CHATTANOOGA, Tenn. - A jury in the ongoing Pilot Flying J fraud trial indicated Wednesday they have reached a partial verdict but remain divided on a single count involving a single defendant.
U.S. District Judge Curtis Collier sent the jurors home Wednesday, as they continued to deliberate on the single count over which they were divided. They will return Thursday at 9 a.m.
Earlier in the day in a note to Collier, the jurors considering the fate of former Pilot Flying J President Mark Hazelwood and three former subordinates had said they had "reached a unanimous decision on everyone except for one count on one person."
The note did not say to which defendant they were referring.
Collier on Wednesday afternoon said he planned to tell jurors "their time (spent deliberating) has not been inordinate, and they should continue to try to reach a decision."
Two hours after he sent that instruction to jurors, they still had not reached a verdict on the sole count the panel said it was divided on, so Collier sent them home.
Hazelwood, former Vice President Scott "Scooter" Wombold and former account representatives Karen Mann and Heather Jones have been standing trial since November in U.S. District Court in Chattanooga on charges including conspiracy to commit wire and mail fraud.
The quartet are accused in a five-year scheme within the company's direct sales division to lure trucking companies into buying diesel from Pilot Flying J with promises of discounts they never intended to fully pay, and lying to those firms about it.
Jurors on Wednesday also had a legal question about one of the lesser counts in the indictment alleging specific acts of fraud, which indicates it is one of those charges upon which the jury cannot agree.
Mann is only charged in the conspiracy count, so that means the jury likely is divided over one of the remaining three defendants on a specific act of fraud and not the overall conspiracy.
Defense opposes partial verdict reading
The indictment alleges an overall conspiracy to defraud truckers, and each of the four defendants are charged with the plot itself.
But federal prosecutors Trey Hamilton and David Lewen also alleged in the indictment specific acts of fraud known in legalese as "substantive" fraud counts.
There are seven counts in the indictment alleging "substantive" or individual acts of fraud. Each involves emails related to fraud. Jones is charged with five of those. Wombold is also charged in three of the five in which Jones is accused. Hazelwood is accused of two separate substantive acts of fraud.
Defense attorneys for each of the four accused conspirators said they would oppose allowing the jurors to announce their verdict before they have reached a decision on all the counts.
Prosecutor Hamilton noted in his remarks to Collier that the law allows the judge to accept a partial verdict even if jurors either have not or cannot reach a unanimous decision on the charge that currently has them at odds.
Collier said he would consider accepting a partial verdict at some point but did not elaborate.
Fourteen former Pilot Flying J sales executives and staffers have pleaded guilty and are awaiting sentencing. Two more were granted immunity. Pilot Flying J's board has confessed criminal responsibility and paid $92 million in criminal penalties and another $85 million in lawsuit settlements.
The board also has been picking up the defense tab for Hazelwood and his three accused former subordinates.
Pilot Flying J CEO Jimmy Haslam has denied any knowledge of the fraud scheme and is not charged.
Federal agents raided Pilot Flying J's Knoxville headquarters on Tax Day 2015. The FBI and IRS Criminal Investigation Division had been investigating the fraud scheme since at least 2011 when agents confronted Vincent Greco, then a sales executive at the truck stop giant.
In return for immunity, Greco agreed to turn mole and began making secret recordings of his interactions with Pilot Flying J executives.
Those recordings captured fraud talk among executives, including Hazelwood, a mandatory training session in which former sales executive Brian Mosher taught the "art" of fraud to other staffers, and what Hamilton and Lewen contend was talk by Hazelwood of expanding the fraud scheme.
Haslam's voice was captured during a "wrap-up" event with Hazelwood at the same November 2012 mandatory training sessions in which Haslam said, "Sounds like Stick's deal with Western," as Hazelwood was explaining how naive some truckers were about the pricing of diesel fuel and the calculation of discounts.
Haslam's comment was a reference to an incident in which former Pilot Flying J vice president John "Stick" Freeman had been caught shortchanging Western Express, a Nashville firm. To smooth things over, Pilot Flying J agreed to pay $1 million to buy a broken-down airplane from Western.
Hazelwood then said, “Yeah, well, we’re … going to introduce him to a guy by the name of Manuel.”
“Manuel,” testimony has shown, was a name those involved in the fraud scheme used as code for the manual rebate fraud, a nod to the fact that some of the trucking companies targeted in the fraud scheme were owned by Hispanics.
Greco also captured Hazelwood and other sales executives at a meeting at Freeman's lake house in Rockwood in October 2012 making racist and misogynistic comments, singing along to a racist country song, and mocking the Browns, the team's fans and members of Pilot Flying J's board.
In a legally controversial move, Collier allowed Hamilton and Lewen to play snippets of those racist recordings to counter the notion advanced by Hazelwood's defense team that he was too savvy a businessman to risk doing anything, including committing and condoning fraud, that would hurt Pilot Flying J's bottom line.
Hazelwood was earning $26.9 million at the height of the fraud scheme. Hamilton and Lewen have argued the fraud scheme helped grow Pilot Flying J's market share and its profits.
Freeman and Mosher are among the sales executives who have pleaded guilty. Mosher testified against Hazelwood and the other three co-defendants. Freeman was not summoned by the prosecutors to testify.