Biggest Coordinated Sales Team Retail Fraud of Decade
 

Back in the News After 7 Years
Pilot Flying J $56.5M Sales Team Rebate Fraud
Convictions of former Pilot Flying J President Hazelwood, staffers overturned

Controversial Ruling Comes Back to Haunt Verdict

A federal appellate court overturned the convictions of former Pilot Flying J President Mark Hazelwood and two members of his direct sales team on Wednesday, ruling a lower court judge shouldn’t have allowed jurors to hear a recording that included “deeply offensive racist and misogynistic language.”

In its two-to-one panel ruling, the U.S. Court of Appeals for the 6th Circuit, struck down the convictions of Hazelwood and two former sales team executives, Scott Wombold and Heather Jones, over allowing prosecutors to play a secret recording of Hazelwood spewing “profanities about African Americans and women,” according to court documents.

U.S. District Judge Curtis Collier was wrong to allow prosecutors to play at the trio’s 2018 trial secret recordings of Hazelwood making racist comments and singing along to a racist song.

“Even if somehow otherwise admissible, the recordings are a textbook violation of (federal rules) because of the risk of unfair prejudice eviscerates any purported probative value.”

Hazelwood was convicted after a four-month trial of conspiracy to commit wire fraud, wire fraud and witness tampering and sentenced to 150 months and fined $750,000.

He was the highest-ranking member of Pilot Flying J who was convicted in the plot. Two subordinates were convicted of varying crimes alongside him, and 14 others pleaded guilty. Two were granted immunity. Pilot Flying J’s board also admitted criminal responsibility.

The fraud plot — in which trucking firms were cheated $56.5 million in the five-year scheme — cost Pilot Flying J’s board $92 million in criminal penalties and $85 million in lawsuit settlements.

Wombold, convicted of wire fraud, was sentenced to 6 years in prison. Jones, who was convicted of conspiracy to commit mail fraud, received a 2.5-year sentence.

Hazelwood and his subordinates used a diesel fuel discount program Hazelwood created that was supposed to allow small trucking companies the same type of breaks on diesel fuel granted much larger firms. But Hazelwood and his subordinates shaved pennies off those discounts — with the trucking firms unaware. freightwaves.com knoxnews.com

Editor's Note: Pilot Flying J is one of the largest top 10 privately held companies in the United States and employs more than 24,000 employees.

Following this since the initial raid in 2013 when agents first raided a regional sales manager's home in Arizona and had him call Pilot's CEO, and Cleveland Browns owner, Jimmy Haslam directly with FBI agents secretly recording it, in an attempt to get him to incriminate himself, which was unsuccessfully. As Haslam immediately forwarded the call, without saying anything, to legal.

Within hours, raiding Pilot's corporate office in Knoxville and arresting the company president and a number of sales team members. They never named the whistleblower but did make deals with two sales team members to testify for immunity.

The five-year fraud scheme surrounded taking advantage of the smaller trucking firms and independent operators by skimming rebate rewards for over $56.5M. Thus increasing their bonuses significantly and increasing sales numbers.

Basically the entire sales team including it's administrator, along with the president leading the effort, were involved and cheating clients nationwide.

It was 1 year after Jimmy Haslam, CEO and owner of Pilot, bought the Cleveland Browns in 2012 and was spending the majority of his time in Cleveland. Leaving the president Mark Hazelwood alone to run the company.

The now famous 'secret recording' they're referring to was the whistleblowers recording of a sales team national meeting where the president, Mark Hazelwood were heard making racist jokes about the Browns players, the truckers, clients and detailing exactly what they were doing. Interestingly enough Pilot Flying J paid for Hazelwood's defense and continued his salary throughout the trial. And nothing has been reported on that since.

Over the years it's been surprising Haslam was never indicted or charged although he made obvious contingent plans with both businesses. By putting his wife legally in charge of the Browns and selling 20% of the company to Warren Buffet, with an option to sell the remaining 80% at a later date.

The media really never questioned Haslam or raised any speculation about his involvement other then to print his public comments. In Cleveland the media only reported the case briefly.

In this writers opinion Haslam got a pass on this. That is if you consider a $92 million dollar fine a pass. But he also was very proactive in resolving all the law suits that followed. Which obviously played into public opinion.

But now we've got the top player and his two closest subordinates facing another trial or do we see some sort of settlement. After all Haslam's brother is the Governor of Tennessee and Pilot Flying J is one of Tennessee's largest retail employers. Just a thought. Because now no one is paying attention and we all know the prison's are over crowded. When it comes to white collar crime there does appear to be a double standard. Just my opinion. - Gus Downing

Read the D&D Daily's timeline of events in the Pilot Flying J fraud case, which we've been following since 2013, here.