18-0312_D&D Daily Media Placement Q3_201

America's Biggest Retail Sales Team Fraud in History
First Reported on April 16, 2013, Day of FBI Raid on Corporate Offices

Nov. 5, 2018

They Have Prison Sing-A-Longs

Update: No Christmas break from prison for Ring Leader Hazelwood, ex-Pilot Flying J president

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Former Pilot Flying J president and ring leader Mark Hazelwood was sentenced to more than 12 years in prison and fined $750,000.

Open your presents, sing "Silent Night" - but do it from behind bars.

That's the message a federal judge laid down last week when he denied former Pilot Flying J president Mark Hazelwood's plea to skip reporting to federal prison for a fraud sentence until after Christmas - and New Year's, too.

What's next? U.S. District Judge Curtis Collier asked. Valentine's Day? Easter?

The ruling means Hazelwood, 59, will report Nov. 26 to begin serving a 12-and-a-half year sentence for cheating trucking customers out of millions of dollars at the diesel pump. A federal jury convicted him in February of wire fraud, witness tampering and conspiracy to commit wire fraud.

Pilot staffers kept two sets of books, bragged about the fraud in emails and talked openly about the scheme at sales meetings - in front of an undercover informant wearing a wire for the FBI.

Seventeen former Pilot Flying J staffers pleaded guilty in the case and await sentencing. Two others received immunity.

Pilot Flying J's board paid a $92 million criminal penalty, along with an additional $85 million to resolve trucking customers' claims. knoxnews.com

Editor's Note: Hazelwood tried everything in the book to get out of this or keep delaying his jail time. From hiring a very popular local attorney to defend him to once convicted firing him for 'cause' which wasn't accepted by the courts. Then hiring a big NYC law firm to reduce his jail time even after the federal judge an African American heard Hazelwood's racist taped tirade on tape during a sales team meeting making fun of Haslam's Cleveland Browns. The bottom line here is that this is the biggest coordinated entire sales team internal fraud committed against customers we've ever heard of or reported on and Haslam walks away scot free even though Pilot paid $93M in fines and admitted criminal wrongdoing. 

Sept. 27, 2018

Former Pilot Flying J president sentenced to 12​​​​​​​ years in prison, fined $750K
Mastermind behind retailer's massive rebate fraud scheme

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A federal judge on Wednesday ordered former Pilot Flying J President to serve more than 12 years in federal prison as the mastermind of a five-year fraud plot to grow the firm's market share.

Senior U.S. District Judge Curtis Collier also ordered Mark Hazelwood to pay a $750,000 fine in addition to spending 150 months behind bars.

"The motive was hubris - his competitiveness ... his desire to capture more market share for Pilot," Collier said. "The defendant improperly took it upon himself to use the Pilot name and reputation ... This degree of commandeering ... the court is not aware of any reported case where such a situation has happened.

"Mr. Hazelwood abused the trust of Pilot and the trust placed in him," Collier continued. "The participants (in the fraud scheme) laughed and joked about it. They used extreme and offensive language. They used Pilot's email ... cellphones ... financial management system. They talked openly of this criminal activity ... He violated the law on a constant and repeated basis for half a decade."

Collier is allowing Hazelwood to remain free through November while the U.S. Bureau of Prisons determines in what facility he will be housed. He will remain under conditions of house arrest imposed after his conviction in February.

Hazelwood was convicted after a four-month trial of conspiracy to commit wire fraud, wire fraud and witness tampering.

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. knoxnews.com

Feb. 15, 2018

Jury finds Hazelwood, Jones guilty of conspiracy in Pilot Flying J fraud trial

A federal jury on Thursday convicted the former president of the nation’s largest diesel fuel retailer of a plot to rip off truckers to boost both his own bottom line and that of his employer — Pilot Flying J.

A five-woman, seven-man jury in U.S. District Court in Chattanooga deemed former Pilot Flying J President Mark Hazelwood guilty of conspiracy to commit wire and mail fraud, one count of wire fraud and witness tampering.

The same jury acquitted former Vice President Scott “Scooter” Wombold of the conspiracy charge, of lying to the FBI and two counts of fraud. The jury instead convicted Wombold of a single count of wire fraud.

Former Pilot Flying J account representative Heather Jones was convicted on the conspiracy charge but acquitted of four individual acts of fraud.

The jury set former Pilot Flying J account representative Karen Mann free entirely, acquitting her of the sole conspiracy charge she faced. knoxnews.com

Feb. 6, 2018

$80M Pilot Flying J Customer Fuel Rebate Fraud Case Goes to Jury Tomorrow
Does Family CEO Get Indicted? The Big Question Everybody is Waiting to Hear

Four former Pilot Flying J employees share a seat at the defense table, in a trial that has spanned more than three months.

In closing arguments Monday, Assistant U.S. Attorney Trey Hamilton spent two hours walking through his case with the jury. He alleged that the four defendants, along with 14 others who have already pleaded guilty, worked together to advance a conspiracy, in a scheme to cheat trucking customers out of promised fuel rebates.

“This scheme was at the heart of the conspiracy to commit mail and wire fraud that infected the sales team at Pilot Flying J,” Hamilton said in closing arguments.

Pointing to emails and financial records, Hamilton reminded jurors of how people at Pilot profited from the scam that targeted less sophisticated truckers, baited them with false promises, and shorted them discount checks through fraudulent manual rebates.

Not only did the company reap the financial benefits of the fraud scheme, but so did the alleged co-conspirators.

The government also  took the time in closing arguments to revisit testimony from the half dozen former Pilot workers who took the stand during trial, admitting under oath to knowing that the conspiracy they participated in was wrong and voluntarily contributing to it anyway.

A verdict may not come until mid-February, as jurors are only scheduled to work through Wednesday and then return Feb. 12.

Pilot has acknowledged criminal responsibility for the fraud scheme, paying $92 million in government fines and more than $80 million in settlements to truckers who were shorted.

Editor's Note:  

A whistleblower initially started this case and two executives out of the entire sales team of twenty, are not being tried for their participation.  A fact most often not mentioned by reporters covering the trial. 

Interestingly enough this case began shortly after Jimmy Haslam, Pilot's CEO and Chairman, had just purchased the Cleveland Browns within the past twelve months. 

After buying the Browns Haslam hired a new CEO out of Coca Cola who abruptly resigned just a few days before or immediately right after the FBI raided Pilot's offices.  And Haslam, who had been basically living his dream running the Browns, disappeared from the Cleveland scene and popped back up a few days later dealing with this issue. 

When the FBI made their first arrest in Phoenix, right before the raid, they had the regional sales executive get Haslam on the phone to see if they could trap him in saying something.  To no avail - as Haslam quickly transferred the executive to legal counsel. 

The whole debate has been did Haslam himself knowingly accept the practice and condone it? Certainly there's circumstantial evidence all around him but obviously not enough right now to publish anything regarding possible charges.  And with his brother being the governor of Tennessee and his father having started Pilot decades ago right there in Knoxville they happen to be one of - if not the most powerful families in that state.  So no one, not even the local newspapers are going to infer it or even mention it at this point.

The interesting point is that Haslam has set up the business as if he may indeed be exiting it over the next few years.  With selling a small percentage of it last year to none other then Warren Buffet and giving him an option to buy virtually the rest of the retailer within the next few years. 

Simultaneously of this Haslam has also set up his wife to run the Browns.  A fact that quite frankly may end up being better for the Browns.  Or at least most of us in Cleveland think so.

But the fact is no one at this point has given Haslam up or at least it's not made the news or been released.  However Pilot did acknowledged criminal responsibility for the fraud scheme, paying $92 million in government fines

After 19 days of listening to witness testimony and evaluating evidence, the jury began to hear closing arguments in Pilot Flying J federal fraud case on Monday.

Four former Pilot Flying J employees share a seat at the defense table, in a trial that has spanned more than three months.

Former Pilot president Mark Hazelwood, ex-vice president Scott Wombold, and previous inside sales representatives Heather Jones and Karen Mann all face charges for conspiracy to commit mail and wire fraud. Hazelwood additionally faces charges for witness tampering, and Wombold is charged with making false statements to the FBI and IRS.

In closing arguments Monday, Assistant U.S. Attorney Trey Hamilton spent two hours walking through his case with the jury. He alleged that the defendants, along with 14 others who have already pleaded guilty, worked together to advance a conspiracy, in a scheme to cheat trucking customers out of promised fuel rebates.  wate.com

The FBI's Initial Raid of Pilot Fly J's Corporate Office

WATCH: Jimmy Haslam's Post-Raid Press Conference

With a fraud trial moving into its second month, scrutiny of Jimmy Haslam's role at Pilot is only likely to intensify as the prosecutors look to wrap up their case and the defense phase gets underway.

Pilot Flying J was founded by family patriarch Jim Haslam, Jimmy's father, and a former University of Tennessee football player, with a single gas station in 1958.  His other son, Bill Haslam, was president of Pilot before being elected Knoxville mayor in 2003 and later to his current position as Tennessee governor.

The Haslams have denied any prior knowledge of the scheme.

Rebate fraud: The four defendants in the case maintain their innocence -- former President Mark Hazelwood, former Vice President Scott "Scooter" Wombold, and former sales representatives Heather Jones and Karen Mann.

However, 14 other former members of the Pilot sales team have pleaded guilty to participating in the scheme to shortchange trucking customers on diesel rebates. The company paid a $92 million penalty to the federal government and settled a class action lawsuit for $85 million.

Prosecutors say the scheme ran from at least 2008 until agents raided the company's headquarters in 2013.

Star witness to come? Prosecutors have been building their case with testimony from an array of former Pilot employees from the lower and middle ranks of the sales team.

Former Vice President John "Stick" Freeman, whom the government describes as the architect of the fraud scheme, has yet to take the stand. But he has been featured prominently in others' testimony and in undercover recordings played for the jury, including one in which he boasts that Haslam "loved it" when the sales team swindled customers. "He knew -- absolutely," Freeman said in the recording. Freeman pleaded guilty in July.

Defense strategy: Defense attorneys have signaled that Haslam will feature prominently in their efforts to persuade the jury of reasonable doubt. Hazelwood's lawyers have said that that Haslams' relationship with Freeman will be "highly relevant" to the case.

"Make no mistake about it, Jimmy Haslam III and (his father) Jim Haslam II were in charge of this company," attorney Anthony Drumheller said. "This was a family company they owned and strongly managed."

'Jimmy, we've been caught': Investigators were denied in an effort to lure Haslam into discussing the fraud scheme in a recorded phone conversation before agents descended on the company's Knoxville headquarters in 2013.

Former sales executive Brian Mosher testified that agents had him call Haslam to say, "Jimmy, we've been caught." Mosher said Haslam replied: "I understand there are some folks at your house," and then handed the phone to a lawyer in Pilot's legal department.

Court filings submitted before the trial suggested that investigators' plans may have been thwarted by Mosher's wife passing along word that the FBI was at the house to Wombold, who in turn informed Hazelwood. cleveland.com

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