Ex-Pilot President Mark Hazelwood, Seven Others Indicted in Diesel Fuel Rebate Fraud
Hazelwood was arraigned in U.S. District Court on a 60-page speaking indictment, which means the document lays out with specificity the allegations against the former Pilot executive accused with seven others in the diesel fuel rebate fraud.
Ten former Pilot employees already have pleaded guilty.
PROFILE: Who is Mark Hazelwood?
Also named in the indictment are former Pilot employees Scott Wombold, who was the vice president of direct sales, and John Freeman, who was vice president of sales and who has been identified in an FBI affidavit as the architect of the fuel rebate fraud.
Also named in the indictment are Vicki Borden, who supervised various sales support staff, as well as sales representatives Katy Bibee, Heather Jones and Karen Mann.
The last defendant listed in the indictment is John Spiewak, who is listed as a former regional sales manager.
All eight defendants are charged in 13 counts of wire and mail fraud and conspiracy to commit those crimes.
UPDATED: Ex-Pilot Flying J president, 7 others indicted in diesel fuel rebate fraud case. https://t.co/thNmmthJjm pic.twitter.com/234WlOU9yx — knoxnews (@knoxnews) February 9, 2016
Hazelwood is charged in a 14th count with witness tampering. He left Pilot in 2014 and is now founder and CEO of Professional Driver Agency, a job placement service for truck drivers, based in Brentwood, Tennessee.
"We're obviously disappointed and saddened by today's events but cannot comment further on any matters which are part of the ongoing investigation," said Pilot Flying J in a statement. "We can say that since this unfortunate episode began, the company has put in place policies and procedures unparalleled in the industry to prevent anything like this from happening again.
"The company has cooperated with the investigation since its beginning and will continue to do so. The company repaid affected customers, accepted legal responsibility, and agreed to pay a monetary penalty. The trust and confidence of Pilot Flying J's customers continues to be of paramount importance to the company and their continued support and loyalty is very much appreciated."
The indictment alleges that one month after he was fired from Pilot in May 2014, Hazelwood "wilfully tried to persuade his former administrative assistant" to mislead or refuse to cooperate with the FBI or the IRS Criminal Investigation Division.
That employee is only identified as "Pilot Employee 1."
The indictment alleges the conspiracy began in 2008 and ended with the raid on April 15, 2013.
The indictment indicates that Hazelwood agreed on the day of the raid to speak with law enforcement. The indictment does not indicate how forthcoming he was.
Not named in any indictments returned so far is CEO Jimmy Haslam, who has steadfastly maintained his innocence.
The remaining defendants will be appearing in court Feb. 9.
Here's a look at the updated Pilot Flying J hierarchy including who was indicted today https://t.co/Ijt2uXXWPC pic.twitter.com/mdfDTFl1VM — WBIR Channel 10 (@wbir) February 9, 2016
An April 11 tentative trial date was set, but prosecutors signaled that a delay likely would be necessary because of the sheer volume of evidence they are required to turn over to attorneys.
U.S. Magistrate Judge Bruce Guyton allowed Hazelwood to go free under standard conditions of release, restricting his travel to Knoxville and Nashville.
Defense attorney Rusty Hardin entered a not guilty plea on Hazelwood's behalf.
Ex-Pilot Flying J pres. Mark Hazelwood leaves federal court after entering not guilty plea https://t.co/Ijt2uXGlr2https://t.co/D6aRCXRnP2 — WBIR Channel 10 (@wbir) February 9, 2016
Of the 10 former Pilot employees who have pleaded guilty, Brian Mosher was the last to enter a guilty plea and the highest-ranking former staffer to do so. Mosher was director of sales for national accounts.
The company struck a deal last year to avoid criminal charges against Pilot itself by paying a $92 million penalty over two years and cooperating in the fuel-rebate fraud investigation. The firm also has reached an $85 million settlement with trucking customers who sued the company.
The 10 former staffers who struck plea deals in the case admitted to some form of wire and mail fraud. Each is being held responsible for varying loss amounts and for varying victims. Mosher was hit the hardest, agreeing to a loss calculation of $20 million and a maximum victim count of 250 firms. Those figures boost his penalty range 24 levels under federal sentencing guidelines. Probation is no longer an option as a result. A sentencing chart suggests a penalty range of five to 10 years for Mosher.
Three other former staffers have been granted immunity and cooperated in the early days of a probe that began in 2011 with a tipster who secretly recorded chats with a sales executive who later turned FBI mole. That mole is widely believed to be Vincent Greco, who was director of sales for the firm's west region at the time. Greco, too, was granted immunity.
The probe went public in April 2013 when federal authorities, including the FBI and the IRS Criminal Investigation Division, launched a high-profile raid on Pilot headquarters.
Federal prosecutors have said in various court hearings the rebate scheme stretched back to at least 2008. Cheating smaller trucking firms was "part of the culture" at Pilot, so much so that Mosher taught others at a mandatory staff meeting, the pair have said.
