Former Pilot Flying J Sales Executive: ‘I Cheated Customers and I Did It Well’
CHATTANOOGA, Tenn. — Brian Mosher considered himself a master at the game of defrauding trucking company customers, and he told jurors Nov. 27 he presented details of it to his bosses, including former Pilot Flying J President Mark Hazelwood and current CEO Jimmy Haslam.
“I was hammering for a promotion with the discount savings my (fraudulent) manual rebates created for Pilot,” Mosher testified in U.S. District Court in Chattanooga. “I used manual rebates to try to position myself for promotions.”
Mosher said he went over spreadsheets with Hazelwood and Haslam that detailed how much cash he “saved” Pilot Flying J by paying trucking firms a much lower discount on diesel fuel purchases than he promised.
“Early on, I would explain the way the spreadsheet was laid out,” he said. “But later on we would just look at the bottom line.”
Insider scoop leads to fraud talk
Mosher’s testimony came in the fourth week of the ongoing trial on federal conspiracy to commit wire and mail fraud charges of Hazelwood, former Pilot Flying J Vice President Scott Wombold and former regional account representatives Heather Jones and Karen Mann.
Pilot Flying J CEO Jimmy Haslam's voice is heard for the first time today in federal court via secret recordings of a training session for staffers at which fraud was taught. I have the latest on @knoxnews Facebook now, story tonight — Jamie Satterfield (@jamiescoop) November 28, 2017
Mosher, along with 13 other former executives and sales support staff of the nation’s largest diesel fuel retailer, has pleaded guilty. Two others were granted immunity. Pilot Flying J’s board of directors has confessed criminal responsibility to the tune of $92 million in fraudulent profits.
Haslam, who also owns the Cleveland Browns, has repeatedly denied knowledge of the scheme and he is not charged.
Mosher testified that he first learned of the fraud scheme in 2008 when talking to sales executive John “Stick” Freeman about some insider knowledge Freeman had about plans by one trucking firm — Western Express in Nashville — to take over another.
Freeman, who also has pleaded guilty and is expected to testify, got caught cheating Western Express and Pilot Flying J agreed to buy a dilapidated airplane from the firm for $1 million to smooth things over, testimony has shown.
The story of the airplane was legend among the direct sales division where the fraud scheme was centered, secret recordings showed. Freeman has said in those recordings — none of which contain Haslam’s voice — that Haslam knew about that, too.
At the time of his discussion with Freeman, Mosher was under the supervision of Hazelwood, who had not yet been promoted to president. Mosher said he asked Hazelwood “several times” about Freeman’s admitted fraud and whether it was a good idea.
“(Hazelwood responded), ‘Absolutely. We do not have contracts with these customers,’ ” Mosher testified.
‘I cheated customers and I did it well’
So, Mosher said, he got on board.
“I was told this is what I should do, so I cheated customers and I did it well,” he said.
But as Mosher watched Freeman garner a promotion to a vice president’s job and saw Hazelwood himself rise up the ranks, he said he balked.
“I was fairly put off when other folks got promoted, and I had not,” he said.
Mosher was so good at the fraud that he reached his “commission capacity,” so each new fraud netted Pilot Flying J money but not Mosher, he told jurors. Mosher complained directly to Hazelwood, he said.
“I told him I was tapped out in commissions,” he said. “Therefore, manual rebates (insider code for fraud) did not allow me to profit.”
Mosher said he threatened to quit defrauding Pilot Flying J customers.
“(Hazelwood) responded, ‘That wouldn’t be a very good idea,’ ” Mosher testified.
Mosher got his promotion. He was director of national accounts when the FBI and IRS Criminal Investigation Division raided Pilot Flying J’s Knoxville headquarters on Tax Day 2013.
‘Elder statesmen’ of fraud
He also was tapped by Freeman to teach the art of fraud to every Pilot Flying J staffer in the direct sales division during a mandatory training session held at Pilot’s headquarters in November 2012.
What Mosher, Hazelwood, Wombold and Freeman didn’t know was Texas salesman Vincent Greco had turned mole for the FBI and recorded both that training session and a meeting among executives at Freeman’s Rockwood lake house two weeks earlier.
In that October meeting, Freeman boasted that the salesmen and supervisors gathered at his lake house were the “elder statesmen” who needed to teach underlings and new hires how to use the manual rebate system to defraud trucking companies. He said Mosher was the best man for the job.
Wombold said trainers like Mosher needed to highlight three lessons for Pilot Flying J direct sales staff as part of their presentations to make sure they “know these things backward and forward.”
Assistant U.S. Attorney Trey Hamilton asked Mosher to describe the three key points he was instructed to deliver in his fraud training session.
“How to target unsophisticated trucking companies, how to cheat them out of their due rebate and how to get away with it,” Mosher replied.
‘Buck stopped at Mark Hazelwood’
Haslam was not at the lake house. Hazelwood arrived late.
“What’s up guys?” he yelled out.
He said he was excited by a conversation he had with John Compton, who for a brief stint in the fall of 2012 and early 2013 took over Haslam’s chief executive job so Haslam could devote time to the Browns, before arriving at the lake house.
“(Compton said), ‘I’m going to leave you (expletive) alone. All I want you (expletive) to do is sell a bunch of gallons,’” Hazelwood said on the recording.
Mosher explained why Hazelwood was so excited about Compton’s attitude.
“The buck stopped at Mark Hazelwood,” Mosher told jurors. “We would have to report no higher up the chain than Mark Hazelwood.”
It wasn’t clear if Hazelwood had told Compton about the fraud scheme. But within months of the decision to put Compton, who had helmed the PepsiCo snack food and drinks corporation, Haslam took back the job, saying he missed it. Compton became a “strategic adviser.” His name has not been mentioned in any documents related to the fraud scheme made public so far.
Freeman can be heard on the recording explaining to Hazelwood the idea of Mosher teaching the art of fraud at the mandatory sales training session. By that time, Mosher said, Hazelwood and the other executives had consumed a lot of alcohol and Hazelwood’s tone was raucous.
“Brian’s going to wind up running this (expletive),” Hazelwood said on the recording.
When Mosher explained that he planned to tell “stories” of fraud as a teaching tool since it was “from telling stories” that “we all learned this business from,” Hazelwood responded, “I’d agree with that.”
The trial continues Nov. 28.
