Hazelwood Attorney Says Feds Are Making a Crime out of Civil Fraud
CHATTANOOGA, Tenn. — The former president of Pilot Flying J took on the federal government Feb. 6, accusing prosecutors of ginning up a criminal case out of a civil fraud, and making a deal with the devil to do it.
“I would suggest to you this entire matter is a civil fraud that should not be here in criminal court,” defense attorney Rusty Hardin told jurors in U.S. District Court on behalf of former Pilot Flying J President Mark Hazelwood.
Hazelwood has been standing trial since November in U.S. District Judge Curtis Collier’s Chattanooga courtroom on charges he not only led a band of thieving sales executives but planned to grow the fraud scheme.
Hardin told jurors in closing arguments Hazelwood is being falsely accused by the man prosecutors sarcastically called “the rebate fraud expert” — former sales executive Brian Mosher.
Mosher cut a deal in the wire and mail fraud conspiracy case and was a key witness for federal prosecutors Trey Hamilton and David Lewen.
“What they did was to decide to give a deal to the triggerman in a capital murder to get someone else,” Hardin said.
Hardin blasted the government for charging one sales staffer while she was battling breast cancer. She admitted lying to trucking companies about the cheating and testified for the government, too.
“That is wrong,” he said. “It’s just wrong.”
Hamilton and Lewen say Hazelwood jumped on board the fraud train as soon as he learned about it when he was coming up the ranks in the direct sales division and, as boss, encouraged his executives to lie and steal to get more business for Pilot Flying J.
They’ve used secret recordings of Hazelwood hearing fraud talk and, the prosecutors say, talking it up himself in a February 2013 meeting in Orlando, Fla., during which Hazelwood talked about creating a way to identify more potential victims.
Hardin, though, had a different characterization of that Orlando meeting. He said Hazelwood was merely talking about seeing which trucking firms they could low-ball on fuel discounts, not cheat.
“A and B pricing is nothing but aggressive business,” Hardin said. “It’s not a crime.”
Hazelwood is standing trial alongside former Pilot Flying J Vice President Scott “Scooter” Wombold and former account representatives Heather Jones and Karen Mann. Mosher and 13 other former staffers at the truck stop giant have pleaded guilty. Two more were granted immunity. Pilot Flying J’s board has confessed guilt, paying $92 million in criminal penalties and settling lawsuits to the tune of $85 million. The board is also picking up the defense tab.
Hamilton presented his initial closing argument Feb. 5. He will give a rebuttal argument Feb. 7. Jones’ attorney, Ben Vernia, argued her case Feb. 5.
Pilot Flying J case now in the hands of a jury. Update coming — Jamie Satterfield (@jamiescoop) February 7, 2018
Mann is the only one of the four who is charged solely with conspiracy and not individual acts of fraud or other wrongdoing. She did the paperwork for Arnie Ralenkotter — another executive who confessed fraud and testified — and his subordinates. Ralenkotter ordered up fraud via email.
Attorney Jonathan Cooper argued Feb. 6 that Mann loved her job and the people with whom she worked, had no idea her boss and his salesmen were lying to trucking companies about the cuts she made at Ralenkotter’s command and never lied to anyone.
“Karen Mann was an enthusiastic employee,” Cooper said. “She loved her job. She loved working for Pilot. She didn’t want to cheat customers. She wanted to help Arnie and (salesman) Tim (Prins). She wanted to be part of a team. She was not trying to cheat anyone.”
Attorney David Rivera painted Wombold as an honest supervisor being forced out and ignored by hard-charging fraudster salesmen like Mosher.
“He was old school — you put your head down and you do exactly what the direct sales manual says to do,” Rivera said.
Testimony and exhibits showed Wombold signed off on fraud by Mosher, though Rivera said Wombold didn’t realize Mosher wasn’t telling his customers that he was reducing their fuel discounts. Rivera said it was Wombold who, when Mosher was training other Pilot Flying J staffers on the art of fraud, “encouraged” a salesman who questioned such tactics to be more vague in his negotiations with his customers.
“He is giving an alternative to what Brian (Mosher) is saying,” Rivera said.
He conceded Wombold was present in those secretly recorded meetings at which fraud was openly discussed. But he said Wombold knew that it was Mosher who was becoming the Pilot Flying J “superstar.” He noted Hazelwood was secretly recorded saying Mosher would one day be president of the truck stop giant.
“Scott had a choice,” Rivera said. “It’s rarely perfect. He’s on his way out, so what does he do? He encourages (other staffers to avoid fraud).”
Pilot Flying J CEO Jimmy Haslam, who also owns the Cleveland Browns, denies knowledge of the scheme and is not charged. Hardin questioned during his closing arguments why Haslam wasn’t on the government’s witness list and why prosecutors didn’t summon to the stand Haslam’s friend, former Vice President John “Stick” Freeman.
Freeman has pleaded guilty. The government says he was the chief architect of the fraud scheme.
Hardin showed jurors a chart of various Pilot Flying J executives, some of whom have pleaded guilty, and of trucking company owners.
“This is what I want to know: Where are these people?” he asked.
