Rss

Appeals court overturns conviction of Pilot Flying J President Mark Hazelwood

A week after a split three-judge panel of the U.S. Court of Appeals for the 6th Circuit overturned former Pilot President Mark Hazelwood’s conviction in a fuel rebate scheme, his attorneys are seeking to end his home confinement.

“We’re very hopeful that the judge will get rid of the home confinement condition because the conviction is no longer in place,” Hazelwood’s attorney, David Debold of Gibson, Dunn & Crutcher, told FreightWaves on Thursday. 

In its two-to-one panel ruling, the federal appellate court struck down the convictions of Hazelwood and two former sales team executives, Scott “Scooter” Wombold and Heather Jones. 

The court ruled the District Court had erred by allowing prosecutors to play secret recordings of Hazelwood spewing “profanities about African Americans and women,” according to court documents.

“The district court admitted the recordings on the theory that if the defendant was reckless enough to use language that could risk public outrage against the company, ‘he was a bad businessman,’ and as a bad businessman, he was also reckless enough to commit fraud,” Judge Richard Suhrheinrich wrote in the majority opinion. “This is vintage bad character evidence — and precisely the type of reasoning the Federal Rules of Evidence forbid.”

In her dissenting opinion, Judge Bernice Bourie Donald wrote the Hazelwood recordings were admissible during his trial.

“The government sought to introduce extrinsic evidence of recordings rebutting the proffered defense by showing Hazelwood engaging in and promoting racist, sexist, and otherwise inappropriate talk and entertainment as allowing and encouraging his subordinates to do the same, all at and during a company meeting where business decisions and perspective were had,” she wrote.

Senior U.S. District Judge Curtis L. Collier sentenced Hazelwood to more than 12.5 years in prison in September 2018 for his alleged role in an elaborate $56.5 million fuel rebate scheme to cheat smaller trucking companies out of millions of dollars. 

According to the motion filed recently in the U.S. District Court for the Eastern District of Tennessee, Hazelwood has never violated his pretrial or post-conviction release conditions. 

Since prosecutors indicted Hazelwood in February 2016, he has remained on pretrial release for more than 4.5 years. Since his sentencing, he has primarily been on home confinement for over 2.5 years, wearing an electronic monitoring device.

“The reason the judge put him on home confinement was that he was supposedly a greater risk of flight, having been convicted and sentenced,” Debold said.

The motion filed in District Court states that Hazelwood has been an “exemplary releasee,” going beyond what was required of him by selling his private jet and putting his boat up for sale.

Clock ticking for prosecutors to decide next steps

The U.S. Attorney’s Office for the Eastern District of Tennessee has until Wednesday to file a petition seeking rehearing by the full 6th Circuit Court, or seek more time to file the motion, Debold said.

“If prosecutors don’t file anything by next Wednesday, then that option is closed,” he told FreightWaves.

Another option, Debold said, is prosecutors may ask the U.S. Supreme Court to review the case. 

The U.S attorney’s office has a 90-day deadline from the date of the decision to ask the Supreme Court to take the case. He said prosecutors could ask for an extension there as well.

“If prosecutors are going to take either route, going to the full Court of Appeals or the Supreme Court, the U.S. solicitor general must first approve either option,” Debold said.

If prosecutors exercise neither of the options listed above, the case goes back to the District Court to discuss whether to retry the case and, if so, to work out a schedule, he said.

Rachelle Barnes, public information officer for the U.S. attorney’s office, said her office could not discuss U.S. Attorney J. Douglas Overbey’s next steps in the Hazelwood case. 

“It is our policy not to discuss cases that are pending or open, so we have no comment on this matter,” Barnes told FreightWaves.

Hazelwood secretly recorded using racial slurs

In 2012, Vincent Greco, former Pilot Flying J sales executive, was granted immunity and agreed to secretly tape sales meetings for the FBI and the IRS as part of their ongoing investigation into the fuel rebate scheme.

In October 2012, Greco attended a management meeting of Pilot executives at the lake house of John “Stick” Freeman, former vice president of sales. 

After the sales meeting concluded, during which Hazelwood was not present, he later joined the after-party where the sales team members watched football and drank alcohol.

At trial, jurors were allowed to hear eight minutes of secret recordings that include Hazelwood making racial slurs and derogatory comments about women. 

The audio reveals Hazelwood asking, “Where’s our greasy (racial slur) song” and then singing along with other Pilot employees to the racist lyrics of the country song written by David Allan Coe.

The tapes also include Hazelwood making profane remarks about Pilot’s board of directors and the Cleveland Browns football team, which Pilot CEO Jimmy Haslam III also owns.

In July, Haslam announced that Shameek Konar, chief strategy officer, will succeed Haslam as chief executive in operating the nation’s largest network of travel plazas and truck stops in January.

‘Jacking the discount’

The fuel rebate scandal rocked the truck stop dynasty in April 2013 after the FBI and the IRS raided Pilot’s corporate headquarters in Knoxville, Tennessee. 

The truck stop chain reached a $92 million agreement with the U.S. Department of Justice in July 2014 over the 15-month probe of its five-year fuel rebate scheme that targeted customers it considered “too unsophisticated to catch on.” Pilot also agreed to pay an $85 million settlement to trucking companies that had fuel rebate agreements with the truck stop chain.

Fourteen former Pilot employees pleaded guilty for their roles in a scam known as “jacking the discount” among the company’s diesel fuel sales staff. Two other former employees were granted immunity for cooperating with federal investigators, and one was found not guilty.

The scheme targeted customers it considered “too unsophisticated” to catch on as well as minority-owned companies “in hopes that language barriers might make [the] discovery of their fraud more difficult, or easier to explain away if caught,” according to court filings.

Haslam has denied any involvement in the fuel rebate scheme.

Read more articles by FreightWaves Senior Editor Clarissa Hawes

News Alert: Investigators charge trucker who drove through protesters on I-35
Calling out racism in trucking
Convictions of former Pilot Flying J President Hazelwood, staffers overturned