Judge sentences ex-Pilot Flying J president to 12 years for role in rebate scam

By Land Line staff | 9/27/2018

The former president of Pilot Flying J has been sentenced to more than 12 years in prison and fined $750,000 for his role in a multimillion dollar fraud scheme that bilked small trucking companies out of portions of their rebates for diesel fuel purchases.

U.S. District Court Judge Curtis Collier handed the sentence down to Mark Hazelwood, formerly a top executive at Pilot Flying J. A Tennessee jury found Hazelwood guilty of conspiracy to commit mail and wire fraud, as well as one count of witness tampering.

Hazelwood was one of three former Pilot Flying J employees found guilty in February. Three other former Pilot Flying J employees were on trial as well, including former vice president of national sales Scott Wombold, and regional saleswomen Heather Jones and Karen Mann.

Hazelwood and Jones were both convicted of conspiracy. Hazelwood also was found guilty of witness tampering and fraud. Wombold was acquitted on the conspiracy charges but convicted of fraud. Jones was found not guilty on fraud charges. Mann was found not guilty of conspiracy, the only charge she faced.

Hazelwood has been under house arrest pending the outcome of the sentencing hearing. He is expected to remain under house arrest until ordered to report to prison in November.

Another 14 former employees have pleaded guilty to various charges stemming from the conspiracy. Some of those who have pleaded guilty testified against their former colleagues.

The conspiracy came to light in 2013 following a raid on the company’s Knoxville, Tenn., headquarters by the FBI and the IRS. Pilot Flying J’s board confessed to criminal responsibility and paid a $92 million penalty. The nation’s largest truck stop chain paid an additional $85 million to settle various lawsuits filed by customers.

The conspiracy involved fraudulent and false pretenses, promises and representations made to the targeted trucking companies, including fraudulently generated invoices and rebate amounts. The indictment alleges the conspiracy involved either or both “off-invoice fraud,” where the represented discount amount was not submitted to Pilot’s billing system for the customer’s invoices, and “rebate fraud,” where customers who received monthly rebate checks had portions of the full rebate amount “deliberately and fraudulently” withheld by various means.

While defense attorneys for Hazelwood repeatedly sought to portray Pilot Flying J CEO Jimmy Haslam as having knowledge of the scheme, Haslam repeatedly denied any knowledge of the activities. Haslam has not been charged in connection with the conspiracy.

 

 

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