Prosecutor Says Pilot Flying J Sales Team Had Culture Of "Lying, Cheating" To Boost Profits, Personal Pay; Chattanooga Trial To Take 6 Weeks Or More

Monday, November 6, 2017

Prosecutor David Lewen of Knoxville told a federal jury in Chattanooga on Monday afternoon that the sales team at the Pilot Flying J convenience store chain had a strategy of upping profits and personal pay by "lying, cheating and lulling customers."

Former Pilot president Mark Hazelwood and three others are facing wire and mail fraud charges.

The trial is set to go six weeks or more, attorneys said Monday.

Hazelwood is standing trial along with executive Scott "Scooter" Wombold and account representatives Heather Jones and Karen Mann.

Prosecutor Lewen said a single truck can consume 1,600 gallons of diesel a month, and many trucking firms have a large fleet. He said discounts are important to the carriers.

He said the Pilot team promised trucking firms certain discounts, but managed to "rip off the trucking companies so more profit would go into their pockets. The more they cheated the trucking companies the more their profits would increase."

Prosecutor Lewen said trucking companies might be promised "cost +2" but actually receive "cost +12."

He said another tactic was to offer rebate checks, but to reduce the amount promised in the checks.

The prosecutor said the government obtained a number of emails and videos showing company officials bragging about getting away with cheating the trucking firms.

He said Hazelwood was aware of the scheme and in one email about deceiving customers had this seven-word message: "Rebate. Rebate. Masturbate. Make them feel special."

Prosecutor Lewen said at the time Pilot was making hundreds of millions of dollars in annual profits and Hazelwood was getting 3.5 percent of the take.

He said Hazelwood was charged with witness tampering for calling his long-time assistant and telling her to lie to agents. She is scheduled to testify.

He said Wombold was charged with lying because he lied three times when interviewed by agents.

The prosecutor said Brian Mosher "did the dirty work" for Wombold and will take the witness stand against him.

He said Ms. Mann, in one email about defrauding the trucking firms, said "she loved it."

Testimony is set to begin on Tuesday morning. 

The Pilot chain is owned by the Haslam family, but Governor Bill Haslam and Cleveland Browns owner Jimmy Haslam have denied any knowledge of a plan to defraud trucking companies.

Fourteen employees have already entered guilty pleas, and some of them are set to testify for the government.

The charges followed a 2013 raid by federal agents at the company's headquarters in Knoxville.

The Pilot Flying J board earlier agreed to a $92 million civil penalty, and the firm has paid some $85 million to settle lawsuits. It is paying the legal bills of the four remaining defendants.

Prosecutor Francis "Trey" Hamilton told Judge Curtis Collier the government's case may take about 15 trial days. The defense said it will have proof over about the same time period.

Judge Collier said trial will be held Monday-Thursday each week.

A number of prospective jurors told the judge they had medical issues or were needed at work or home. But enough jurors were secured to begin opening statements at mid-afternoon.

The case was moved to Chattanooga from Knoxville due to publicity issues.

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