KNOXVILLE, Tenn. (WVLT) - The U.S. Department of Justice announced that it asked a judge to dismiss charges against former Pilot Company President Mark Hazelwood.
The motion filed Tuesday requested that a judge dismiss the remaining charges against Hazelwood, including charges of wire fraud, conspiracy to commit wire fraud and obstruction of justice. The motion also asked for the dismissal of charges against two Pilot Company executives, Scott Wombold and Heather Jones.. Charges won’t officially be dismissed until the judge signs an order, according to Jim Walden, Hazelwood’s attorney.
The government filed the motion to dismiss citing a combination of factors including limited government resources, the age of the case, and “the challenge of presenting those facts and circumstances through cooperators who have completed their sentences, some of whom, it has been proffered to the government by defense counsel, have made statements since sentencing that would negatively affect the credibility of their testimony.”
Hazelwood’s legal team released the following statement:
“Mark Hazelwood’s nightmare is now over. We believed in his innocence from day one. We are gratified that the Department of Justice agreed that dismissal was the only appropriate remedy. We look forward to seeing the next chapter of Mark’s life, surrounded by his wife Joanne and his loving family, and are honored to have been able to tell his whole story in full truth. Mark is innocent.”
Hazelwood was convicted in 2018 after being accused in a wire and mail fraud conspiracy investigation.
The indictment stated between Feb. 2008 and April 2013 Hazelwood encouraged Pilot’s direct sales team to use the “manual rebate” technique.
Hazelwood and two others were charged with conspiracy to commit wire fraud, mail fraud and several individual counts of wire fraud. Senior U.S. District Judge Curtis Collier sentenced Hazelwood to 12 and a half years in prison along with a $750,000 fine. The convictions of all three were reversed on Oct. 14, according to court documents.
Convictions for Hazelwood and two other Pilot executives, Scott Wombold and Heather Jones, were overturned in October after a judge ruled evidence shown in the trial to be inadmissible.
According to court documents, the release of recordings of Hazelwood using “deeply offensive racist and misogynistic language,” was in violation of the Rules of Evidence making them inadmissible in court because of the risk of unfair prejudice.
The interview in full can be found below:
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Justice Department: No plans for a second trial of ex-Pilot president Mark Hazelwood
The U.S. Justice Department says it doesn't want to waste taxpayer money on a second trial of trucking industry tycoon and former Pilot Company President Mark Hazelwood.
Acting U.S. Attorney Trey Hamilton filed a motion Tuesday in U.S. District Court in Knoxville, asking for "the court's leave" to dismiss all charges against Hazelwood and two Pilot Company subordinates already tried and convicted in a plot to defraud the truck stop giant's trucking customers. An appeals court overturned the convictions.
The Justice Department doesn't need U.S. District Judge Curtis Collier's approval to drop the case since the agency is promising to never again seek to prosecute Hazelwood and two ex-staffers convicted of various counts alongside him.
The motion is largely a courtesy and is designed, in part, to prevent Collier from exercising authority to force a trial over the department's objections.
Hamilton cites three reasons for the unexpected move — "personal circumstances" of the former Pilot Company sales executives and staffers who pleaded guilty and many of whom spent time in prison; the "challenge" of resurrecting the case; and "limited government resources."
Hazelwood was convicted in 2018 after a four-month trial of conspiracy to commit wire fraud, wire fraud and witness tampering.
He was the highest-ranking employee of Pilot Flying J convicted in the plot. Two subordinates were convicted of varying crimes alongside him, and 14 others pleaded guilty. Two were granted immunity. Pilot Flying J’s board also admitted criminal responsibility.
A federal appellate court overturned the convictions of Hazelwood and two of his former staffers last October, ruling a judge was wrong to allow jurors to hear recordings of Hazelwood making racist and sexist remarks.
The 6th Circuit U.S. Court of Appeals — in a 2-to-1 decision — struck down the convictions of Hazelwood and former staffers Scott Wombold and Heather Jones in connection with a yearslong scheme to defraud trucking firms doing business with the nation’s largest diesel fuel retailer by shaving off a part of promised discounts.
Ruling:Former Pilot Flying J President Mark Hazelwood wins appeal over racist recordings
After the decision, Hazelwood's legal team quickly issued a statement: "Mark Hazelwood’s nightmare is now over. We believed in his innocence from day one. We are gratified that the Department of Justice agreed that dismissal was the only appropriate remedy. We look forward to seeing the next chapter of Mark’s life, surrounded by his wife, Joanne, and his loving family, and are honored to have been able to tell his whole story in full truth. Mark is innocent.”
Attorneys Ben Vernia and Cullen Wojcik issued the following statement: "Heather Jones has maintained her innocence since the beginning of this ordeal over 8 years ago. She is deeply gratified by the government’s motion to dismiss, and she looks forward to the court ruling on it so that she can finally put this whole case behind her and move on with her life. It has been an honor for my co-counsel Ben Vernia and me to represent Ms. Jones, and we could not be happier for her."
The Justice Department did not have immediate comment. Attorneys for Wombold declined to comment.
Underlings remain felons
The nightmare for 14 of Hazewood's underlings — offered plea deals by the same Justice Department to testify against their one-time boss — is not over.
Each of them will remain branded as felons. Most have now served prison time. All of them gave up their rights to appeal.
According to Hamilton's motion, Hazelwood's defense team is now claiming many of those former underlings are unwilling to testify. A few, he wrote, now claim they were falsely accused and, therefore, would not be "credible" on the witness' stand.
"That situation in conjunction with the fact that the government’s case concerns facts and circumstances that occurred nearly a decade or more ago that can only be presented by overcoming the challenges posed by obtaining continued assistance from cooperators who have completed their sentences, some of whom reportedly have made statements since sentencing that would negatively impact the credibility of their testimony in a retrial," Hamilton wrote.
It's an unexpected end to a case that began in dramatic fashion on Tax Day 2013 when federal agents walked into the headquarters of the Pilot Company's Lonas Drive headquarters in Knoxville armed with search warrants.
Jimmy Haslam, owner of the Cleveland Browns, was then the chief executive officer for the Knoxville-based trucking giant. He declared himself stunned and promised to get to the bottom of things.
The Justice Department, in turn, made public the search warrant application — a rarity amid an ongoing prosecution — that detailed a scheme to lure small trucking firms to do business with Pilot by offering them the same diesel fuel discounts granted the big firms.
The schemers would then shave a few pennies off the top of that promised discount, figuring the small firms would never know they were being cheated. And, in fact, they didn't, trial testimony has shown.
Until, that is, the FBI persuaded a Pilot sales executive to secretly record meetings and trainings. Hazelwood was captured on those recordings hurling racial slurs at the Browns and their fans as well as talking about plans to expand the discount program offered small trucking firms.
The Pilot board has admitted its sales division engaged in the scheme and paid $92 million in criminal penalties. The board also shelled out some $85 million to settle lawsuits over the scheme. The board also agreed to pay Hazelwood $40 million as part of a labor contract in which the ex-president promised to keep quiet about those racist recordings should they go public.
Ex-Pilot Flying J President Hazelwood, Two Others, to Be Retried
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There is no question now that former Pilot Flying J President Mark Hazelwood and two former company executives, already convicted of cheating truckers out of diesel fuel rebates, will be retried on federal criminal charges.
What remains unknown, though, is when?
At a telephonic federal court hearing Feb. 18, prosecutors and defense attorneys for the three former executives offered differing dates to begin the defendants’ joint trial sometime in the fall. A significant unknown factor is whether it would be safe for a jury, prosecutors, defense attorneys, witnesses and the public to be crammed into a relatively small courtroom in Chattanooga, Tenn., if the COVID-19 pandemic has not subsided.
Scott Wombold, a former vice president, and Heather Jones, a former account representative, also will be defendants. They were convicted by a Chattanooga jury on Feb. 15, 2018, in connection with a multimillion-dollar fraud scheme to siphon fuel rebates away from thousands of truckers.
They will now have to be retried after an appeals court reversed their convictions due to the fact that Senior U.S. District Court Judge Curtis Collier of Chattanooga allowed inappropriate secret tape-recorded conversations among the executives to be heard by the jury.
At the Feb. 18 pretrial hearing, prosecutors for the U.S. Attorney’s Office for the Eastern District of Tennessee said they wanted to start the retrial Nov. 1, but defense attorneys suggested starting Sept. 13. Collier asked prosecutors and defense attorneys to decide on a date, and put it in writing by March 15.
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He also asked the attorneys to decide if it might be appropriate to provide a questionnaire to potential jurors asking if they be would willing to serve, and for how long, despite threats of a lingering pandemic.
“I’m thinking about the virus now,” Collier told the attorneys. “The expectation, at least according to the president, is that everybody should be vaccinated by the end of July.”
The retrial was ordered by a three-judge panel for the 6th U.S. Circuit Court of Appeals in October that reversed the convictions of Hazelwood, Wombold, and Jones. The three were convicted by a Chattanooga jury on Feb. 15, 2018, in connection with the multimillion-dollar fraud scheme.
In its Oct. 14 decision, the appellate court said the federal district court wrongly admitted recordings of Hazelwood using “deeply offensive racist and misogynistic language” on the theory that if he 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.”
The majority opinion was authored by Circuit Judge Richard Suhrheinrich and supported by Circuit Judge Eric Murphy. Circuit Judge Bernice Donald dissented.
“At issue here is the District Court’s admission of three recordings made on Oct. 25, 2012, at the lake house of a Pilot sales employee,” Donald wrote. “The majority concludes they are not — that the recordings only show Hazelwood’s ‘seriously misguided personal beliefs’ and that ‘having a bad set of personal beliefs did not make it more likely that Hazelwood made bad business decisions, like committing wire or mail fraud.’ ”
Pilot Flying J headquarters in Knoxville, Tenn., was raided by federal agents April 15, 2013. (RaymondClarkImages/Flickr)
The case began with a raid on Pilot’s headquarters in Knoxville, Tenn. More than 50 FBI and IRS agents poured into the company’s three-story offices on the afternoon of April 15, 2013.
Hazelwood’s jury trial lasted more than 27 days. The government called nearly 30 witnesses, including cooperating Pilot employees who pleaded guilty for their roles in the conspiracy. The government also presented emails among the alleged co-conspirators and undercover audio recordings.
Prior to Hazelwood’s trial, 14 former Pilot sales executives had been charged, pleaded guilty and agreed to cooperate with the government while awaiting sentencing. Hazelwood originally was sentenced to 12½ years in prison for his leadership role and fined $750,000.
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Retrial date set for trio accused in Pilot fuel rebate scheme
KNOXVILLE, Tenn. — Four years after the last ill-fated trial, a new date has been set for three former Pilot Co. employees accused of taking part in a sales scheme to defraud some trucking companies of promised fuel rebates.
The retrial for Mark Hazelwood, the former Pilot president, Scott Wombold, a former Pilot vice president, and Heather Jones will be Feb. 1, 2022, in Chattanooga, according to an order put down Tuesday by Senior U.S. District Court Judge Curtis Collier.
The retrial is expected to take some 30 in-court days, and the judge doesn't expect to work Fridays. The last trial started in November 2017, and a verdict wasn't returned until the day after Valentine's Day 2018.
It'll be the second go-round for the defendants, attorneys, and the federal government. Hazelwood and Wombold have signaled they want a different location and a recusal for the next trial.
In October, an appeals court panel in Cincinnati tossed their convictions, finding Collier had improperly let in racially charged recordings secretly made during a 2012 private gathering of Pilot sales employees.
The court agreed with defense attorneys the evidence was so prejudicial that Hazelwood, Wombold and Jones couldn't get a fair trial.
The recordings, made by a cooperating witness in the federal investigation, showed Hazelwood -- not Wombold or Jones -- using racially offensive language and requesting the playing of a 1980s David Allen Coe song that uses the N-word repeatedly.
Lawyers for Hazelwood, Wombold and Jones strongly objected to introducing the recordings during the trial in January 2018. Collier let them in, but cautioned jurors they didn't apply and shouldn't be considered against Wombold or Jones.
Hazelwood, Wombold and Jones, a former Pilot account representative, were subsequently convicted and sentenced.
Hazelwood got 12 1/2 years and a $750,000 fine. Wombold got six years and a $75,000 fine. Jones got 2 1/2 years.
That's all moot now. The men also has recovered the fines that they paid after sentencing. All three are free awaiting the retrial.
Federal authorities raided Pilot headquarters in Bearden on April 15, 2013.
More than a dozen former employees have pleaded guilty. Pilot paid a $92 million fine in 2014, just one form of the punishment the privately held company faced as a result of the sales scheme.
Pilot mark hazelwood
Former Pilot Company President Mark Hazelwood freed from house arrest after winning appeal
Former Pilot Company President Mark Hazelwood is now free to leave his mansion.
A federal judge on Monday ordered Hazelwood be freed from house arrest after his convictions in a massive fraud cause were overturned in October. Prosecutors didn't fight the trucking tycoon's move to shed his ankle bracelet monitor and haven't said whether they plan to retry Hazelwood or dismiss his charges.
The conditions of Hazelwood's release now are nearly the same as they were before the trial. He can travel throughout the Eastern and Middle Districts of Tennessee and beyond state lines for business so long as he notifies the probation office. He also must surrender his passports and avoid contact with witnesses, victims and co-defendants.
Hazelwood started as a salesman at Pilot and climbed the ranks as the company exploded into a billion-dollar corporate giant with travel centers in 44 states and six Canadian provinces. As president, he was accused of overseeing a plot that ripped off small trucking companies to the tune of $56.5 million by shorting them on diesel rebates.
Pilot’s rebate program offered discounts on diesel fuel to trucking customers in exchange for guaranteeing a minimum number of gallons per month. Staffers calculating the discount each day shorted customers a few cents here and there, adding up to big money fast — and to bigger profits, commissions and bonuses. Employees talked openly about the fraud, including in emails and at meetings recorded by FBI informants.
More:Appeals court reaffirms former Pilot Company President Mark Hazelwood deserves a new trial
By the time the trial began in late 2017, fourteen former Pilot executives and staffers had pleaded guilty to conspiracy charges in the fraud plot. Two others were granted immunity. Pilot's board of directors confessed criminal responsibility. The firm paid $92 million in criminal penalties and $85 million in lawsuit settlements.
Hazelwood — along with former subordinates Scott "Scooter" Wombold, Heather Jones and Karen Mann — maintained their innocence. Hazelwood's defense attorney argued he was too savvy a businessman and too loyal to Pilot to engage in such a scheme.
Jurors heard conversations recorded by an undercover informant of Hazelwood and other executives talking about the fraud. U.S. District Judge Curtis Collier allowed the jury to hear a recording made at a weekend sales retreat that included Hazelwood making racist remarks and singing along drunkenly to a country song about interracial sex — or as Hazelwood called it, "our greasy (racial epithet) song."
Defense lawyers argued the song and remarks had nothing to do with the fraud, never should have been played in court and prejudiced jurors against Hazelwood. Collier, who is Black, told jurors to consider only whether the recordings contradicted Hazelwood's claims of business acumen.
More:Former Pilot Flying J President Mark Hazelwood wins appeal over racist recordings
The jury ultimately convicted Hazelwood in February 2018 of wire fraud, witness tampering and conspiracy to commit wire fraud. Wombold was convicted of fraud but acquitted in the overall plot. Jones was acquitted of acts of fraud but convicted in the conspiracy. Mann was acquitted outright.
Hazelwood faced 12½ years in federal prison but won the right to stay confined to his Sequoyah Hills home while waiting on his appeal. He sold his jet, put his boat on the market and proved to be an "exemplary releasee," his attorneys argued.
In October, a divided three judge-panel of the Sixth Circuit Court of Appeals overturned the convictions of Hazelwood, Wombold and Jones. A two-judge majority — both white — held the racist recording unfairly prejudiced the jury and should never have been entered as evidence in the case. The sole Black appeals judge dissented, arguing the court has repeatedly upheld convictions in which similar evidence was admitted.
The Sixth Circuit last month stood by its decision to order a new trial for Hazelwood, Wombold and Jones.
Prosecutors must now decide if they can reconstruct a case in which most of their witnesses were former Pilot employees who were hoping for sentencing breaks in return for their testimony.
Jamie Satterfield contributed to this report.
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