Diesel Fraud 'Conspirators' Indicted
Federal charges stem from alleged fuel rebate scheme by certain Pilot Flying J sales division members
KNOXVILLE, Tenn. -- Eight current and former employees of truckstop company Pilot Flying J, including former president Mark Hazelwood, have been indicted in U.S. District Court for the Eastern District of Tennessee at Knoxville, Tenn., on federal charges concerning diesel rebate fraud, according to court documents.
Hazelwood has been indicted on charges that include conspiracy to commit mail fraud, conspiracy to commit wire fraud and witness tampering.
As reported in a McLane Co./CSP Daily News Flash, seven others--Scott Wombold, John Freeman, Vicki Borden, John Spiewak, Katy Bibee, Heather Jones and Karen Mann--were also indicted.
The company’s direct sales division was responsible for marketing the sale of diesel fuel to the interstate trucking industry. For the purpose of inducing the companies to purchase their diesel fuel from Pilot instead of competitors, the division employees offered per-gallon diesel fuel price discounts ("cost-plus discounts").
Pilot named Hazelwood vice president of sales and development in 1988 and promoted him to executive vice president of the company in 1998. In 2012, the company promoted him to president.
Between February 2008 and April 2013, Hazelwood, Wombold, Freeman, Borden, Spiewak, Bibee, Jones and Mann “did knowingly and willfully conspire, combine, confederate and agree with each other and with others, known and unknown” to defraud interstate trucking companies,” the indictment read.
To perpetuate the off-invoice and rebate fraud, lulling the trucking companies into believing that the company was "honestly and accurately" applying the agreed-upon cost-plus discount, they provided "false and fraudulent explanations, often by email and telephone."
On the charge of witness tampering, the indictment said that Hazelwood "knowingly and willfully attempted to corruptly persuade" his former administrative assistant "to hinder, delay and prevent the communication" to special agents of the Federal Bureau of Investigation (FBI) and the Internal Revenue Service, Criminal Investigation (IRS-CI) of information relating to the possible commission of wire fraud.
- Click on the link below to download the indictment for a detailed description of the scheme and communications.
Ten other employees have pleaded guilty to a scheme to defraud customers over diesel fuel rebates since federal agents raided Pilot Flying J's headquarters in Knoxville, Tenn., in April 2013.
Pilot Flying J CEO and Cleveland Browns football team owner Jimmy Haslam has not been charged with any crime.
Pilot Flying J agreed to pay $92 million in fines and accept responsibility for the criminal conduct of its employees while the government agreed not to prosecute the company. The agreement required Pilot Flying J to comply with several conditions, including cooperation in the investigation of people who may have been involved in the fraud. It did not protect any individual from prosecution.
Most of the lawsuits against Pilot Flying J were resolved by a class-action settlement, in which the company agreed to pay out nearly $85 million to 5,500 customers.
Pilot Flying J, the largest operator of travel centers and travel plazas in North America, has more than 650 retail locations under the Pilot and Flying J brands.