KNOXVILLE, Tenn. -- A federal judge has sentenced Mark Hazelwood, the former president of fuel supplier and truckstop operator Pilot Flying J, to more than 12 years in prison for his role in a scheme to defraud trucking companies out of diesel fuel rebates, reported the Knoxville New Sentinel.
Jim Walden, an attorney for Mark Hazelwood, said in a press statement obtained by the newspaper that Hazelwood will appeal the 150-month sentence, which Walden said was “unreasonably long.” The court also fined Hazelwood $750,000, the report said.
"The motive was hubris, his competitiveness ... his desire to capture more market share for Pilot," Senior U.S. District Judge Curtis Collier said, according to the report. "The defendant improperly took it upon himself to use the Pilot name and reputation. ... Mr. Hazelwood abused the trust of Pilot and the trust placed in him.”
Referring to recordings made in the case, the participants in the scheme “laughed and joked about it,” the judge said. “They used extreme and offensive language. ... They talked openly of this criminal activity. .. He violated the law on a constant and repeated basis for half a decade."
In February, Hazelwood was convicted of conspiracy, wire fraud and witness tampering. He was the highest-ranking member of Pilot Flying J who was 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.
The rebate scheme became public after federal agents raided the company's headquarters in April 2013.
In July 2014, 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.
Several lawsuits against Pilot Flying J were resolved by a class-action settlement, in which the company agreed in November 2013 to pay out nearly $85 million to 5,500 customers.
Pilot Flying J CEO and Cleveland Browns football team owner Jimmy Haslam has denied any knowledge of the scheme and has not been charged with any crime. “As we have said from the outset, Jimmy Haslam was not aware of any wrongdoing,” Pilot Flying J said in a statement provided to CSP Daily News. His brother, Tennessee Gov. Bill Haslam, has not been involved in the company’s operations and also has not been charged with any wrongdoing.
Knoxville, Tenn.-based Pilot Flying J, which ranks No. 12 in CSP’s 2018 Top 202 list of the c-store chains by number of company-owned retail outlets, has more than 750 locations in 44 states. Warren Buffett’s Berkshire Hathaway Inc. has made a significant minority investment in Pilot Flying J, acquiring a 38.6% equity stake that will expand over time to become the majority shareholder.
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