Former Pilot Flying J president charged with fraud, witness tampering

Former Pilot President Mark Hazelwood indicted in federal court

KNOXVILLE (WATE) – Former Pilot President Mark Hazelwood, along with seven others, were indicted in federal court with charges related to a fuel rebate scandal involving Pilot Flying J.

Mark Hazelwood
Mark Hazelwood

Hazelwood pleaded not guilty to conspiracy to commit mail fraud and wire fraud, wire fraud and witness tampering charges. He left Pilot Flying J in May 2014. At the time, no reason was given for his departure, but shortly afterwards three employees were fired.

Vice President of Direct Sales Scott “Scooter” Wombold, former Vice President of Sales John “Stick” Freeman, District Sales Director Vicki Borden, Direct Sales Regional Sales Manager John Spiewak and Direct Sales Account Representatives Katy Bibee, Heather Jones and Karen Mann. Freeman was fired in May 2014.

The indictments claim Hazelwood, Wombold, Freeman, Borden, Spiewak, Bibee, Jones and Mann made false promises to about fuel rebates between February 1, 2008 and April 2013. According to the indictments, fake invoices, rebate invoices and rebates checks were sent to trucking companies in order to trick them into thinking they were getting rebate discounts on fuel.

Affidavits filed in a 2013 search of Pilot Flying J claimed Hazelwood, CEO Jimmy Haslam and other top sales officials were aware of a rebate situation. The investigation found that Pilot Flying J employees had been shortchanging customers on the rebates they accrued through diesel fuel purchases and processing the rebates manually to cover up the discrepancy.

According to court documents, an unnamed informant alleged to the FBI that the company was cheating its customers of tens of thousands dollars in a scheme that was not only condoned by top sales officials, but encouraged. A lawsuit by the National Retail Transportation and Keystone Freight Corporation claimed Hazelwood personally benefited from the alleged scam through increased profits and bonuses.

Pilot paid a $92 million dollar fine to the federal government. Several trucking companies also settled with Pilot in a multi-million dollar payout.

A federal judge in Arkansas approved an $85 million dollar class action settlement with Pilot Flying J and trucking companies affected by the alleged rebate scam. However, several trucking companies opted out of the class action settlement, hoping to get more money in their individual claims than they would have gotten with the settlement.

WATE 6 On Your Side reached out to Governor Bill Haslam and current Pilot Flying J CEO Jimmy Haslam for comment, but have not received a response. Hazelwood was given a conditional release allowing him to travel to eastern and middle Tennessee for business.

Hazelwood’s trial date was set for April 11. A  status hearing was scheduled for March 8.

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