Former Pilot Flying J president indicted on federal charges
The former president of Pilot Flying J, the $31 billion truck stop company run by the family of Gov. Bill Haslam, has been indicted in connection to a rebate fraud scheme.
In the latest round of indictments related to the years-long Pilot investigation, former president Mark Hazelwood and seven other high-ranking employees were indicted this month. Although the indictments were publicly released Tuesday, sealed indictments were filed Feb. 3.
Pilot owner and CEO Jimmy Haslam was not among those indicted. Haslam, who is also the owner of the NFL's Cleveland Browns, has repeatedly denied any knowledge of any problems.
Rachel Albright, a Pilot spokeswoman, declined The Tennessean's request for an interview with Haslam. Gov. Bill Haslam's spokeswoman Jennifer Donnals gave a general statement in response to the indictment.
"The governor has confidence in the legal system to resolve these matters with these individuals," Donnals said in a statement emailed Tuesday afternoon.
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Hazelwood faces charges of conspiracy to commit wire and mail fraud and witness tampering, according to an indictment filed in U.S. District court in Knoxville. Other named defendants include Scott Wombold, John Freeman, Vicki Borden, John Spiewak, Katy Bibbe, Heather Jones and Karen Mann. All of the accused worked for Pilot.
Before Tuesday's indictment, authorities argued that Freeman — also known as "Stick", who worked as the former director and vice president of Pilot's direct sales division — was deeply involved in the rebate scheme. His profanity-laced conversations and emails were previously released in federal court documents, with some resurfacing in Tuesday's indictment.
Wombold, or "Scooter," was vice president of the direct sales division. Borden was director of the direct sales division and direct supervisor of Bibbe, Hones and Mann. Spiewak was a regional sales manager who worked remotely from Ohio, according to the indictment.
Federal authorities accuse all eight of participating in "a scheme and artifice to defraud certain interstate trucking companies and for obtaining money from certain interstate trucking companies by means of materially false and fraudulent pretenses, representatives and promises."
Pilot promised fuel rebates to trucking customers but in many cases never actually paid them, resulting in defrauding customers of more than $56 million and a $92 million federal penalty, according to federal documents and previous reports. Ten former Pilot employees have pleaded guilty to charges related to the rebate scheme in an investigation that dates back to 2011.
Hazelwood’s compensation was tied to the profitability of diesel fuel sales at the company, the indictment says. It also accuses Hazelwood of contacting a former employee who was working with federal investigators "with the intent to hinder, delay and prevent" that employee from communicating with the FBI or IRS.
WBIR-TV reported Hazelwood pleaded not guilty during a court appearance Tuesday. Rusty Hardin, the attorney representing Hazelwood, didn't immediately respond to a request for comment. The Associated Press reported Wombold also pleaded not guilty.
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The 58-page indictment outlines numerous emailed and private conversations between the defendants that, federal authorities contend, provide evidence of a scheme defrauding customers of rebate money stemming from fuel purchases.
Much of the information in the indictment, including allegations that Freeman was forced to purchase an airplane for $1 million after shorting a customer the same amount of money, was included in a previously released affidavit and a transcript of a secret meeting among the defendants now under indictment.
Pilot Flying J investigation timeline
In a statement from Albright, she said Pilot continues to cooperate with the investigation.
“We’re obviously disappointed and saddened by today’s events but cannot comment further on any matters which are part of the ongoing investigation. We can say that since this unfortunate episode began, the company has put in place policies and procedures unparalleled in the industry to prevent anything like this from happening again," said Albright, who works for The Ingram Group, a company run by longtime Haslam confidant Tom Ingram.
“The company has cooperated with the investigation since its beginning and will continue to do so. The company repaid affected customers, accepted legal responsibility, and agreed to pay a monetary penalty."
The alleged conspiracy took place between Feb. 1, 2008, and April 2013. The charges came to light after federal authorities raided Pilot's corporate headquarters in Knoxville in 2013.
Companies accuse Haslam of directing Pilot fraud
As a result of the ongoing investigation, Pilot paid tens of millions in settlements to some of the trucking customers.
It's unclear when or if the criminal case could go to trial.
Reach Dave Boucher at 615-259-8892 and on Twitter @Dave_Boucher1. Reach Anita Wadhwani at 615-259-8092 and on Twitter @anitawadhwani. Reach Nate Rau at 615-259-8094 and on Twitter @tnnaterau.
