Jury begins deliberating in Pilot Flying J fraud trial

CHATTANOOGA, Tenn. (WATE) - The fate of four former Pilot Flying J employees, including the former president, are now in the hands of a jury in a conspiracy trial that has stretched more than three months.

After sitting through nearly 20 days of testimony, jurors must decide if four former employees of the nation’s largest diesel fuel retailer were clueless to a fraud conspiracy going on inside their sales division, or if they were key players in helping pedal the scheme forward.

Ex-Pilot Flying J president Mark Hazelwood, ex-Pilot vice pesident Scott Wombold, and ex-Pilot account representatives Heather Jones and Karen Mann are accused of knowingly and voluntarily joining a conspiracy that shorted trucking customers promised fuel rebates.

Federal prosecutors said, in their closing rebuttal, that money motivated these defendants to either lead the conspiracy or play an essential role in keeping the wheels turning.

“They were incentivized, through the commission system, to cheat and lie, and the company received substantial benefit,” Assistant U.S. Attorney Trey Hamilton said.

The ex-sales staff have been standing trial since early November for their alleged participation in a fraud scheme that netted Pilot more than $56 million.

As the conspiracy grew, so did the salaries and commission, evidence showed.

Hazelwood, Pilot’s former leader, saw his salary increase from $13.9 million in 2008, when the scheme began, to $26.9 million in 2012.

Wombold, who approved fraudulent rebate adjustments, nearly doubled his paycheck over the course of the conspiracy, from $522,887.48 in 2008 to $1,156,344.62. Federal prosecutors showed a $30,000 commission check for just the month of June 2012.

The Inside Sales Representatives, who helped put together the spreadsheets and calculate the manual rebates, also saw a significant increase in pay.

Heather Jones jumped from $68,000 to $115,000, from 2008 to 2012, and Karen Mann’s salary climbed from $92,000 to $117,000 in those same years.

Defense attorneys said in their closing arguments earlier in the week that their clients either knew nothing of the fraud or did not think what they were doing was wrong.

Rusty Hardin, attorney for Hazelwood, said Tuesday that the government had no proof that Hazelwood read the trip reports, detailing the fraud.

But in his rebuttal, Assistant U.S. Attorney Trey Hamilton showed jurors emails of Hazelwood requesting detailed trip reports on a weekly basis. He also reminded the jury of testimony from Hazelwood’s assistant, who testified that she would distribute a binder full of at least 12 trip reports a week for Hazelwood to review.

Hardin accused the government of “giving the triggerman a pass,” referring to one of the fraud scheme masterminds Brian Mosher, who pleaded guilty to the charges and acted as a government witness during trial.

“Mark Hazelwood was the one who taught Brian Mosher how to use the gun and ordered him to use it,” Hamilton said, implying that Hazelwood was the leader of the conspiracy.

Federal prosecutors often painted Hazelwood, during trial, as a ruthless businessman, who encouraged his sales team to be aggressive, even if that meant lying to customers and shorting them promised rebates.

All of the members of counsel argued that none of the defendants plotted to cheat customers out of money and the evidence falls short in proving an intent to deceive.

The Pilot Flying J board have accepted criminal responsibility for the fraud scheme, paying $92 million in penalties and $85 million in settlements. The board is also covering the legal expenses for the four defendants standing trial.

The jury has the rest of this week off and will return for deliberations on Monday.

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