The former president of the nation’s largest diesel fuel retailer has been sentenced to more than 12 years in prison for his role in a conspiracy to defraud 78 trucking customers over a five-year period.
Hazelwood was convicted in a scheme to shortchange trucking companies they lured with promises of fuel discounts. He was charged with conspiracy to commit wire and mail fraud, witness tampering and one count of fraud.
The government had asked for a prison sentence of up to 17 years and a $750,000 fine. Hazelwood’s defense asked that their client remain under house arrest.
U.S. District Judge Curtis Collier handed down a sentence of 150 months in prison and a $750 thousand fine to be paid to the U.S. government.
In court, Judge Collier said he did not believe, based on the evidence, that Hazelwood was motivated by financial gain, but rather by his desire for power and to beat the competition. He said Hazelwood used his power and recognition in the industry to earn the trust of the defrauded customers.
“Mark Hazelwood’ reputation in the trucking industry enabled him to abuse his trust and defraud customers.”
Hazelwood will remain under house arrest through the end of November, before beginning his prison term.
“We’re grateful that Judge Collier showed some leniency and rejected the government’s request for the sentence,” Jim Walden, Hazelwood’s attorney, said. “We’re also very grateful that he allowed Mark to self-surrender.”
Jonathan Cooper represented one of Mark Hazelwood’s co-defendants in trial. A jury acquitted his client and former Pilot Flying J sales representative Karen Mann in the conspiracy.
Cooper said Hazelwood’s sentence should serve as a warning to other corporate leaders.
“[Judge Collier] wanted to send a message and to prevent the community from further fraudulent activity by other company executives,” Cooper said, “so I think deterrence was a key element to his reasoning.”
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 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.
Hazelwood unsuccessfully asked for a new trial. After hiring a new defense team, they argued the jury should not have heard recordings of him using racial slurs and profanely criticizing his own board of directors at a get-together with other employees.
His defense team already announced plans to appeal the sentence and will once again ask an appellate court for a new trial.
“We’re going to appeal and fight this case,” Walden said. “Hopefully we’re going to be back here and do it again and we’re going to show that Mark Hazelwood is innocent.”
Hazelwood’s convicted co-defendants Scott Wombold and Heather Jones will be sentenced Oct. 3 in Chattanooga.