NASHVILLE, Tenn. (AP) – The former president of a Tennessee company owned by Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam is charged along with seven others with conspiracy to commit mail fraud and wire fraud.
Mark Hazelwood left Pilot Flying J in 2014, a year after the FBI raided the truck stop chain’s Knoxville headquarters. The federal indictment unsealed on Tuesday accuses eight former employees of participating in a scheme to cheat customers out of promised rebates and discounts.
Hazelwood faces an additional charge of witness tampering. Former vice president of national accounts Scott “Scooter” Wombold faces an additional charge of making false statements.
Pilot has agreed to pay out nearly $85 million to settle claims in a class-action lawsuit with 5,500 trucking companies.
Pilot Flying J released the following statement:
“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. 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 trust and confidence of Pilot Flying J’s customers continues to be of paramount importance to the company and their continued support and loyalty is very much appreciated.”
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.
Each defendant was given a conditional release. A trial date was set for April 11. A status hearing was scheduled for March 8.*The Associated Press contributed to this report.