CHATTANOOGA, Tenn. (CN) – The former executives of Pilot Flying J who sit on trial for fraud in a Tennessee federal courtroom cared about the truck stop company they helped build, defense lawyers said in their opening statements Tuesday.
The day before, federal prosecutors sketched out their narrative in their opening arguments. They said the four defendants, two former Pilot executives and two former inside sales representatives, conspired and committed fraud.
From 2008 to 2013, they allegedly promised trucking companies discounts on diesel but furtively lessened the discounts companies received.
But in the federal court in downtown Chattanooga, the defendants’ lawyers reminded jurors just how high the burden of proof is in a federal felony criminal trial while also giving background on their clients, setting the stage for their challenge of the government’s interpretation of events.
Pilot services the trucking industry, dealing in billions of gallons of fuel each year, and sits parked at number 15 on Forbes' list of America's largest private companies. Its CEO Jimmy Haslam III also owns the National Football League’s Cleveland Browns. His brother Bill Haslam, the current Republican governor of Tennessee, worked as Pilot’s president in the 1990s.
In 2014, Pilot admitted corporate responsibility for promising a series of rebates to trucking companies that bought fuel at its truck stops but then mailing checks with smaller discounts. It signed a criminal enforcement deal and agreed to repay the trucking companies it duped, and also agreed to pay a $92 million fine to the U.S. government.
Eighteen former Pilot employees were charged, and all but four pleaded guilty. Their trial on conspiracy charges began Monday in Chattanooga.
Attorney Anthony Douglas Drumheller of Texas-based Rusty Hardin & Associates was the first to address the jury Tuesday on behalf of defendant Mark Hazelwood, the former president of Pilot.
April 15, 2013, was a Monday and the day that FBI and IRS agents descended upon Pilot’s Knoxville, Tenn., headquarters, Drumheller told jurors.
In the morning, Hazelwood took a conference call, a meeting and then went home for a sandwich. In the afternoon, Drumheller said, Hazelwood planned to hop onto a jet to oversee a small merger in Missouri and he packed, throwing together khakis, jeans and button-down shirts that displayed Pilot’s brand.
But on the road, he received a call from an unknown number. He answered.
“That day is important to Mr. Hazelwood because it tells you all you need to know about Mr. Hazelwood,” Drumheller said.
When Hazelwood learned of the raid, he went back to the office, and agreed to be interviewed by federal agents. The CEO, CFO and Pilot’s general counsel were not at the headquarters at the time of the raid, Drumheller said.
Hazelwood faced a choice, Drumheller said. “He went into the storm.”
Born in Ohio, Hazelwood began his career washing dishes at a diner truck stop. In 1985 – soon after the federal government deregulated the trucking industry – Hazelwood began working at Pilot as a district manager.
He spent 29 years working his way up and became a key player in Pilot’s development. He wasn’t the kind of person to cheat or ruin relationships with its customers, Drumheller told the jury.
Besides, only 35 percent of the company’s revenues are attributable to fuel sales, he said.