Ex-president of Pilot Flying J objects to being labeled most guilty in $56.5M fraud scheme

CHATTANOOGA, Tenn. – Defense attorneys are crying foul over the pecking order in federal prosecutors’ court-ordered ranking of 17 former employees of the nation’s largest diesel fuel retailer by level of responsibility for a $56.5 million scheme to defraud truckers.

In motions filed last week in U.S. District Court, attorneys for former Pilot Flying J President Mark Hazelwood and former subordinates Scott “Scooter” Wombold and Heather Jones are challenging the government’s characterizations of their culpability in the five-year fraud scheme.

Sign Up:Get breaking news headlines in your inbox.

U.S. District Judge Curtis L. Collier had ordered federal prosecutors Trey Hamilton and David Lewen to rank — from most guilty to least — the 17 former executives and staffers of Pilot Flying J now facing sentencing in a plot to promise trucking firms discounts on diesel fuel they never intended to fully pay.

Judges in the Eastern District rarely order prosecutors to compile a ranking of co-conspirators. It is the job of the U.S. Probation Office, not prosecutors, to weigh a co-conspirator’s role when doing the math on establishing a penalty range dictated by sentencing guidelines prior to sentencing.

Levels of power

Hamilton and Lewen opted to rank the 17 instead by levels of power within Pilot Flying J, with Hazelwood at the top of the list.

More:Jury finds Hazelwood, Jones guilty of conspiracy in Pilot Flying J fraud trial

Hazelwood’s defense team doesn’t quarrel with the prosecutors’ move to put Hazelwood in a sentencing category all his own.

But, the attorneys countered, “Mr. Hazelwood does object to the Government’s ‘approximation’ of him as being the most culpable defendant. Mr. Hazelwood respectfully suggests that attribution is neither consistent with nor supported by the evidence introduced by the Government at trial.”

Hazelwood was convicted in February. He is facing more than two decades in prison and is currently under house arrest in one of his four homes. He was earning $26.9 million in the months before Pilot Flying J’s Knoxville headquarters was raided in April 2013.

When Hazelwood was discharged in May 2014, the truck stop giant’s board agreed to pay him $40 million as part of a confidential settlement agreement, which was listed as an exhibit at Hazelwood’s detention hearing. The payments were due to him "pursuant to his pre-existing employment agreement," Pilot Flying J said in a statement.

More:Unsealed records reveal graphic details of ex-Pilot Flying J execs' repugnant football party

Attorney Annie T. Christoff is contesting the prosecutors placement of Wombold, a former vice president, in the ranking hierarchy alongside ex-executives John “Stick” Freeman, Brian Mosher, Arnie Ralenkotter and Jay Stinnett.

Wombold, tried with Hazelwood, was acquitted of the conspiracy and six of seven wire fraud charges. His defense team had argued he was being pushed out of his job by fraudsters Freeman and Mosher, and knew about the fraud scheme but did little to promote it.

“The jury convicted Mr. Wombold of only one count of substantive wire fraud, involving only one customer, and yet the Government has grouped him with far more culpable defendants,” she wrote. “Mr. Wombold’s title at Pilot is not reflective of his relative culpability or even his actual authority at Pilot during the times in question.”

More:USA TODAY NETWORK wins access to sealed records, racist tapes in Pilot Flying J case

Jones’ defense attorneys, Ben Vernia and Cullen Wojcik, agree with the prosecutors that she should be grouped by level of culpability with the all-female account representative staff. The jury convicted Jones in the conspiracy but acquitted her of individual acts of fraud.

But they are resisting the prosecutors’ push to put her at the top of the calendar in the sentencing hearings line-up.

Hamilton and Lewen have asked Collier to sentence Hazelwood, Wombold and Jones first because they, unlike the 14 other fraudsters, took their cases to trial and can appeal. The prosecutors also argue they may call as witnesses against the trio at sentencing some of those former staffers who struck plea deals.

Collier set a June 27 sentencing for Hazelwood, Wombold and Jones as soon as the verdict was announced. Both the prosecutors and defense are now signaling a need to delay that because of various scheduling conflicts.

Collier did not give a time table for when he would announce a roster of sentencing dates for each of the 17.