Attorneys for two former executives at the Pilot Flying J truck stop chain told jurors on Tuesday that their clients shouldn't be found guilty by association with other members of the company's sales team who pleaded guilty to the scheme to defraud customers through diesel fuel rebates.
The rebate scam caused the company to pay a $85 million settlement to jilted customers and a $92 million penalty to the government. Pilot is controlled by the family of Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam, who have denied any prior knowledge of the scheme and have not been charged.
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Defense attorneys presented their opening statements on behalf of former Pilot President Mark Hazelwood, former vice president Scott "Scooter" Wombold and two former saleswomen, Heather Jones and Karen Mann, on the second day of the trial Tuesday. Federal prosecutors have said some of the 14 former employees who pleaded guilty will testify against their onetime Pilot colleagues.
"What motivates them on the witness stand?" said Wombold attorney John Kelly. "It used to be money; now it's something a lot more important."
Kelly said his client did not participate in the scheme, and even saw his professional prospects dim as others who were directly involved in the fraud rose to positions of prominence within Pilot.
Wombold may have had knowledge about the illegal practices, but did not engage in them, Kelly told the jury.
"He didn't like it, didn't do it, didn't encourage it," Kelly said.
"The government's case against Mr. Wombold is guilt by association," he said. "You need more to find someone guilty of a crime. Knowledge is not enough."
The attorneys for Wombold and Hazelwood noted that both men came from modest means in their Ohio hometowns, each working their way up from truck stop jobs to become senior managers at Pilot. Both took immense pride in helping the company become the nation's largest diesel retailer, and had no interest in damaging the company by hurting its customers, they said.
Hazelwood attorney Anthony Drumheller said executives at Pilot had been hearing rumors for a month or so before federal agents descended on the company's Knoxville headquarters in April 2013. Hazelwood had been on the way to the airport to go complete the acquisition of Mr. Fuel, a smaller competitor in Missouri, when he received a call from agents asking him to return to headquarters.
Drumheller also invoked Jimmy Haslam's name before the jurors, saying that after Hazelwood returned to coordinate the response to the raid, Jimmy Haslam told him to travel the country as Pilot's "ambassador," tasked with smoothing out relations with angry customers.
"Make no mistake about it, Jimmy Haslam III and (his father) Jim Haslam II were in charge of this company," Drumheller said. "This was a family company they owned and strongly managed."
Wombold was the supervisor of Brian Mosher, a former Iowa-based sales director whose guilty plea agreement says he held break-out sessions during an annual sales meeting to show colleagues how to defraud trucking companies without getting caught. Wombold's attorney described Mosher as a "lone wolf" whose connections to the upper reaches of the company granted him wide autonomy to strike deals and change them without the customers' knowledge.
Lawyers for the two sales representatives based at Pilot's Knoxville headquarters said they were not aware of any conspiracy.
"She did not intend to defraud her customers," said Jones' attorney Benjamin Vernia. "There were aspects of these deals that she wasn't intended to know about."
Pilot sales directors had a habit of striking oral deals with customers, a practice that a 2007 audit recommended ending, Vernia said. But the company did not follow suit.
Mann attorney Jonathan Cooper said his client "trusted these men" she worked with, and that adjusting the rebates was an arduous process that was not worth the extra $20 to $30 in monthly commissions she gained.