CHATTANOOGA, Tenn. — Federal agents and a prosecutor showed up on a Pilot Flying J sales executive's doorstep on Tax Day 2013 and asked the man to make a phone call to the chief executive officer of his company, the former employee said in U.S. District Court here.
Agents and Assistant U.S. Attorney David Lewen recorded the call, the now-former sales executive, Brian Mosher, said Tuesday.
“I was asked to make a phone call and I did — (to) Jimmy Haslam,” he testified. Agents and Assistant U.S. Attorney David Lewen recorded the call.
“I said, ‘Jimmy, we’ve been caught,’” Mosher testified. “He said, ‘I understand there are some folks at your house.’”
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On the same day agents with the FBI and IRS Criminal Investigation Division launched a raid of the truck stop giant’s Knoxville, Tenn., headquarters, but it was not clear from Mosher’s testimony whether the raid had begun when he was asked to call Haslam. Mosher was unaware of the Knoxville raid when agents arrived at his Iowa home, where he worked.
Lawyer Rusty Hardin asked Mosher what Haslam said when told, “We’ve been caught.” He is representing Pilot Flying J's former president, Mark Hazelwood, on fraud conspiracy charges linked to a scheme to rip off small trucking companies of promised discounts.
“He didn’t ask, ‘Caught doing what?’ ” Hardin asked.
Mosher responded: “No. He immediately transferred me to Pilot legal (counsel).”
Mosher, who has pleaded guilty along with 13 other former Pilot Flying J executives and staffers, has been on the witness stand in U.S. District Court in Chattanooga for two days in the ongoing trial of Hazelwood and subordinates Scott “Scooter” Wombold, Heather Jones and Karen Mann.
Haslam, who owns the Cleveland Browns football franchise in addition to the private company that Forbes magazine calls the 15th largest private company in the United States, is not charged and has denied any knowledge of the scheme. A public relations firm Tuesday issued another statement of denial on behalf of Haslam after the Knoxville News Sentinel reported that earlier in Mosher’s testimony secret recordings were played in which Haslam was heard speaking during meetings that included a session on rebate fraud.
It was November 2012. All sales staff were required to attend.
The training included a motivational speech from Hazelwood in the morning followed with a series of “break-out sessions,” according to an agenda entered into evidence. Mosher testified that sales executive John “Stick” Freeman had tapped him to lead a session on defrauding trucking companies through a manual rebate system in which the firms were promised higher discounts than they actually received.
Freeman also has pleaded guilty and is expected to testify.
What no one knew was that Texas salesman Vincent Greco was serving as a mole for the FBI and IRS and was wearing a recording device during the mandatory meeting.
He recorded Mosher’s training on the manual rebate fraud scheme. Mosher testified that he “believed” Haslam attended, but Haslam’s voice was not heard during that recording.
Greco also recorded what was described in the agenda as a “wrap-up session” that Hazelwood hosted. In that recording, Hazelwood details Pilot Flying J’s plan to try to take business from the National Association of Small Trucking Companies by offering the same type of fuel card offered by NASTC but with a promise of a deeper discount on diesel fuel.
He said the association's representative, David Owens, was offering trucking companies a discount of 5 cents a gallon under a method known as “cost plus.” The calculation of a “cost plus” discount was complicated, and it was that complication that allowed Pilot Flying J’s sales staff to trick trucking companies into believing they were getting better discounts than actually paid, testimony has shown.
“That’s what (Owens) tells them with no idea what cost plus five is,” Hazelwood said on the recording. “We’re going to go into the marketplace at four with a zero fee and we are going to give you credit. You’re going to pay three times a week. That’s going to …”
At that point, a voice identified by federal prosecutors and Mosher as Haslam said, “Sounds like Stick’s deal with Western.”
That was a reference to an incident in which Freeman had been caught cheating Western Express, a Nashville trucking company. To smooth things over, Pilot Flying J agreed to pay $1 million to buy a broken-down airplane from Western.
Hazelwood then said, “Yeah, well, we’re … going to introduce him to a guy by the name of Manuel.”
► February 2015: Whistleblower in Pilot probe files lawsuit
► November 2014: Companies accuse Haslam of leading Pilot Flying J fraud
Manuel,” testimony has shown, was a name those involved in the fraud scheme used as code for the manual rebate fraud, a nod to the fact that some of the trucking companies targeted in the fraud scheme were owned by Hispanics.
Until now, the speaker recorded saying, “sounds like Stick’s deal with Western,” has only been identified in court records as “male voice #1.” Tuesday’s court proceedings were the first time that speaker was identified as Haslam.
Mosher previously testified that he presented a spreadsheet to Haslam and Hazelwood in 2008 that detailed the money he was earning for Pilot Flying J. He again testified Tuesday that the spreadsheet specifically focused on his manual rebate fraud.
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It listed the discount the trucking firms had been promised, what Mosher cut that discount down to without the customer knowing, and the “savings” his admitted fraud netted Pilot Flying J.
Jurors have seen copies of similar spreadsheets during Mosher’s testimony.
U.S. District Judge Curtis Collier will not hold court on Wednesday because a juror in the case has an obligation, he said. That means the trial will resume Thursday.
Follow Jamie Satterfield on Twitter: @jamiescoop
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