(KNOXVILLE) The former president of Pilot Flying J tried to convince a former aide he had a lesser role in a rebate fraud scheme, interfering in a federal investigation, a federal indictment alleges.
Mark Hazelwood, 57, faces several counts of mail fraud and one count of witness tampering. The charges stem from a federal investigation into a fuel rebate scheme that authorities say bilked trucking company customers of millions.
Federal prosecutors allege that on the day in April 2013 that FBI and IRS agents raided Pilot headquarters in West Knoxville, Hazelwood agreed to speak with agents in his office.
He agreed, according to the indictment, to discuss "aspects of Pilot's diesel fuel discount practices involving some of Pilot's diesel-fuel-purchasing customers..."
READ: Indictment of 8 employees
Some seven weeks after the raid, after he'd left Pilot, Hazelwood spoke by phone with his former administrative assistant. The person is identified only as "Pilot Employee I" in the indictment.
According to the indictment, he told the former aide he knew the person had told a federal investigator that Hazelwood read regular sales call summaries that were known internally as "trip reports."
The reports summarized meetings that Pilot direct sales employees had had with trucking company customers - the people who the government alleges ended up being fleeced in a rebate scam.
The reports are significant, from the government's perspective, because they would tend to show that Hazelwood had direct knowledge of whether sales personnel were manipulating rebates to customers.
According to the witness tampering charge, Hazelwood further told "Pilot Employee I" that while he had asked for the weekly company reports, he actually never read them and "had no way to respond to trip reports," the indictment states.
The government alleges that that's a lie.
Hazelwood's duties included traveling with Pilot sales employees, and he required his employees as early as 2006 to submit weekly trip reports "that summarized direct sales division employee meetings with customers," the indictment alleges.
In fact, the indictment states, Hazelwood not only read the trip reports but "had the ability to respond to trip reports that he had received during his employment with Pilot."
Hazelwood also knew federal authorities were looking into Pilot's diesel discounting practices and that the former aide - "Pilot Employee I" - was a witness in the investigation.
Hazelwood's time with Pilot dates to the late 1980s when he became vice president of sales and development. He was promoted to executive vice president of Pilot in 1998, and became president in 2012.
From at least 2004 until the 2013 raid, he was the boss of the direct sales division that prosecutors allege was at the center of the scheme that sought to cheat customers out of rebates to which they'd been promised.
Hazelwood's pay was linked to how well Pilot did in selling diesel fuel to trucking customers, the government alleges, so he had a stake in making as much money from customers as possible.
Besides Hazelwood, seven others with ties to Pilot were named in the indictment unsealed Tuesday: Scott Wombold, John Freeman, Vicki Borden, John Spiewak, Katy Bibee, Heather Jones, and Karen Mann.
Pilot CEO Jimmy Haslam was not named in the indictment.
Hazelwood's indictment comes almost three years after dozens of FBI and Internal Revenue Service agents raided Pilot’s West Knoxville headquarters and several other nearby offices, seizing thousands of documents and copying computer hard drives.
Federal indictments previously returned allege Pilot employees since at least 2008 crafted a multimillion-dollar scheme to drive up profits, bump off the competition and increase commissions for its sales representatives and executives, according to federal documents.
Ten now former employees have pleaded guilty and agreed to cooperate in the government's investigation.