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December 7, 2017 9:30 AM, EST
Defense Goes on Offense Against Key Witness in Pilot Flying J Fraud Trial
John Sommers II for Transport Topics

CHATTANOOGA, Tenn. - If Pilot Flying J’s top leaders knew its sales executives were cheating customers, why all the code talk, an attorney for the truck stop giant’s former president asked Dec. 6.

Attorney Rusty Hardin, who represents former Pilot Flying J President Mark Hazelwood on charges he plotted with subordinates to rip off trucking firms of promised discounts on diesel fuel, repeatedly sought Wednesday to discredit the testimony of one of the government’s key witnesses against his client.

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Jimmy Haslam, Pilot Flying J CEO. Paul Sancya/AP 

That witness – former director of national accounts Brian Mosher – has throughout his testimony in U.S. District Court in Chattanooga pointed to both Hazelwood and Pilot Flying J CEO Jimmy Haslam in the five-year, $92 million fraud scheme.

Code talkers

Hardin, on the other hand, is building his defense of Hazelwood around the notion that, just as Haslam has insisted he knew nothing about the scheme, neither did the former president. Haslam is not charged.

On Dec. 6, he used the language Mosher and other sales executives used in a secretly recorded meeting to press that point. He noted that no one on those recordings used words such as fraud, steal, lie and cheat – all actions of which federal prosecutors Trey Hamilton and David Lewen contend Hazelwood participated in and encouraged.

Instead, the sales executives, including Hazelwood, were captured on the recordings using the phrase “manual rebate” and a variation of that phrase – Manwell or Manuel – coined by former vice president John “Stick” Freeman as a nod to the fact that some of the victimized trucking firms were owned by Hispanics.

Hardin cited a recording of a meeting in February 2013 – just two months before the FBI and IRS Criminal Investigation Division raided Pilot Flying J’s Knoxville headquarters – in which, prosecutors allege, Hazelwood talked about expanding the fraud to even more trucking companies. The recording, made by salesmen turned FBI mole Vincent Greco, was made in a hotel in Orlando, Fla.

“This new way to cheat customers was still talked about in code, wasn’t it?” Hardin asked Mosher.

Mosher responded, “The word ‘cheat’ wasn’t used.”

“Can you explain why you guys wouldn’t speak openly if you were all involved in this conspiracy?” Hardin asked.

Mosher answered, “I think we were speaking openly.”

Attorney: Where’s the tape?

Mosher said that although most manual rebates, a process so labeled because discounts were manually calculated by Pilot Flying J support staff, were legitimate, the fraud scheme was so commonplace that the term itself came to mean fraud among the executives, including Hazelwood.

“Not once in Orlando, Fla., in the presence of Mark Hazelwood or Jimmy Haslam, did y’all ever say cut back (the promised discount) and don’t tell the customer,” Hardin said. “Did you ever say that in front of Jimmy Haslam?”

“Yes, I have on several occasions,” answered Mosher.

Hardin replied, “We don’t have a tape of you saying that, do we?”

“No, sir,” Mosher answered.

Selective cheating

Greco, testimony has shown, turned mole in 2011 after he was confronted by federal agents. He began wearing a wire at their direction and was recording every time he met with or socialized with fellow sales executives. Hamilton and Lewen so far have only played a portion of those recordings in the trial, which began last month.

Hardin has told jurors the crew of sales executives who have pleaded guilty in the fraud conspiracy used code to hide their cheating of customers from Haslam and Hazelwood. He sought to use Mosher to press that point with the jury.

Hardin pointed to comments Freeman made during one secret recording in which he talked about the need to get discount deals in writing.

“Here in a meeting, Mr. Freeman … is telling them to put the deal in writing,” Hardin said.

But Mosher pushed back, saying what Freeman was referring to was legitimate business deals with large trucking companies too sophisticated to be defrauded.

“Sir, we didn’t defraud every customer we had,” Mosher said. “(Most) of our business was not on manual rebates, sir.”

‘For myself and the company’

Mosher is in his fifth day of testimony. He and 13 other former Pilot Flying J sales executives and staffers have pleaded guilty. Greco and one other former employee were granted immunity. Standing trial alongside Hazelwood are former vice president Scott “Scooter” Wombold and former regional account representatives Heather Jones and Karen Mann.

Attorney David Rivera, who represents Wombold, also took a turn at trying to discredit Mosher on Wednesday. He noted Mosher, by his own admission, wanted to climb the corporate ladder at Pilot Flying J but lost out on a vice president’s slot to Wombold.

“You testified you did all this (fraud) for money,” Rivera said.

Mosher quickly answered, “For myself and the company, sir.”

Testimony has shown that the sales executives who have confessed guilt had reached their commission caps, so they weren’t directly profiting as the fraud grew. But Mosher and others have testified that their fortunes were tied to Pilot Flying J’s profitability. The fraud scheme netted the nation’s largest diesel fuel retailer not only millions in cash but millions in gallons of new diesel fuel business since the promised discounts were used to secure loyalty agreements from trucking companies.

The trial continues Dec. 7.

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