CHATTANOOGA, Tenn. (WATE) – Defense attorneys for the four former Pilot Flying J employees standing trial for fraud said their clients should not be found guilty by association in connection with a $92 million scheme to cheat trucking companies out of promised fuel rebates.
“Guilt by association is not a basis for conviction,” John E. Kelly, defense attorney, said. “Knowledge is not enough. It doesn’t make you guilty and doesn’t mean you participated in it.”
Former Pilot President Mark Hazelwood, former Vice President Scott Wombold, and two former saleswomen, Heather Jones and Karen Mann, are facing charges for conspiracy to commit mail and wire fraud. Wombold faces additional crimes for allegedly lying to the FBI and IRS. Hazelwood is also charged with witness tampering.
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Fourteen members of their sales team pleaded guilty to charges involving defrauding customers, and federal prosecutors said a handful of them will be testifying against their former co-workers in trial.
One of those ex-colleagues took the stand on the second day of trial. Assistant U.S. Attorney Trey Hamilton called Janet Welch to the stand. She previously worked in Pilot’s Direct Sales Department, a department the government alleged in opening statements was “infected with fraud.”
In court, Welch admitted to pleading guilty to conspiracy to commit mail fraud, a crime the four defendants are also charged.
The government plans to call a number of witnesses like Welch in testimony to help strengthen its claim that the four defendants had the intent to deceive and defraud trucking companies.
In court Tuesday, Welch answered questions related to company emails, direct sales manuals, and overall sales practices at Pilot. She explained to jurors that employees were trained to incentivize trucking companies to fuel at Pilot by offering fuel at discounted rates and undercutting the competition.
Welch read a 2008 email from her boss Arnold Ralenkotter advising her to short a trucking customer a penny a gallon unless the company had a method of tracking the cost, an email to which she forwarded to then President Mark Hazelwood.
The defense maintains that just because other former Pilot employees pleaded guilty to fraud charges does not mean the four defendants standing trial share guilt. Defense attorneys argued in opening statements that the government’s case is based on guilt by association and that their clients did not intend to defraud anyone.
The defense argued that the defendants, particularly former executives Hazelwood and Wombold, dedicated many years of their lives to building Pilot Flying J into what it is today, and they did not have any motivation to financially injure trucking companies.
Defense attorneys acknowledged that the defendants, like all executives, wanted to make money and negotiate the best deals on behalf of the company, but they never lied to or cheated truckers.
The board of directors for Pilot Flying J entered a criminal enforcement agreement related to this scheme, agreeing to pay $92 million in compensation. The Pilot board additionally paid $85 in settlements and is covering the legal fees for the four defendants standing trial in Chattanooga.
The government already expressed to Judge Collier that it will need at least 15 days to present its case to the jury. It will resume calling witnesses Wednesday.