Jury hears secret sales recording in Pilot trial

Ex Pilot Flying J President standing trial for wire fraud, among other charges, walking back from lunch break on day one of his trial.

CHATTANOOGA, Tenn. (WATE) – The government sketched a narrative of a corrupt sales department with ill intentions, in day three of the conspiracy trial involving four former employees of truck stop giant Pilot Flying J.

Former Pilot President Mark Hazelwood, Former Vice President of Pilot’s Direct Sales Division Scott Wombold, and former inside sales representatives Heather Jones and Karen Mann are standing trial for conspiracy to commit fraud, among other crimes.

Federal prosecutors said from 2008 and 2013, the defendants and others promised trucking companies to fuel at discounted rates in exchange for their business, but then mailed checks with smaller rebates.</

14 other former Pilot employees also faced conspiracy charges and already pleaded guilty. Some of those people are expected to testify against their former colleagues in trial.

Former Inside Sales Representative Janet Welch testified in court that she, along with other co-workers, executed a scheme to cheat trucking customers out of promised fuel discounts, undercut the competition, and earn fraudulent money for the truck stop company.

“We could manipulate the prices,” she said in court. “We could change the discount to what we wanted it to be without the customer knowing it.”

They did this by offering trucking companies manual fuel rebates, all while manipulating the prices without the customer knowing it.

“That’s the beauty of it,” Brian Mosher, former director of national sales for Pilot Flying J, could be heard saying on tape. “It’s index-based pricing, and it changes every day.”

In court Wednesday, jurors heard a secret recording of a sales meeting, where leaders in the company directed sales staff to target “less sophisticated” trucking firms not closely tracking their rebates.  Scott Wombold was Brian Mosher’s boss.
“It’s an art. It’s a feel. It’s a do what you can, and don’t expose yourself,” Mosher said on the recording.

“What did you think he meant by ‘don’t expose yourself’?” Assistant U.S. Attorney Trey Hamilton asked Welch during witness testimony.

“Don’t get caught cheating the customer,” Welch said.

Welch said that inside sales reps, like herself, would adjust rebates to increase the price and reduce the discount, in a scheme to defraud the customer.

The defense for former Pilot executives Hazelwood and Wombold does not deny that the conspiracy happened, but argue their clients did not know about it nor participate in the scheme. Attorneys for Jones and Mann maintain that their clients simply followed orders and did not question their supervisors.

“Manual rebates themselves weren’t necessarily a fraudulent thing, were they?” Eli Richardson, Wombold’s attorney, asked Welch in cross examination.

“Some of them aren’t,” Welch replied. “The majority I did were fraudulently-calculated.”

Pilot admitted corporate responsibility for the crimes in 2014, signing a criminal enforcement deal and paying $92 million in penalties. The Board of Directors also paid $85 million to settle related lawsuits and are covering the attorney fees for the four defendants standing trial.

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