Pilot trial update: like rats from a sinking ship

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Prosecutors play Hazelwood tape; other defendants ask for separate trials

Wednesday morning, Judge Collier’s federal courtroom in downtown Chattanooga was packed full of attorneys, defendants, and members of the media who wanted an answer to an issue that had been left unresolved when the conspiracy and fraud trial went on a hiatus in early December. Would the prosecutor, Assistant U.S. Attorney Trey Hamilton, play audio recordings of defendant Mark Hazelwood, former President of Pilot Flying J, uttering racist epithets, including the n-word?

The recordings were made at an October 2012 meeting of Pilot Flying J executives at a lakehouse belonging to John Freeman, VP of National Sales. Before the trial went on a break, Judge Collier explained that he had decided to allow the government to play the recordings for the jury if the prosecutors chose to do so, but the attorneys for the remaining defendants Scott Wombold, Heather Jones, and Karen Mann said that they would try to separate their clients’ trials from Hazelwood’s. The argument was that the content of the tapes was so inflammatory that their clients, who weren’t at the meeting, would be associated with Hazelwood’s noxious views, and that the jury would be unfairly prejudiced against them. Prosecutors Trey Hamilton and David Lewen would have to take a gamble that Judge Collier would deny the motions for severance and keep all the governments’ defendants in the same trial.

Wednesday morning in the courtroom, the suspense was palpable. Before the jury was let in, the attorneys discussed some of their concerns about the tapes. Judge Collier appeared to be surprised that the prosecution decided to go ahead and play the tapes as soon as possible, and then a wave of objections started. The attorneys for Heather Jones and Karen Mann said that the limiting instructions—the directions the judge would read to the jury to make sure they knew how to apply the evidence of the tape—did not go far enough in stating that their clients were not present during any social events of that nature and would not have participated in racist conversation. 

In response, prosecutor Hamilton filed a memo arguing against the motions to change the instructions and said that the government was willing to stipulate that Mann and Jones were not present at the lakehouse meeting. “The limiting instructions,” Hamilton said, “are concise, clear, and adequately protect the other defendants.” The limiting instructions were to make clear to the jury that the content of the tapes should not affect their determination of whether Hazelwood was guilty of conspiracy to commit mail and wire fraud, but that it was meant to contradict character evidence elicited in cross-examinations by Hazelwood’s attorney, Rusty Hardin. Judge Collier said that because Hardin had presented witness testimony suggesting that Hazelwood could not have committed fraud because he was such a responsible steward of Pilot’s reputation, the prosecution should be allowed to bring evidence contradicting that—demonstrating that Hazelwood was more than capable of being reckless in a business context in a way that might damage Pilot’s business. 

Judge Collier agreed with the prosecution. Then the next objections started, and like rats fleeing from a sinking ship, the defense lawyers for Wombold, Jones, and Mann asked for mistrials. If the jury was tainted by hearing Hazelwood’s inflammatory racist language, they said, their clients could not get an impartial hearing. Judge Collier demurred, “These motions are anticipatory,” he said. “I’m told this trial has many days to go. Later on in the case, we’ll have a better idea as to whether this evidence has had a prejudicial effect,” said Collier. The judge took the motions under advisement, saying he’d rule on them at a later date, and then he ordered that the jury be brought in and the trial continued.

The first witness called by the prosecution was Christopher Pappas, an FBI electronic surveillance operations technician in Knoxville. Pappas explained how he received the recording device from IRS Special Agent McCord and FBI Special Agent Root, the principal federal investigators for the trial, downloaded the files, and copied them onto the disk that would be played for the jury. Then Kevin McCord, a Special Agent in the IRS Criminal Investigations unit, took the stand. McCord narrated how he gave the device to Vincent Greco, the Pilot salesman who was cooperating with the FBI, at an exit off I-40 on Greco’s way to Rockwood, TN, where the lakehouse was located. McCord explained how the device worked and provided context for the three excerpts that the prosecutors were about to play for the jury. 

The first excerpts were difficult to hear—and Hazelwood’s attorney, Rusty Hardin, is fighting to keep the transcripts sealed—but the jurors were given transcripts so they could follow along. Only selected excerpts from the transcripts were displayed in the courtroom on monitors that the press could see. On the tape, Hazelwood compared the Oakland Raiders’ merchandise sales to the Cleveland Browns, and said, “Who buys Raiders’ s—t? N——-s.” Then later, referencing the 1982 David Allan Coe song “N——r F—-er,” Hazelwood asked John Freeman, “Hey, where’s the Greasy N——r? Where’s our Greasy N——r song?” Freeman replied, “I got it.” Then came a lot of drunken whooping and hollering, singing along, and cheering as the song played.

Rusty Hardin, Hazelwood’s defense attorney, began his cross examination of Agent McCord by asking him how long he’d work in IRS Criminal Investigations. “More than 15 years,” McCord replied. “That last 30 minutes… that wasn’t one of your prouder moments, was it?” shot back Hardin. McCord refused to be rattled: “I just present the facts.” Hardin tried to attack the recordings from different angles, trying to get McCord to agree that “the statements were inflammatory”—McCord would only say “They are not good statements”; later, Hardin suggested to McCord that the informant Greco had deliberately gotten Hazelwood drunk. McCord simply said he had no way of knowing whether Hazelwood was intoxicated or not. Hardin wrapped up his cross examination by trying to muddy the waters on the operation of the recording device, its sensitivity, and whether or not Greco turned it on and off during the lakehouse meeting. 

Attorneys for Scott Wombold, Heather Jones, and Karen Mann made their various objections and tried to emphasize that their clients had no idea any of their supervisors engaged in that kind of language and socializing. McCord for the most part said that he had no knowledge of those other employees engaging in anything, but when pressed by Karen Mann’s attorney, Jonathan Cooper, did say “I am aware of some emails that Karen Mann has sent that could be viewed as unsavory.”

The other big highlight of the day was the testimony of Kevin Clark, a former regional sales manager for the Midwest who has already plead guilty to conspiracy to commit mail fraud against the United States, a lesser charge than the ones faced by the current defendants that only carries a maximum 5 year sentence. Clark admitted to changing his clients’ cost-plus discount rebates without telling them, and said that he routinely discussed the matters during profit-and-loss meetings with Hazelwood and other executives. When asked why he engaged in something he knew was wrong, Clark became emotional and said, haltingly, “I was afraid if I didn’t get on board with it, I’d lose my job.” Clark also said that when John "Stick" Freeman became VP of National Sales, "[the fraud scheme] was getting pushed pretty hard at us." In one of the sad ironies of the trial, Clark's supervisor Vincent Greco, whom Clark told on many occasions how uncomfortable he was cheating his customers, ended up being the informant who helped incriminate him.

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