The first sentencing of the Pilot Flying J “manual rebate” scandal
Perhaps it was Mark Hazelwood’s seniority in the Pilot Flying J organization, or the cumulative nature of the recordings, emails, texts, wires and other communications that led to his being found guilty on most of the counts he was indicted on in mid-February. It seems equally as likely that his coarse language on numerous documents, and the highly sensational recording of his racist rant didn’t do him any favors with the jury.
In sentencing Hazelwood to 150 months, Senior U.S. District Judge Curtis L. Collier Jr. had to evaluate the calculus of the money involved, as well as the scope of the crime. The court was also obliged to consider the aspects of retribution, deterrence, and rehabilitation. At the end of his final statement, Collier said that in light of all those involved and how “all roads led to Mr. Hazelwood” when it came to the culture, that for retribution, his sentence should be above the guideline range. For deterrence, with the increase in data technology, and this kind of crime only possibly growing, above the guidelines might also be merited. Even for rehabilitation, Collier seemed inclined to go beyond the guidelines. “Usually this isn’t an issue in white collar crime, but Mr. Hazelwood is different as he owns several businesses and due to his competitive nature, we must consider this too.”
Yet the court chose a range almost right between the 135 and 168 months that were the established guidelines. Judge Collier attributed this to the strong testimony of the 168 letters that had been sent to the court, as well as today’s persuasive defense which spoke to the strong character of Hazelwood and the many charitable things he has done over his lifetime.
Hazelwood will also be fined the maximum amount of $250,000 per count for a total of $750,000.
FreightWaves has covered some of the turning point moments of the case from the early stages. We considered the proceedings from a freight data perspective. We reflected the day after the guilty verdicts on the implications from a historical and regional Chattanooga and Knoxville perspective.
Today, the long-awaited final results are in (although more sentencing will follow over the coming months). Still, there has been plenty of drama since the February verdict on charges of wire fraud conspiracy, wire fraud, and witness tampering. Hazelwood has been under house arrest since his conviction. His trial attorney, Rusty Hardin and his firm choose not to file a motion seeking a new trial and began building an appeal based on Judge Collier’s most legally controversial ruling, which permitted jurors to hear a drunken Hazelwood using racial epithets at a meeting of Pilot Flying J supervisors.
Hazelwood fired Hardin in May, and hired Knoxville lawyer Brad Henry and New York firm Walden, Macht and Haran. The new team claimed Hardin botched Hazelwood’s trial in his strategy to depict Hazelwood as a hard-traveling executive, much too busy to lead a fraud scheme. The new legal team asked for a four-month delay in sentencing. Judge Collier reluctantly agreed to a delay, but only for a single month. Any delay also has a chain-reaction impact to the several others who were found guilty of participating in the scheme.
During that narrow window of time, Hazelwood’s new legal team then filed an appeal for a whole new trial, which late last week, Judge Collier denied, saying the appeal was effectively without legal merit. Collier said Hazelwood had no excuse for tarrying months after his February conviction in U.S. District Court in Chattanooga to seek a new trial.
“The Court has reviewed each of defendant’s arguments that trial counsel rendered constitutionally ineffective assistance to him before and during trial,” Collier wrote. “The Court finds none of them to have even such a small amount of merit as would allow the Court to find excusable neglect for their late filing.”
Collier allowed jurors to hear the controversial recordings, though he warned them to consider only whether they contradicted the defense’s portrayal of Hazelwood as too busy and too astute to commit such systematic fraud. Hardin fought the move and publicly stated it would be a key appellate issue.
Collier said Hardin’s legal strategy was sound, even though the defense was ultimately rejected by the jury.
“(Hardin) conceived a well-designed, well-thought-out defense strategy that portrayed Defendant as a busy, brilliant, hardworking, high executive who cared deeply about the continued viability and success of Pilot,” Collier wrote in his opinion. “This strategy was unveiled in the opening statement and built upon throughout the trial through the cross examination of witnesses called by the government.”
“The defense introduced a lengthy video in which defendant had a starring role. Trial counsel brought out that defendant was instrumental in every significant undertaking and initiative of Pilot. Trial Counsel brought out that Defendant was absent from his office often on Pilot business. The inference to be drawn from this was that defendant was too busy to pay attention to the fraudulent actions of many of his subordinates who were involved in the charged scheme and artifice to defraud,” Collier wrote. “There was nothing wrong with this strategy and it held promise of being effective and persuasive to the jury.”