A federal judge on Thursday ordered two more Pilot Flying J staffers to prison for what he called an “unprecedented” fraud plot involving at least 17 executives and employees, including the truck stop giant’s president.
Senior U.S. District Judge Curtis L. Collier Jr. sentenced former Pilot Flying J vice president Scott “Scooter” Wombold to six years in prison after a two-day hearing this week in U.S. District Court. He ordered former regional account representative Heather Jones to serve 43 months behind bars.
At least 19 executives and staffers of the truck stop giant have either admitted or been convicted by a jury of participating in a scheme to grow Pilot Flying J’s market share by luring smaller, less sophisticated trucking companies to do business with the truck stop giant in return for discounts on diesel fuel and then shorting them. Fourteen pleaded guilty. Two were granted immunity, including mole Vincent Greco.
Four, including Wombold and former Pilot Flying J President Mark Hazelwood, stood trial over four months in late 2017 and early 2018 in Collier’s Chattanooga courtroom. Hazelwood was convicted and sentenced by Collier last week to 150 months – more than 12 years in prison – as the fraud plot leader.
Regional account representative Karen Mann was acquitted. Wombold was acquitted of direct involvement in the conspiracy but was convicted of an act of fraud for approving Pilot Flying J executive Brian Mosher’s thievery. Regional account representative Heather Jones, who worked under Mosher’s supervision, was convicted in the conspiracy.
Attorney: Former VP reluctant player
Collier is now beginning the task of deciding the fates of each of those convicted or pleading guilty and, in so doing, he’s made clear that he is looking at each person’s individual culpability and importance in what he called the “machinery” of the fraud plot. He spent two days this week hearing testimony and arguments about what role Jones and Wombold played and what their punishments should be.
Richardson contended Wombold was sickened by the fraud and was being pushed out of management by former Pilot Flying J executives Mosher and John “Stick” Freeman because of that. His crime, Wombold' attorney Eli Richardson said, was silence.
“Scott Wombold should have stepped up to the plate and done something,” Richardson said. “There’s no indication he was fine with this, that he was inclined to do this. There’s no evidence he would ever do this again … Other folks were profiting from it. There’s no evidence of greed. There’s no evidence of him being a greedy person … Mr. Wombold did not behave in the callous way some others did.”
Assistant U.S. Attorney Trey Hamilton countered with transcripts from two Pilot Flying J sales meetings – secretly recorded by Greco – in which Wombold “provided rationalization” for fraud, listened to Mosher detail how to commit fraud, “encouraged” a reluctant salesman to “get your mind comfortable with it,” and chimed in with support when Hazelwood suggested an expansion of the fraud plot.
“Mr. Wombold gives words of encouragement and an acknowledgement this was an acceptable way to treat customers,” Hamilton said. “Making these statements, having the title of vice president, you can’t separate the two. It gives extra weight to his response.”
Wombold conceded he was wrong to keep quiet but maintained his innocence in the fraud scheme.
“I think most people would say I came from humble beginnings,” he told Collier. “The Lord has blessed me … In hindsight, I wish I had been more vocal and more forceful … I will never allow myself or those around me to be involved in a situation like this.”
Collier told Wombold that he was “a model” for other Pilot Flying J employees and in a position of authority. He noted Wombold could have told Mosher, “’Pack your bags and get out of here.’ That did not happen.”
Attorney: Account rep following orders
Jones’ attorney, Ben Vernia, argued Jones questioned Mosher about whether cutting discounts without customers’ knowledge was legal. He assured her it was, Vernia said.
“She was instructed to do something by her supervisor,” Vernia said. “She had the great misfortune of working for the most prolific fraudster … She’s been through quite a lot already. She made a mistake in thinking what she was asked to do was acceptable.”
Collier pushed back, though, noting Jones was key in faking numbers to convince trucking firms they weren’t being ripped off and was herself an intelligent woman with a business degree.
“She was 36 years old,” the judge said. “She was a mature person. She’s got a bachelor’s degree, right? Her bachelor’s degree at the University of Tennessee was in business administration … Her role was to supply financial information that furthered the perpetration of fraud. She volunteered that (trucking companies) did not pay attention. Her role in the offense was an important role.”
Hamilton said Jones needed to go to prison to send a message to others corporate staffers.
“A term of imprisonment for Ms. Jones would certainly demonstrate for good purpose following the unlawful direction of a supervisor … has serious consequences,” he said.
Jones told the judge she was innocent, again asserted she was only doing Mosher’s bidding but promised “this will never be a problem again.”
Collier told Jones to “look in the mirror” and quit blaming Mosher. What if Mosher had proposed robbing a bank, the judge asked.
“What do you think he’s going to tell you?” Collier asked. “He’s going to say, ‘Of course, robbing a bank is OK.’”
Collier said he did not believe Wombold and Jones weren't in it for the money – as he said Hazelwood was.
“I don’t think money in your pocket was the motive,” Collier said. “I think you wanted to fit in … maintain your position … maintain your job. But that’s no excuse.”
Judge: How did they miss it?
At one point in the two-day hearing, Collier seemed to question just how the truck stop giant’s chief financial officer, Mitch Steenrod, and the company’s auditors could have been so blind to the five-year fraud plot in which Pilot Flying J’s board has admitted cost trucking firms $56.5 million.
“Pilot is a big company,” Senior U.S. District Judge Curtis L. Collier Jr. said. “All these people are supposed to be checking out all these things. How do all these people not find out about it and stop it? How could Mr. Mosher commit this crime without the chief financial officer, without the auditors, without all these people finding out about it?”
But he also talked about Hazelwood’s “commandeering” of Pilot Flying J’s legitimate rebate program for ill intent and how vital leaders like Wombold were in keeping the plot under wraps.
Neither Steenrod nor Pilot Flying J Chief Executive Officer Jimmy Haslam have been charged. Testimony in Hazelwood’s trial showed fraudster staffers intentionally tried to keep Steenrod out of the paperwork loop, and there is no mention of him in connection with the fraud plot in any publicly released court records.
Haslam has denied knowledge of the scheme. Federal authorities won’t comment, but the deadline to file charges in connection with the fraud plot has passed.
Collier is allowing Wombold and Jones to remain free until January.