Browns owner Jimmy Haslam not charged, but looms large in Pilot Flying J fraud trial
http://www.cleveland.com/metro/index.ssf/2017/12/browns_owner_jimmy_haslam_not.htmlBy Associated Press
NASHVILLE, Tenn. -- Jimmy Haslam is not charged with any wrongdoing in a fraud scheme at his family's truck stop chain, Pilot Flying J, but the Cleveland Browns owner has loomed large in the federal trial of former executives and sales representatives.
With the trial moving into its second month, scrutiny of Haslam's role at Pilot is only likely to intensify as the prosecutors look to wrap up their case and the defense phase gets underway.
Pilot Flying J was founded by family patriarch Jim Haslam, a former University of Tennessee football player, with a single gas station in 1958.
His other son, Bill Haslam, was president of Pilot before being elected Knoxville mayor in 2003 and later to his current position as Tennessee governor.
The Haslams have denied any prior knowledge of the scheme.
Here's what we've learned so far:
Rebate fraud: The four defendants in the case maintain their innocence -- former President Mark Hazelwood, former Vice President Scott "Scooter" Wombold, and former sales representatives Heather Jones and Karen Mann.
Read more: Timeline of an informant's work in the Pilot case
However, 14 other former members of the Pilot sales team have pleaded guilty to participating in the scheme to shortchange trucking customers on diesel rebates. The company paid a $92 million penalty to the federal government and settled a class action lawsuit for $85 million.
Prosecutors say the scheme ran from at least 2008 until agents raided the company's headquarters in 2013. One former executive testified that the fraudulent practices at Pilot began small and then spread. "We kind of slid into it," former northeast regional sales director Arnie Ralenkotter said.
Star witness to come? Prosecutors have been building their case with testimony from an array of former Pilot employees from the lower and middle ranks of the sales team. They have detailed how the company preyed on less sophisticated trucking customers unlikely to be able to keep up with the complex discount system.
Former Vice President John "Stick" Freeman, whom the government describes as the architect of the fraud scheme, has yet to take the stand. But he has been featured prominently in others' testimony and in undercover recordings played for the jury, including one in which he boasts that Haslam "loved it" when the sales team swindled customers. "He knew -- absolutely," Freeman said in the recording. Freeman pleaded guilty in July.
Defense strategy: Defense attorneys have signaled that Haslam will feature prominently in their efforts to persuade the jury of reasonable doubt. Hazelwood's lawyers have said that that Haslams' relationship with Freeman will be "highly relevant" to the case.
"Make no mistake about it, Jimmy Haslam III and (his father) Jim Haslam II were in charge of this company," attorney Anthony Drumheller said. "This was a family company they owned and strongly managed."
Wombold's lawyer, John Keller, said his client did not participate in the scheme, and even saw his professional prospects eclipsed by those like Freeman who were directly involved in the fraud.
'Jimmy, we've been caught': Investigators were denied in an effort to lure Haslam into discussing the fraud scheme in a recorded phone conversation before agents descended on the company's Knoxville headquarters in 2013.
Former sales executive Brian Mosher testified that agents had him call Haslam to say, "Jimmy, we've been caught." Mosher said Haslam replied: "I understand there are some folks at your house," and then handed the phone to a lawyer in Pilot's legal department.
Court filings submitted before the trial suggested that investigators' plans may have been thwarted by Mosher's wife passing along word that the FBI was at the house to Wombold, who in turn informed Hazelwood.
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