Former Pilot Flying J President Mark Hazelwood has been sentenced to 12 ½ years in prison for his role in the infamous fuel rebate scam. According to the judge presiding over the case, Hazelwood “violated the law on a constant and repeated basis for half a decade.”
Hazelwood was the President of PFJ at a time that the sales team was running a “cost-plus” fuel rebate scam on trucking companies. They defrauded companies out of millions of dollars in rebates that they were supposed to pay out. Instead, they shorted companies by sometimes just fractions of a penny on the gallon. But over time, that added up to tens of millions of dollars.
“The motive was hubris – his competitiveness … his desire to capture more market share for Pilot,” said Senior U.S. District Judge Curtis Collier.
Since Hazelwood had a profit-sharing agreement with PFJ, more market share for Pilot meant more money for him. Some years he made as much as $15 million or more from PFJ. Even once Hazelwood was fired for wrongdoing a year after the FBI raided the company’s headquarters, he received $40 million settlement check from the company.
Hazelwood was the highest up executive charged at the company. CEO Jimmy Haslam, brother of Tennessee Governor Bill Haslam and owner of the Cleveland Browns, was not charged with a crime.
As part of the settlement, the company also agreed to pay all of his legal bills. Those bills are likely to keep adding up as Hazelwood will appeal the verdict that found him guilty of one count of conspiracy to commit wire fraud, one count of wire fraud, and one count of witness tampering.
“I’m devastated I’m having to stand before you today,” Hazelwood said in a statement before sentencing. “I will be appealing my conviction. I do proclaim my innocence. We should have had policies and procedures to prevent this. We didn’t. I’m truly sorry.”
In addition, to paying out Hazelwood, Pilot Flying J has reportedly paid more than $80 million in civil settlements to companies that they defrauded, as well as a $92 million penalty to the federal government.
Hazelwood has been ordered to pay a $750,000 fine and spend 150 months in prison. He will not need to report to prison until after Thanksgiving.
Fourteen of Hazelwood’s former coworkers including sales employees and executives are still awaiting sentencing after pleading guilty.