Pilot Flying J fraud trial delayed by snow, but fight continues over racist recordings

CHATTANOOGA, Tenn. – Snow and cold temperatures prompted the cancellation Wednesday of the ongoing trial of the former president of the nation’s largest diesel fuel retailer and three subordinates on charges they plotted to rip off small trucking companies.

The trial could resume Thursday. In the meantime, Rusty Hardin, attorney for former Pilot Flying J President Mark Hazelwood, is making another push for a mistrial in the wake of U.S. District Judge Curtis Collier’s decision to allow jurors to hear secret recordings of Hazelwood and a crew of now-confessed fraudster salesmen making racist and misogynistic comments.

► More:Judge: Ex-president of Pilot Flying J recorded making 'vile' racial remarks

“There are some bells that cannot be unrung — these tapes cannot be unheard,” Hardin wrote in a motion. “If Mr. Hazelwood is to get a fair trial, then the jury should not be allowed to consider the proposed evidence.”

Racism on display

Federal prosecutors Trey Hamilton and David Lewen played for jurors snippets of recordings made by a secret mole for the FBI and IRS Criminal Investigation Division during an October 2012 meeting of Pilot Flying J sales executives at the Rockwood lake house of company Vice President John “Stick” Freeman.

In those recordings, Hazelwood and the executives used racial epithets and made derogatory comments about the Cleveland Browns, which their boss owned, the team’s fans, the city’s citizens and the city of Oakland, Calif., home to the Oakland Raiders. Hazelwood requested a racist country song that has a racial epithet in the title be played, and the Pilot Flying J executives sang along to it. Testimony showed they’d been drinking.

Collier has refused to make transcripts of those snippets public. He has also ordered sealed the entirety of those recordings as well as all related motions and transcripts. USA TODAY NETWORK - Tennessee and other media outlets including the Cleveland Plain Dealer, the Chattanooga Times Free Press, WBIR-TV in Knoxville and WKYC-TV in Cleveland are fighting both orders.

Hardin is fighting Collier’s decision to allow snippets to be played and Collier’s warning instruction he gave jurors about those recordings. The decision will be a key issue on appeal if Hazelwood is convicted.

Too smart to defraud?

The prosecutors contended Hardin himself invited the introduction of the racist recordings as evidence in the case when he sought in his defense to show jurors Hazelwood was too savvy a businessman to participate in behavior, including fraud, that would threaten the business that was paying him more than $26 million in 2012.

► More:Former Pilot Flying J president's pay doubled to $26.9M during fraud scheme

Hazelwood and 19 former Pilot Flying J executives and staffers have been accused of conspiring to commit wire and mail fraud in a five-year scheme to grow Pilot Flying J’s market share and profit by luring in truckers with promises of fuel discounts they never intended to fully pay.

Fourteen of those employees have pleaded guilty. Two have received immunity. Hazelwood is standing trial alongside former Vice President Scott “Scooter” Wombold and former account representatives Heather Jones and Karen Mann.

Pilot Flying J’s board, which Hazelwood mocked in those secret recordings, has admitted criminal responsibility. CEO Jimmy Haslam denies any responsibility or knowledge and is not charged.

Mann and Jones were not at the lake house meeting. Their attorneys also are fighting the playing of the recordings, though Collier has shielded their written objections from public view.

'On his own time'

Hardin argues in the first motion Collier has refused to seal since the recordings first became an issue in December that Collier misunderstood Hardin’s defense and was, therefore, wrong in his conclusion that Hardin himself had opened the door for the tapes to be introduced.

► More:Other media outlets join fight to unseal records in Pilot Flying J fraud case

“First, Mr. Hazelwood contests that his personal conduct, on his own time, would jeopardize Pilot, rather than putting at risk his own future with the company — which is precisely what happened,” Hardin wrote. “Second, even if some scintilla of evidence suggested such a cause and effect relationship, it would be the jury’s duty to decide whether such a relationship existed. Thus, the jury should not have been instructed that this conduct did run such a risk.”

Hardin said Collier was wrong to tell the jury that the tapes were being offered as proof that Hazelwood would indeed engage in behavior that put Pilot Flying J at risk. Collier warned the jury Hazelwood’s racist commentary was not proof of guilt in the fraud conspiracy.

Collier said in his instruction to the jury that the recordings could be “used by you only for your consideration of whether Mr. Hazelwood was a good businessman and an excellent company president for Pilot Travel Centers and whether in those roles Mr. Hazelwood would engage in conduct that ran the risk of putting Pilot Travel Centers in jeopardy or, as the question was asked, taking the chance of everything coming down if that conduct was discovered, and risked that customers would not only not deal with Pilot Travel Centers but would go to competitors.”

Hardin wrote, “Such a limiting instruction assumes, without any proof, that Mr. Hazelwood’s comments, made to a small group of peers while drinking in a private home after work ‘could bring the entire company down.’ The limiting instruction also assumes, without any proof, that if such evidence became public, customers ‘would go to competitors.’”

Hardin contends Hazelwood is now being forced to mount a defense against the recordings, not just the fraud allegations.

“This evidence and limiting instruction will force Mr. Hazelwood to rebut and explain both the actual conduct and the assumed relationship between the conduct and any risk to the company,” Hardin wrote. “Such inquiry will turn this trial, which is ostensibly about a conspiracy to commit mail or wire fraud, into a case about the significance of racist and misogynistic discussions.”

The prosecutors have not yet filed a response.