Jan. 07–CLEVELAND, Ohio — When the fraud trial of four former Pilot Flying J employees resumes this week in Chattanooga, Tennessee, prosecutors are expected to play audiotapes of a senior executive using racially offensive language that blasts the city of Cleveland and the Cleveland Browns.
Prosecutors contend that the tapes counter the defense argument that Pilot Flying J’s former president, Mark Hazelwood, is a man of excellent character. He is one of four people on trial accused of conspiracy to commit mail and wire fraud.
Pilot Flying J, the largest operator of travel centers in North America, is owned by Jimmy Haslam, who, with his wife Dee, owns the Browns.
U.S. District Judge Curtis Collier said that considering current societal standards, “Making some of the offensive remarks could cause a reasonable person to question whether Mr. Hazelwood was, in fact, a good manager and president.” And that language suggests Hazelwood was willing to do things that could have harmed the company, the judge said.
Collier also commented in court that the three recordings of Hazelwood and other Pilot Flying J salespeople contained, “offensive, profane, racial- and gender- offensive language.” He made the comments just before the December holiday break.
The tapes, which so far have not been played for the public or the jury, have become a matter of contention in the two-month trail of employees accused of fleecing tens of millions of dollars from trucking companies.
Jimmy Haslam has not been accused, is not on trial, and has denied any knowledge of the rebate scheme at the center of the fraud trial. However, an FBI affidavit used to obtain a search warrant of Pilot Flying J’s offices, claimed that Haslam knew of the scheme, as he was in sales meetings with Hazelwood when it was discussed.
Haslam, for the most part, has not commented on the trial. However, during a press conference announcing the hiring of Browns general manager John Dorsey on Dec. 7, he did address a question from a reporter about the tapes.
Haslam said, “First, none of those individuals work for us anymore. No one who works for our company now was at that event [where the recordings were made]. That’s not how we act or do things. And those kind of remarks are intolerable.”
The judge spoke about the tapes in court in December. Their disclosure came toward the end of the NFL season, during which several Browns players, as well as others across the league, knelt during the national anthem to bring attention to the issue of racial inequality. To reduce the tension, in late November the league agreed to pay more than $84 million for the players’ social activism causes.
After President Donald Trump urged fans to refuse to go to games until players stopped disrespecting the country, and encouraged owners to fire or suspend players who disrespected the flag, Haslam and his wife released a statement that said, “We must not let misguided, uninformed and divisive comments from the President or anyone else deter us from our efforts to unify.”
Bruce Hennes, of the Cleveland-based crisis consulting firm Hennes Communications, said Haslam has said and done all the right things: Hazelwood was fired; Haslam defended his players’ right to expression amid Trump’s criticisms; and the Haslams have poured millions of dollars into Cleveland for its schools.
‘This has to hurt’
The taped remarks at issue in the trial, secretly recorded by an FBI informant, captured Hazelwood and employees talking at an informal staff meeting. The exact date is unknown. Collier noted in court that Hazelwood made most of the offensive comments. Hazelwood reported directly to Haslam.
Dennis Francis, a defense attorney in Knoxville, Tennessee, has followed the Pilot Flying J trial and spoken about it often to media outlets.
“This has to hurt,” Francis told The Plain Dealer. “It’s a slap in the face to the people who support that football team and the city of Cleveland. “
In court, in comments about the meeting where the tapes were made, Collier cited stories of former disgraced sports team owners Marge Schott and Donald Sterling, and how racial comments they made led to losing ownership of their teams.
The National Basketball Association’s Los Angeles Clippers owner Sterling was recorded making racist comments on the phone to his girlfriend.
“He and his team were subjected to widespread rebuke and an outpouring of disgust,” Collier said.
The NBA forced Sterling out in 2014.
Collier also said that years earlier, Cincinnati Reds baseball owner Schott was discovered to have made racially offensive statements that drew widespread criticism.
Major League Baseball suspended Schott, and she lost control of the team in 1999. She died at the age of 75 in 2004.
Those on trial, Hazelwood, former vice president Scott Wombold and account representatives Karen Mann and Heather Jones, are accused of scheming to defraud trucking firms by skimming money from rebates that should have been paid to those companies based on the amount of fuel they bought.
Authorities said the scheme ran from at least 2008 through April 2013, when the FBI and IRS raided the company’s headquarters.
So far, 14 people have pleaded guilty in U.S. District Court in Tennessee. Pilot Flying J has paid more than $84 million in civil settlements to trucking companies, plus a $92 million penalty to the U.S. Justice Department to avoid criminal charges against the company.
An FBI informant, Vincent Greco, recorded the tapes during a meeting at the lake home of John Freeman, a former sales vice president at Pilot Flying J. Freeman, once a close friend of Haslam, has pleaded guilty and is expected to testify for the prosecution in the coming weeks.
Greco was a former executive at Pilot Flying J. He recorded hundreds of hours of conversations about the scheme, records show. FBI agents recruited Greco after he told his financial adviser, John Verble, details of the scheme, according to court records.
Judge Collier said Hazelwood’s attorneys argued that the material on the tapes is “inflammatory, offensive racial epithets, language so vile that no rational person could give him a fair trial. Mr. Hazelwood’s utterances are beyond the pale. It would be impossible for any juror to look past these slurs and judge Mr. Hazelwood based on the facts in evidence.”
The judge noted that the current jury is made up entirely of white members. There is an African-American man serving as an alternate juror.
Collier sent the jury out of the courtroom before discussing the tapes. He said prosecutors were not trying to paint Hazelwood as a racist, but rather as reckless.
“The evidence… tends to suggest Mr. Hazelwood has in fact engaged in and approved conduct that runs the risk of bringing down everything if discovered,” the judge said, according to a trial transcript. “If it became known that the president of Pilot engaged in vile, despicable, inflammatory and offensive racial epithets against African-Americans, this could have led to boycotts, protests and loss of customer support and business.”
Collier stressed that he would give instructions to jurors that the tapes would apply only to Hazelwood.
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