He slipped between skins and lived two lives in one – the big-hearted businessman and the corporate con artist, the self-made man who talked to truckers like one of their own just to pick their pockets at the pump and laugh behind their backs.
He heads to federal prison at month’s end.
Mark Hazelwood helped build Pilot Flying J into a billion-dollar national powerhouse with travel centers in 44 states and six Canadian provinces. Along the way, he presided over a fraud plot that ripped off small trucking companies to the tune of more than $50 million and still wasn’t satisfied, federal prosecutors say.
‘That’s not me’
A federal judge sentenced Hazelwood, 59, to 12½ years in prison last month for his role in the plot, which spanned at least five years. The sentence followed a jury’s guilty verdict in February on charges of wire fraud, witness tampering and conspiracy to commit wire fraud.
Hazelwood insists he’s innocent. His attorneys say they’ll appeal. Neither responded to requests for an interview.
The man portrayed in court testimony and captured on undercover recordings?
“That’s not me,” Hazelwood told WVLT-TV after his conviction. “That’s never been who Mark Hazelwood is.”
The president-turned-felon worked his way up from a teenage dish rat in a truck-stop kitchen to a boardroom boss commanding nearly $27 million in pay at the height of the fraud. Hazelwood’s rise took 40 years. His fall took just five.
From busboy to boardroom
Hazelwood loves to point to his humble upbringing as the inspiration for his innovations at Pilot. His father worked as a printer for the Dayton Daily News in Ohio, his mother as a waitress at a truck stop off U.S. Highway 40.
His first job? Opening Cokes for Mom at the truck stop at age 5. His first paycheck? Washing dishes for $1.65 per hour at age 13 in between school and helping out on the family tobacco farm.
At 15, Hazelwood went to work for himself washing trucks and tractor-trailers. He graduated from high school in 1977 as student body president and joined Truckstops of America, now Travel Centers of America. Within a year, he’d risen to store manager; within five, to general manager.
Hazelwood began his career with Pilot in 1985 as a district manager. The Knoxville, Tenn.,-based corporation reported $250 million in sales that year, 100 convenience stores and 1,500 employees.
His friends and former co-workers credit him with one innovation after another for Pilot, including devising the travel centers that now dominate interstate exits around the country, complete with fast-food options and private showers.
He starred in a corporate training video as “Mark the Driver,” preaching to Pilot managers about what the everyman trucker wants, needs and expects on the road. On business trips and vacations, he stopped at Pilot stores along the way to inspect the setup.
“He understood the trucking industry (and) their needs,” Alan Wright, a former Pilot vice president, wrote in a letter on his behalf. “He has a gift of developing solutions. … In fact, there were times when I felt Mark was ‘too good’ to the customers.”
The company named Hazelwood president in 2012. By 2014, Pilot reported more than $30 billion in revenue, 700 locations and more than 28,000 employees – and fired its president for cheating customers.
Pilot’s rebate program offered discounts on diesel fuel to trucking customers in exchange for guaranteeing a minimum number of gallons a month. Sales reps promised rates based on wholesale fuel costs plus a pumping fee, usually a few cents per gallon.
Between wholesale costs that fluctuated daily and the various state and local gas taxes, many customers couldn’t keep up to verify they got the promised deals. Pilot staff calculated the discounts day by day, for what became known as a “manual rebate” – called “Manuel” for short.
Shave a penny off the discount here, a nickel there, and the dollars added up fast. Bigger profits meant bigger commissions for sales reps and bigger bonuses for Hazelwood, the man at the top.
Most customers never caught on. The sales reps apparently saw it as all part of the game. Plenty of customers never met their monthly minimums anyhow, went the reasoning.
“Some of ‘em don’t even know what a spreadsheet is,” Brian Mosher, then Pilot’s director of national sales, told a group of sales reps at a November 2012 training session. “I’ve made my peace with it. ... (The average trucking customer) doesn’t know what cost-plus pricing means, and he’s not going to take the time to find out. He’s lazy. He doesn’t deserve (a rebate).”
Inside Pilot, the fraudsters barely bothered to cover their tracks. They kept two sets of books – one with the promised discounts and one with the real figures – so sales reps could keep their lies in line.
“We could make the rebate whatever we wanted it to be,” Janet Welch, a former Pilot senior sales rep, testified at Hazelwood’s trial. “But you wanted to keep up with the information you were sending the customer, because you could get caught. … The majority were fraudulently calculated.”
Federal prosecutors said the scheme began around 2007-2008, although some have indicated the fraud dates back earlier. John Verble, a former broker for Morgan Stanley Smith Barney’s Knoxville office whose clients included Hazelwood, has said he became suspicious as early as 2003.
Verble suggested installing tracking devices on diesel pumps. Hazelwood declined because “we don’t want that.”
Hazelwood said at trial he didn’t know about the fraud, devised and implemented by John “Stick” Freeman, Pilot’s onetime vice president of sales. But he read and answered the emails where staffers bragged about “jacking the discount” and sat in all the major sales meetings, including Mosher’s 2012 training session.
The way of the winners
The scheme couldn’t last. On April 15, 2013, FBI and IRS agents raided Pilot’s corporate headquarters.
Agents carted off boxes of documents, along with hard drives full of the emails and spreadsheets that documented years of fraud. But those dry, tedious records couldn’t compete for impact with recordings of Hazelwood and his subordinates bragging behind closed doors about their financial conquests.
“We’re all going to be winners,” Hazelwood says on one recording.
Just know how to pick your suckers, he told the sales reps.
“Customer A (for example) looks at every orifice you have,” Hazelwood said. “Customer B … doesn’t even know you have an orifice.”
As the years went by, Hazelwood talked about finding ways to expand the scheme. “Aunt Bea” became the nickname for the next round of victims.
“Manuel does a hell of a job,” Hazelwood says on a recording. “Wonder what percentage of our volume’s on Aunt Bea?”
Most of the recordings came from meetings attended by Vincent Greco, a regional sales director for Pilot based in Texas. Hazelwood had passed Greco over for the vice president’s job that went to Freeman, and court records indicate Greco never forgot it.
Greco turned informant for the FBI in 2011.
The ledger of the law
The recordings gave agents the grounds for the search warrant executed in the Tax Day 2013 raid – and captured Hazelwood slinging racist remarks and singing along drunkenly to crude, profane lyrics by outlaw country star David Allan Coe. Hazelwood’s lawyers insist the jury never should have heard those remarks and say the sounds biased jurors against Hazelwood, who chose not to take the witness stand.
That argument failed to win Hazelwood a new trial. Letters from friends who vouched for his religious devotion and charity work failed to spare him a prison sentence.
“Over the ledger of a lifetime, the good works balance is dramatically in favor of Mark Hazelwood,” wrote Mitch Hixon, a trucking industry colleague.
Not good enough, U.S. District Judge Curtis Collier ruled.
“Mr. Hazelwood abused the trust of Pilot and the trust placed in him," the judge said. "The participants laughed and joked about it. They used extreme and offensive language. … They talked openly of this criminal activity. ... He violated the law on a constant and repeated basis for half a decade.”
Hazelwood is scheduled to report to prison Nov. 1.
Seventeen former Pilot Flying J staffers pleaded guilty in the case and await sentencing. Two others were granted immunity. Two more were convicted alongside Hazelwood and were sentenced last week.
Pilot Flying J’s board paid a $92 million criminal penalty, along with an additional $85 million to resolve trucking customers' claims.