Prosecutors handling the Pilot Travel Centers fraud case have listed former president Mark Hazelwood as the “most culpable” individual in the long-running cheating of trucking firms out of promised rebates.
Hazelwood, who made over $27 million his last year at Pilot, is under home detention in Knoxville pending his sentencing by Judge Curtis Collier of Chattanooga.
Prosecutors put John Freeman, Brian Mosher, Arnie Ralenkotter, Jay Stinnett and Scott Wombold in the next degree of guilt category.
Vicki Borden, office manager who was not called as a witness during the lengthy trial at Federal Court on Georgia Avenue, is next.
Then comes regional sales managers Chris Andrews, Kevin Clark, Scott Fenwick and John Spiewak.
At the lowest level are regional account managers Katy Bibee, Lexie Holden, Heather Jones, Ashley Judd, Holly Radford and Janet Welch.
The government is asking that the three defendants convicted at trial – Hazelwood, Wombold and Ms. Jones – be sentenced first. It was noted that the government made certain promises to those who entered guilty pleas that were not extended to those who went to trial.
A fourth defendant, Karen Mann, was found not guilty by the jury.
Here is the filing by the government:
In its February 21, 2018 Order (Doc. 498),1 for the purpose of facilitating the orderly and just sentencing of the multiple defendants in the above-captioned related criminal actions, the Court directed that the government file a document listing the Defendants in order of the government’s approximation of each Defendant’s respective culpability. To that end, and mindful of the Court’s statement that “no party will be limited to the opinion or position it states in any response to [that] Order,” the United States respectfully offers this response to guide the Court in scheduling the sentencing hearings in an orderly and logical manner.
Section 1 groups the Defendants into categories of approximate culpability as requested by the Court, and Section 2 proposes a just and logical ordering of the sentencing hearings that is based in large part on the government’s categories of approximate culpability. Section 3 concludes with a motion to reset the sentencing hearings for Defendants Freeman, Borden, Spiewak, and Bibee presently scheduled for May 8, 2018.
1. The government’s approximation of respective culpability
The government undertook to accomplish the Court’s directive through a principled approach that blended consideration of each Defendant’s position within Pilot’s corporate hierarchy and each Defendant’s personal participation in the scheme to defraud – which in some instances were inextricably intertwined. Upon careful consideration of the purpose of this exercise, the government determined that the degree of difference in culpability among the Defendants warranted, for the most part, the grouping of Defendants, rather than the seriatim ranking of them.
Accordingly, what follows is the government’s placement of Defendants in five (5) categories of approximate culpability with Category 1 being the most culpable and Category 5 being the least culpable – generally speaking. Within the categories, the Defendants are listed alphabetically. The government notes that during discussions with some defense counsel who contacted the government following the entry of the Court’s 2/21/2017 Order, it was brought to the government’s attention that credible arguments can be made that side-by-side comparisons between certain individuals in Category 4 (the regional account managers) and Category 5 (the regional account representatives) could yield a culpability listing that ranks a regional account representative from Category 5 even with, or slightly higher than, a regional account manager from Category 4 – depending on what factors are chosen to determine culpability and how those factors are weighted. As seen from the government’s groupings, in determining approximate culpability, the government has chosen to give significant weight to the corporate structure of the Pilot Direct Sales group.
Category 1 Hazelwood, Mark: President and Executive Vice President over Direct Sales group
Approximate Culpability Category 2 (2)
Freeman, John: Vice President and Director in Direct Sales group
Mosher, Brian: Director in Direct Sales group
Ralenkotter, Arnie: Director in Direct Sales group
Stinnett, Jay: Senior Regional Sales Manager in Direct Sales group
Wombold, Scott: Vice President in Direct Sales group
Approximate Culpability Category 3
Borden, Vicki: Director in Direct Sales group
Approximate Culpability Category 4
Andrews, Chris: Regional Sales Manager in Direct Sales group
Clark, Kevin: Regional Sales Manager in Direct Sales group
Fenwick, Scott: Regional Sales Manager in Direct Sales group
Spiewak, John: Regional Sales Manager in Direct Sales group
Approximate Culpability Category 5
Bibee, Katy: Regional Account Representative in Direct Sales group
Holden, Lexie: Regional Account Representative in Direct Sales group
Jones, Heather: Regional Account Representative in Direct Sales group
Judd, Ashley: Regional Account Representative in Direct Sales group
Radford, Holly: Regional Account Representative in Direct Sales group
Welch, Janet: Regional Account Representative in Direct Sales group
Footnote 2 Proof at trial showed that all of the Defendants listed in “Approximate Culpability Categories 1 and 2” attended and participated to some degree in the Direct Sales management meetings that occurred on October 25, 2012 at John Freeman’s lake house and on February 18, 2013 at the hotel in Orlando, Florida that were the subject of the audio recordings admitted in evidence as Government Exhibits 501, 503, 504, 505, 506, 507, 508, 522, 523, and 524. Defendant Borden, although a Director, is not known to have attended those particular meetings.
2. The government’s proposed just and orderly sentencing hearing schedule
The government respectfully proposes the schedule set forth below for the sentencing hearings in the above-captioned related criminal cases. The government is guided by its approximate culpability categories with the exception of the Defendants who were convicted at trial. With respect to the Defendants who accepted responsibility for their criminal conduct and entered guilty pleas pursuant to plea agreements, the government’s sentencing position will be governed by the terms of those plea agreements which contain agreements by the government to make various Rule 11(c)(1)(B) recommendations to the Court regarding United States Sentencing Guidelines provisions that are non-binding on the Court. With respect to the Defendants who were convicted at trial, the government is not so constrained, and therefore intends to seek the application of certain Guideline provisions, such as the relevant conduct provisions in Section 1B1.(3) for calculating loss, that it agreed to curtail its ability to invoke with respect to the Defendants who entered into plea agreements with the government.
Additionally, the government cannot foresee all of the defenses that the three trial-convicted Defendants may raise during sentencing proceedings that might warrant the government’s calling of cooperating co-defendants to testify. In the event such testimony is needed, the government’s recognition of such cooperative testimony would be most efficiently effected through a motion pursuant to Section 5K1.1 of the United States Sentencing Guidelines. Thus, the government proposes a sentencing order that schedules the sentencing for any Defendant with the potential for a Section 5K1.1 motion to follow the sentencings of the three trial-convicted defendants. For all of these reasons, the government proposes to group the trial-convicted Defendants alone in the first sentencing hearing.
Following Sentencing Hearing Group 1 (the trial-convicted defendants), the government proposes to organize the Defendants into groups that take the government’s approximate culpability groupings into account, while also giving appropriate consideration to other factors such as the timing and sequence of the execution of plea agreements (3) of individuals within each approximate culpability category.
Sentencing Hearing Group 1 Hazelwood, Mark: President and Executive Vice President over Direct Sales group Convicted by jury on February 15, 2018.
Wombold, Scott: Vice President in Direct Sales group Convicted by jury on February 15, 2018.
Jones, Heather: Regional Account Representative in Direct Sales group Convicted by jury on February 15, 2018.
Sentencing Hearing Group 2
Freeman, John: Vice President and Director in Direct Sales group Plea agreement executed on July 14, 2017, after indictment.
Mosher, Brian: Director in Direct Sales group Plea agreement to information executed on November 29, 2013.
Stinnett, Jay: Senior Regional Sales Manager in Direct Sales group Plea agreement to information executed on June 7, 2013.
Footnote 3 See U.S.S.G. § 5K1.1(a)(5) (advising that a reduction in sentence for substantial assistance should consider “the timeliness of the defendant’s assistance”). The government advises the Court that it anticipates the filing of motions pursuant to U.S.S.G. § 5K1.1. To facilitate the Court’s consideration of the timeliness of a cooperating Defendant’s assistance, the government’s proposal arranges the Defendants’ sentencing proceedings within each proposed Sentencing Hearing Group as follows: the Defendant with the most-recently executed plea agreement is first, followed by the next most-recently executed plea agreement, and ending with the Defendant with the oldest plea agreement execution date.
Ralenkotter, Arnie: Director in Direct Sales group Plea agreement executed on May 24, 2013. Defendant Ralenkotter was the second Pilot employee to enter into a plea agreement and was the first Pilot employee to do so at the Director-level or above, as noted in his plea agreement.
Sentencing Hearing Group 3
Defendant Borden: 4 Director in Direct Sales group Plea agreement executed on July 19, 2017, after indictment.
Sentencing Hearing Group 4
Spiewak, John: Regional Sales Manager in Direct Sales group Plea agreement executed on July 20, 2017, after indictment.
Andrews, Chris: Regional Sales Manager in Direct Sales group Plea agreement to information executed on December 12, 2013.
Fenwick, Scott: Regional Sales Manager in Direct Sales group Plea agreement to information executed on June 19, 2013.
Clark, Kevin: Regional Sales Manager in Direct Sales group Plea agreement to information executed on June 11, 2013.
Sentencing Hearing Group 5
Bibee, Katy: Regional Account Representative in Direct Sales group Plea agreement executed on July 13, 2017, after indictment.
Holden, Lexie: Regional Account Representative in Direct Sales group Plea agreement to information executed on November 8, 2013.
Welch, Janet: Regional Account Representative in Direct Sales group Plea agreement to information executed on June 27, 2013.
Footnote 4 In placing Defendant Borden alone in proposed Sentencing Hearing Group 3, the government is not suggesting that a separate day should be set aside for Defendant Borden. Rather, the government is respectfully suggesting that Defendant Borden’s sentencing hearing should be scheduled so that it comes after those Defendants listed in proposed Sentencing Hearing Groups 1 and 2 and before the Defendants listed in proposed Sentencing Hearing Groups 4 and 5.
Radford, Holly: Regional Account Representative in Direct Sales group Plea agreement executed on June 6, 2013. As noted in her plea agreement, Defendant Radford was the third Pilot employee to enter into a plea agreement.
Judd, Ashley: Regional Account Representative in Direct Sales group Plea agreement executed on May 9, 2013. As noted in her plea agreement, Defendant Judd was the very first Pilot employee to enter into a plea agreement.
3. Conclusion Based on the foregoing, the government respectfully moves the Court to reset the sentencing hearing presently scheduled for May 8, 2018 for Defendants Freeman, Borden, Spiewak, and Bibee and reschedule them in a manner consistent with the government’s proposal set forth above. Due to the government’s plan to diligently make available additional discovery material to the Defendants who entered guilty pleas before indictment,5 the government respectfully requests that the Court not schedule any sentencings before June 27, 2018, which is the date presently set for the sentencing proceedings for jury-trial-convicted Defendants Hazelwood, Wombold, and Jones.
Finally, when establishing a just and orderly schedule for all of the sentencing hearings for these related matters, the government respectfully requests that the Court consider the following scheduling conflicts: ? June 25 – June 29, 2018: During this time, one of the lead case agents will be out town for a previously scheduled trip that counsel for the government did not know about when government counsel agreed to the June 27, 2018 sentencing date after the jury returned its verdict on February 15, 2018. ? July 23 – July 27, 2018: During this time, counsel for the government has previously scheduled out-of-district, worked-related travel plans involving counsel’s participation in the Evaluation and Review program run by the Executive Office for United States Attorneys (EOUSA). There are other conflicts that precede the week of June 25, 2018, but the government is assuming that no sentencings will be scheduled before the most-recently scheduled sentencing date of June 27, 2018. Considering that all but one defendant has defense counsel outside Chattanooga, the government respectfully suggests that the Court consider defense counsel’s potential scheduling conflicts as well. No defendant has been detained pending sentencing.
Footnote 5 The government’s intention is to make discovery provided to the eight (8) indicted defendants, who were indicted in February 2016, also available to the ten (10) non-indicted defendants, the last of whom executed his plea agreement in December 2013. Depending on what the non-indicted defendants seek to review from what is made available to them, appropriate protective orders may need to be entered in keeping with the process followed in indicted criminal case. As stated above, the government is diligently working to accomplish this additional discovery exercise to avoid delays once the Court sets a sentencing schedule.