Federal prosecutors filed a motion Tuesday to dismiss all charges against ex-Pilot Company President Mark Hazelwood and two of his staffers.

Acting U.S. Attorney Trey Hamilton filed a motion in U.S. District Court for the Eastern District of Tennessee to dismiss the charges against Hazelwood, along with two former sales team executives, Scott “Scooter” Wombold and Heather Jones.

Hazelwood was the highest-level executive of Pilot, the nation’s largest fuel retailer headquartered in Knoxville, Tennessee, to be indicted in a five-year rebate scam, known as “jacking the discount,” that targeted trucking customers it considered “too unsophisticated to catch on.” 

This latest move comes just nine months after a split three-judge panel of the U.S. Court of Appeals for the 6th Circuit overturned Hazelwood’s conviction, along with those of Wombold and Jones, in October. The federal appellate court ruled that a lower court judge shouldn’t have allowed jurors to hear recordings that included “deeply offensive racist and misogynistic language.”

In the court filing, Hamilton cited a combination of factors that weighed into the decision to ask for the court’s leave to dismiss all charges against the former Pilot employees. 

The factors include the personal circumstances of certain government cooperators; the challenge of presenting those facts and circumstances through cooperators who have completed their sentences; and limited government resources. 

As of press time on Tuesday, Hamilton did not respond to FreightWaves’ request seeking comment.

Hazelwood was sentenced to more than 12.5 years in prison in September 2018 for his alleged role in an elaborate $56.5 million fuel rebate scheme to cheat smaller trucking companies out of millions of dollars. 

“Mark Hazelwood’s nightmare is now over,” Hazelwood’s defense team said in a statement on Tuesday. “We believed in his innocence from day one. We are gratified that the Department of Justice agreed that dismissal was the only appropriate remedy. We look forward to seeing the next chapter of Mark’s life, surrounded by his wife Joanne and his loving family, and are honored to have been able to tell his whole story in full truth. Mark is innocent.”

In May, Hazelwood’s legal team filed a motion seeking to have Senior U.S. District Judge Curtis L. Collier recuse himself from overseeing the retrial of the fuel rebate fraud case against Hazelwood, Wombold and Jones, and sought to have his case moved from Tennessee to another state.

In court filings, Hazelwood, who is white, claims Collier, who is Black, was biased because he allowed prosecutors to play alleged prejudicial recordings of Hazelwood spewing “profanities about African Americans and women” during his first trial. 

The recordings revealed Hazelwood asking, “Where’s our greasy (racial slur) song?” and then singing along with other Pilot employees to the racist lyrics of a country song written by David Allan Coe. 

The tapes also include Hazelwood making profane remarks about Pilot’s board of directors and the Cleveland Browns football team, which former Pilot CEO Jimmy Haslam III owns. 

Hazelwood later publicly apologized for his remarks. 

Hazelwood also claimed intense press coverage of his alleged role in the rebate scheme had “poisoned the jury pool” in East Tennessee and sought to have it moved from Tennessee to Arkansas, Missouri or North Carolina.

Court documents filed by Hazelwood’s defense team in May stated that the new trial would have focused more on the Haslam family, including former Gov. Bill Haslam and Browns’ owner Haslam III.

The Haslams have denied any involvement in the fuel rebate scam.

What happened?

The fuel rebate scandal rocked the truck stop dynasty in April 2013 after the FBI and the IRS raided Pilot’s corporate headquarters in Knoxville. 

The truck stop chain reached a $92 million agreement with the U.S. Department of Justice in July 2014 over the 15-month probe of its five-year fuel rebate scam. Pilot also agreed to pay an $85 million settlement to trucking companies with fuel rebate agreements.

Fourteen former Pilot employees pleaded guilty to their roles in the fuel rebate scam, two other former employees were granted immunity for cooperating with federal investigators, and one was found not guilty.

This is a developing story.

Read related coverage:
Ex-Pilot president seeks different judge, location for second fuel fraud trial
Court extends feds’ time to seek rehearing in Pilot fraud case
Attorney discusses next steps after court overturns former Pilot president’s conviction
Convictions of former Pilot Flying J President Hazelwood, staffers overturned

Click here for more articles by FreightWaves Senior Editor Clarissa Hawes.