Crime & Justice

Prosecutors seek 20-year sentence for Avery in strange, far-reaching fraud case

After his trial earlier this year in a bizarre and immense fraud case, one with shadowy government operatives and purchases of vintage planes and fancy boats, Mark Avery is about to learn whether his next chapter will be defined by years in prison.

His sentencing on wire fraud, money laundering and bank fraud is set for Monday. But how much time he could face is in dispute.

The assistant U.S. attorney who prosecuted Avery is seeking a 20-year prison sentence. Avery's lawyer notes that he already served 5½ years on similar charges that later were dismissed. Avery, who portrays himself as a man taken advantage of by his dominating and charismatic right-hand man, "Commander" Rob Kane, deserves no additional jail time, his lawyer says.

Here's the twist: The federal judge overseeing the case ruled in 2014 that the government couldn't seek a sentence of more than 10 years. That ruling allowed the new case to move forward, but capped the potential sentence.

Is the government trying to backtrack on a position it staked out years ago, when Avery was cooperating? Or did the situation change dramatically when Avery testified at length during his February trial, testimony that assistant U.S. Attorney Steve Skrocki says was tainted by Avery's blame of others and even lies?

[Judge says Avery can get more than 10 years.]

"The government is simply attempting to renege," Avery's defense lawyer, Mike Dieni, said in a court filing Thursday. "The timing of the government's motion, the eve of sentencing, is vindictive – purely an attempt to punish Mr. Avery for taking the new charges to trial."

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Skrocki, the main prosecutor in criminal cases against Avery and one of the companies he used to own, Security Aviation Inc., says Avery himself erased any benefit of earlier cooperation. He doesn't deserve a break because of his self-serving testimony in February and his failure to accept responsibility, the prosecutor said.

[Avery testifies that he feels like a sucker but never lied to get widow's money]

The question of Avery's sentence is before U.S. District Judge Ralph Beistline.

The case represents the biggest known private fraud case in Alaska, according to prosecutors. Avery siphoned an elderly widow's trust fund of $52 million in six months for his own questionable businesses and personal spending, including the purchase of a yacht, a patrol boat, two World War II vintage planes, RVs, and snowmachines. He also paid off personal debt through the trust money, which he had obtained as a loan.

His choices "allowed him to fulfill his purchasing and personal fantasies of having his own air force, his own medical training and aircraft medevac companies, and a collection of World War II aircraft icons," Skrocki wrote in his sentencing memorandum for the judge.

Once the money from the May Smith Trust ran out, his businesses collapsed, according to trial testimony.

Federal attention first turned to Avery and his operation more than a decade ago. His Security Aviation business and top man, Kane, were charged in 2006 with illegally possessing rocket launchers that could have been attached to the Czech-built L39 fighter jets that were among the business acquisitions.

Both Kane and Security Aviation were found not guilty by an Anchorage jury but the federal investigation into the source of the money continued.

"More than 10 years after initiation of this case, and close to 500 court filings later, it is clear that Mark Avery's greed, avarice, and sense of entitlement drove this crime," Skrocki wrote in his sentencing memorandum.

Avery received leniency the first time around. But most of the investigative files were destroyed or returned, as is FBI policy, so when the case restarted in 2013, the government had to start over, Skrocki said in a court filing last week seeking to set aside the 10-year cap on Avery's sentence.

Prosecutors not only are arguing for 20 years, but want that to be on top of the time already served.  The prosecutor also is seeking a $1 million fine and almost $46 million in restitution to the May Smith Trust. Some of that could come from money Avery receives from a trust created after his mother's death, prosecutors said.

The defense argues that most of the money spent from the May Smith Trust was for legitimate businesses, not for personal enrichment, and that Avery has already lost so much: his career as a lawyer, his wife and children, and all that he owned in Alaska. He went through bankruptcy. He lost his $600,000-a-year job as trustee.

Avery, now 57, is trying to reconstruct a life, needs mental health treatment and isn't a threat, Dieni said in his sentencing memo.

The 10-year cap should stand — it relates to help he provided in investigations against others, Dieni said.

Jurors found Avery not guilty of selected counts, showing that they didn't believe the loan from the May Smith Trust was fraudulent from the start, the defense lawyer said. Less than $5 million in spending was tied to the counts for which he was found guilty, Dieni wrote.

[Jurors find Avery guilty on 11 of 17 counts]

Already Avery has either been in prison or under government supervision for more than nine years, Dieni said. He served his time at the federal correctional institution La Tuna "on the Mexican border" and suffered a serious injury to his arm there, his lawyer said.

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Kane influenced and overpowered Avery with his blustery talk of  undercover work and lucrative government contracts, Dieni said.

Some of Avery's supporters said Kane's promises of riches and excitement were not without basis.

Ray Sleeth, a former Navy SEAL, said he had been involved in government operations on the "gray" side — not public, but not quite super-secret. He said he had retired from the military for medical reasons but was called back to work in the "gray" zone by someone in Virginia and ended up at Security Aviation Inc. His role was to set up a program for terrorist renditions, he said in a letter to the judge supporting Avery.

"There are things that go in the 'gray' world that are designed and crafted in such a manner than the facts can never be fully extracted," Sleeth said.

There is always a fall guy, he wrote.

"Had Security Aviation been a success, Mr. Avery would have been on the Anchorage pedestal as a great Alaska employer and on the 'Gray' pedestal as a man who was not afraid to take a risk for our Nation," Sleeth wrote.

Another letter on behalf of Avery came from Oklahoma lawyer James Kee, who also has a background in undercover operations and who had worked with Kane. He told the judge that he didn't know much about Avery other than he was a "patsy" used by Kane, who was the master manipulator.

"Sir he could talk you out of your robe and convince you he is a Judge," Kee wrote of Kane.

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[Kane testifies but his bigger-than-life person is diminished]

In 2007, Avery pleaded guilty to wire fraud and money laundering related to spending from the May Smith Trust.  He was more than midway through his 8½-year sentence when that case was thrown out in the aftermath of a 2010 decision by the U.S. Supreme Court in an unrelated matter, but it undermined the law under which Avery was convicted.

Avery was charged anew and this time, he fought the charges. His earlier cooperation in the rocket launcher case no longer holds sway, prosecutors said.

"In the government's view, Avery's trial testimony alone could be cause for the court to revisit its ruling and the justification for the court limiting the government's sentencing recommendation," Skrocki wrote in last week's filing.

When Avery testified, he contended he didn't know or couldn't remember essential details, such as whether he had kept the other trustees informed of how he was spending the money.

In the government's view, he lied, blamed others and remained unrepentant for betraying the trust of the woman he was supposed to protect.

By any measure, Avery is an unusual criminal defendant. He's a former Alaska state and municipal prosecutor, a former paramedic, the privileged son of a San Francisco tax and estate lawyer, the late Luther Avery.

After his father died, Avery took over his father's position as trustee over the $100 million May Smith Trust and the bigger May and Stanley Smith Charitable Trust. Stanley Smith was an adventurer who made a fortune mining iron ore in Malaysia after World War II.

By the time Avery stepped in, May Smith was mentally incapacitated. While Avery's lawyer said he oversaw excellent care for Smith, including moving her to an estate in the Bahamas, prosecutor Skrocki said he took advantage of her condition.

"In this case, Avery preyed on the most defenseless in an aging society, a woman with no friends, no mental ability to understand what was happening, and a woman who was essentially, aside from personally handpicked caregivers, living alone," Skrocki said in his sentencing memorandum.

Lisa Demer

Lisa Demer was a longtime reporter for the Anchorage Daily News and Alaska Dispatch News. Among her many assignments, she spent three years based in Bethel as the newspaper's western Alaska correspondent. She left the ADN in 2018.

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