Former Security Aviation head charged anew over millions spent from wealthy widow's trust

Lisa Demer

Mark Avery, the one-time owner of the air charter Security Aviation and a former city and state prosecutor, was brought to federal court in handcuffs and ankle chains Thursday to face new federal charges of siphoning $52 million from a wealthy widow's trust.

Avery, now 54, has been imprisoned since 2008, when he was sentenced to 8½ years for draining those millions from the trust and spending it on businesses, SUVs, homes, jewelry, a yacht and Cold War vintage Czech fighter jets.

But that case was thrown out last year in the aftermath of a 2010 decision by the U.S. Supreme Court. In a ruling in the case of former Enron Corp. chief executive Jeffrey Skilling, the Supreme Court said that the kind of wire fraud to which Avery pleaded guilty only applied in cases of bribery and kickbacks, not those involving more elaborate schemes of deception.

Avery wasn't accused of bribery. What he admitted doing was no longer a crime, according to an opinion issued in June by a three-judge panel of the 9th U.S. Circuit Court of Appeals.

A grand jury handed up an indictment Thursday accusing Avery of five counts of a different type of wire fraud and 10 counts of money laundering.

He's accused of stealing from the May and Stanley Smith Charitable Trust. He inherited his role as one of three well-paid trustees from his father. Stanley Smith, one of his father's clients, had made a fortune in mining and other businesses. The May Smith Trust was created by Stanley Smith to provide for his wife after he died, and the May and Stanley Smith Charitable Trust was created to give away some of their wealth.

The charges say Avery concocted a scheme to drain the May Smith Trust for his own security-rooted business ventures and luxury purchases. The money was gone in less than a year. May Wong Smith was suffering from dementia and couldn't care for herself at the time of her death in the Bahamas in 2006.

Avery had become intoxicated by a larger-than-life associate, Rob Kane, a defense consultant told a judge at Avery's 2008 sentencing. Kane was put on trial along with Avery's Security Aviation in 2006 over rocket launchers that the government contended were illegal, destructive devices. But a jury found Kane and the company not guilty.

At the hearing Thursday, Avery, wearing a yellow jailhouse uniform, told Magistrate Judge John Roberts that he pleaded not guilty to all 15 charges.

Are they the same basic offenses as the first case? Roberts asked.

Yes, but the federal government must start anew to prove them, prosecutor Steve Skrocki said.

Skrocki said the government is working through more than 50 bankers boxes of records that it recently regained from the U.S. bankruptcy trustee. Both Avery and Security Aviation, the air charter business he acquired with money from the widow's trust, ended up in bankruptcy court.

The records are "disheveled," Mike Dieni, Avery's appointed defense lawyer, told the magistrate judge.

While the new case is prosecuted, Roberts agreed to allow Avery out of prison without having to post any cash bail, but under special conditions.

He can live in San Francisco under the watch of an older brother, Matthew Avery, Roberts ruled. Matthew Avery, who works as office manager for his wife's paper importing company there, participated in the bail hearing by phone and agreed to serve as Mark's third-party custodian. Matthew Avery has the means to pay for his brother to get to San Francisco, Dieni told the judge.

Avery will be under a 10 p.m. to 7 a.m. curfew. He'll be able to work. He's forbidden from any financial transactions -- opening a bank account, taking out a loan, getting a credit card -- without getting permission from a court officer. "His No. 1 goal is to try and get a job when he gets out," Dieni said.

Skrocki told Roberts that $3 million of the $52 million has never been accounted for.

Skrocki also insisted that Avery be barred from talking to potential witnesses and provided Roberts with a list of names.

Avery has been serving his sentence at the La Tuna federal prison, a low security facility and adjacent prison camp 12 miles north of El Paso.

Reach Lisa Demer at or 257-4390.

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