Anchorage Daily News

A chapter ended Thursday in the strange saga of one-time Security Aviation owner Mark Avery, a former city and state prosecutor who admitted taking $52 million from a wealthy widow's trust but for a long time didn't see it as stealing.

Avery was sentenced to 8 1/2 years in federal prison Thursday for wire fraud and money laundering. The judge, alluding to alarms about Avery's emotional state, ordered him jailed immediately. He was handcuffed and taken away by U.S. marshals, his once comfortable life in disarray, his future uncertain.

Yet the mystery continues.

How did Avery, privileged son of a celebrated San Francisco tax and estate lawyer, someone who spent much of his adult life in public service as a paramedic or prosecutor, end up in prison?

U.S. District Judge Ralph Beistline said Thursday that he knew more about Avery than most defendants, and he still couldn't figure out how Avery thought there was nothing wrong about spending so much so fast from the May Smith Trust, established to provide for Smith's care.

"You never did think you did wrong until the walls fell down around you," Beistline told Avery.

The judge ordered Avery to return $52,125,000 to the trust. Some of the money will come through bankruptcy proceedings but no one in court Thursday could say how much might be recovered.

Avery got those millions from the trust without any safeguards or documentation and spent it all in six months, assistant U.S. attorney Steven Skrocki said.

Avery bought or started a string of companies including the air charter Security Aviation and stocked them with SUVS, planes, jets, helicopters and other expensive items. He bought for fun, too: a yacht, two vintage World War II planes, personal vehicles.

"It didn't stop until the money ran out," Skrocki told the judge.

May Smith suffered from Alzheimer's disease and didn't know what was happening to the money before her death in 2006, he said.

During the hourlong hearing on Thursday, Avery, 48, kept his back to spectators. He spoke in a monotone, so quietly that his words were hard to make out. He rambled and the judge had to prod him back on course.

"I screwed this up. I messed this up," Avery said.

He's lost everything. He's been disbarred as a lawyer. He and his wife are separated. Everything he bought has been taken through bankruptcy. "A nightmare," Avery said.

But he's not really a criminal, according to his lawyer. "Incompetent" and in over his head as a trustee, Scott Dattan told the judge.

Avery was intelligent and well-educated, but naive and "to some degree greedy," Beistline said. He became wrapped in a "web of mystery, fantasy, intrigue." It was hard to come up with a fair sentence, the judge said, because of the "strange nature of everything about this."

"It's a crazy case."

The judge said some of Avery's troubles stem from his relationship with Rob "Commander" Kane, Avery's right-hand man in his business ventures. But Avery himself was responsible for "highly unethical and illegal conduct," Beistline said.

The judge considered a lengthy psychological evaluation of Avery as well as a report by a retired probation officer working as defense consultant. The psychologist found that Avery was depressed and suicidal. The consultant, Rosemary Costa, said he was Kane's puppet.

As a kid in San Francisco, Avery was a loner, a big, quiet boy picked on by bullies and whose mother had to stick up for him, Costa wrote. He loved submarines and thought about attending a military academy after high school, but had a bad eye from an accident when he was five and couldn't follow that dream.

He flunked out of college, became a paramedic, then went back to school and became a lawyer.

In 1996, he moved to Alaska, tried to become an Anchorage police officer, but didn't make the cut, according to the consultant's report. He became a municipal prosecutor and later moved to the district attorney's office.

Avery inherited his role as well-paid trustee from his father, Luther, a famed lawyer who died in December 2001. One of Luther's clients was Stanley Smith, an orchid collector and Australian war correspondent who made a fortune in mining and other businesses. When Smith died, the May Smith Trust was set up for his widow's care. Later the May and Stanley Smith Charitable Trust was created to give some of the wealth away.

Avery's path took an odd twist in 2004 when he met Rob Kane, a man bigger than life with stories to match about his work in the shadows as an operative for the FBI and the CIA. He talked of gold caches in the Philippines, capturing terrorists, bounty hunting for fugitives.

Avery became "intoxicated" with Kane, who represented the life he never had, Costa wrote. Kane "was so passionate in describing his exploits that he was extremely convincing in spite of their ridiculous, preposterous or unbelievable nature," her report says.

In 2005, Avery began borrowing from the May Smith Trust. The initial idea was to acquire jets to fly the trustees around to check on their charities, then charge the trust for the trips to pay back the loan, prosecutors said. But Avery didn't stop there.

The big spending soon caught the attention of the feds, especially the purchase of weapons, body armor, fighter jets and rocket launchers.

One of the L-39 Czech-built fighter jets crashed in January 2006, and on Feb. 2, the feds raided Avery's businesses and Kane's home. That was before investigators knew the whole story, a court filing by Skrocki says. Kane was arrested, and he and Security Aviation were tried on charges of illegally possessing two rocket launchers. A jury acquitted them in May 2006.

By then, Avery's business empire was under scrutiny and in shambles. In October 2006, he filed for bankruptcy and soon began cooperating with the feds. He got a break for that, but Skrocki told the judge it shouldn't be considered a "get out of jail free card."

The story isn't over. Kane and his family are back in the Philippines, where his wife is from. The other two Smith trustees are still in place. Authorities are continuing to investigate.

"Circumstances change. Evidence changes," Skrocki said. "We never really close the door and say it's the end."

Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.

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