After three days of deliberations, a federal jury on Monday decided that former Alaska prosecutor Mark Avery cheated his way into a wealthy, elderly widow's trust fund in 2005, then spent wildly on vintage planes and expensive boats. The jury handed down verdicts of guilty on 11 of 17 felony counts in U.S. District Court.
But jurors found him not guilty of one count, and hung on five others.
Jurors began deliberating the $52 million fraud case Thursday morning and announced their decision Monday afternoon in a federal courtroom in Anchorage.
Avery, 56, was tried on five counts of wire fraud, 10 counts of money laundering and single counts of bank fraud and making a false statement to a bank.
Under their decision, jurors found that the fraud of the May Smith Trust added up to $31 million. They found him not guilty on the fourth of five requests for wire transfers, which amounted to $6 million. They couldn't decide whether Avery deceived his two fellow trustees from the very start, when he emailed a financial manager for the first $15 million drawn on a loan backed by the trust.
They also hung up on whether the initial spending amounted to money laundering, including Avery's purchase of two RVs and his payoffs of a second mortgage, loans for three SUVs and other debt. They also couldn't decide on another money laundering charge related to Avery making a $304,000 interest payment from, as prosecutors said, the trust-backed loan.
U.S. District Judge Ralph Beistline, who presided over a trial spanning 15 days from the start of jury selection, earlier said he was considering entering his own order of not guilty on two counts related to a separate $500,000 Wells Fargo line of credit. While jurors convicted Avery of those two charges, the judge could still rule in the defendant's favor on them.
Avery declined to comment after the verdicts were read and didn't react in the courtroom. His attorney, Mike Dieni, also declined to comment.
Over 11 days of testimony, jurors were shown some 200 exhibits. They heard from 20 government witnesses and five from the defense, including Avery himself, who testified over one full day and parts of two others, more than any other witness.
"These guilty verdicts are clear indicators that they totally discounted his explanation and his story," said assistant U.S. Attorney Steve Skrocki, the lead prosecutor on the case.
It's too soon for the prosecution to say whether it intends to retry Avery on the five counts on which jurors couldn't reach a decision.
But, Skrocki said: "This is a $30 million conviction, so it's probably unlikely we will retry him on those charges."
Avery was one of three trustees for the $100 million May Smith Trust, set up to provide for the care of May Wong Smith, as well as the $350 million charitable trust in the name of May and her late husband, Stanley Smith, who made a fortune in mining after World War II.
Under the jury's decision, prosecutors showed that Avery deceived the other two trustees in May 2005 to get approval for a loan that was backed by the May Smith Trust. He had pitched a scheme to buy two or three top-end executive jets that could be used for charters and medevacs and also provide low-cost private jet service for the trustees. He and other company officials also had an idea to use the jets to fly "renditions" of terror suspects to other countries under CIA contracts, Avery suggested from the stand.
An existing air charter and medevac business was going to be the center of his operation. But within weeks, Avery had abandoned that business and instead took control of the project along with his right-hand man, Rob Kane, prosecutors said.
The defense blamed Kane, a bigger-than-life undercover operative who convinced Avery that he had the smarts and the connections to run international and sometimes secretive aviation operations that included sending Czech fighter jets bought by Avery to train the Philippine Air Force.
With loan money in hand, Avery bought two aviation companies including Anchorage-based Security Aviation, which he drove into bankruptcy. He bought RVs and snowmachines, a patrol boat and a yacht, the fleet of L-39 Czech jets and two expensive World War II vintage planes. He paid off personal business debts, witnesses told jurors.
In less than six months, all $52 million was spent, prosecutors said. He never repaid the loan though he had said he would do so by March 31, 2006. The May Smith Trust ultimately recovered $8 million through Avery's personal and business bankruptcies.
The two bank felony charges related to a $500,000 line of credit that Avery sought in 2005 from Wells Fargo. On a financial form, he did not disclose the $52 million loan as an existing debt -- which prosecutors said amounted to a fraud and a false statement. Avery told jurors that he only was supposed to disclose personal debt, and the loan was under one of his businesses.
A decade ago, Kane and Security Aviation were charged with illegal possession of rocket launchers but a jury found them not guilty, agreeing with the defense that they were just harmless decoys.
The real target of federal investigators all along was the source of the money and the incredible spending, prosecutors said. The case addressed questions that have swirled for years about whether the government overstepped back in 2006 during raids of Security Aviation, other businesses, and homes of those involved. Jurors found the answer, Skrocki said.
"Telling this story was a long time coming," he said. "People needed to hear what happened."
Avery built up Security Aviation and other companies, adding 100 employees, only to lose everything.
"A lot of people were really hurt by this case, by the money coming in. They relied on it for jobs. And it was just a fantasy," Skrocki said. Avery and his top aides "had no business. They had no business plan. They had no contracts. And by the time the raids happened in February (2006), they had no money. It had already been spent."
Avery in 2007 pleaded guilty to similar charges but that case was thrown out after a U.S. Supreme Court ruling in an Enron case that said the type of wire fraud charged only applied to cases of bribery and kickbacks. The current case involved a different type of wire fraud.
Avery already served about five years in prison in the earlier case.
Avery will remain free under bail conditions set before his trial. His sentencing was scheduled for May 17.
Alaska Dispatch Publishing