Anchorage Couple sentenced for defrauding adopted child of over three quarters of a million dollars and filing a false tax return

Anchorage, Alaska-U.S. Attorney Karen L. Loeffler announced today that two Anchorage residents were sentenced on five counts of wire fraud and one count of filing a false income tax return.

Lori Wiley-Drones, 57, and Edward Drones, 62, were each sentenced today by U.S. District Court Judge Sharon L. Gleason, to 46 months in prison, to be followed by three years’ supervised release.  The court ordered the defendants to pay a total of $829,417.74 in restitution to the victim.  

According to Assistant U.S. Attorney Kim Sayers-Fay, who prosecuted the case, in 1996 the Drones became foster parents to a child who had experienced abuse.  The Drones later adopted this child and then filed a lawsuit on his behalf charging the State of Alaska with failure to protect.  The lawsuit resulted in establishment of a trust fund of over $830,000 for the child.  

According to information presented in court, in March 2009, after the child’s professional trustee declined Lori Wiley-Drones’ demand that the child purchase the family’s home, the Drones began arranging the removal of the professional conservator in favor of Edward Drones, who falsely stated that he had not filed for bankruptcy in the past ten years.  When Edward Drones assumed control of the child’s trust fund in December 2009, he assured the state court that he understood his obligation to keep the child’s property separate from his own and never to use the child’s property for his own benefit.  However, upon gaining control of the trust account, Edward Drones immediately shared this control with his wife.  The defendants admitted that over the next ten months, Lori Wiley-Drones and Edward Drones spent virtually all of the trust money.  In one instance, Lori Wiley-Drones bought and renovated a house in Washington with the child’s trust money.  The Drones used over $125,000 to pay credit card bills, $67,088 to purchase cars, and $38,000 to purchase jewelry.  By December 2010, only $15.05 remained in the child’s trust account.  The Drones filed a false income tax return by failing to report any of the more than $700,000 in misappropriated funds as income in 2010.  

In sentencing the Drones, Judge Gleason observed that by decimating their adoptive son’s trust fund, the Drones destroyed his ability to trust people, which was an attribute all the more precious because of the trauma he had endured in early life.  The judge noted that the sentence she imposed reflected that this fraud was particularly damaging:  the victim’s biological father compromised his childhood, and then the Drones compromised his future – and for things like Coach Purses, fine jewelry, clothes and cars. 

“This type of fraud is as damaging as it is heartbreaking. The sentence reflects the need to protect those who are our most vulnerable individuals and deter those who would trade on and take advantage of that vulnerability”, stated U.S. Attorney Karen L. Loeffler.

Kenneth J. Hines, Special Agent in Charge of the IRS Criminal Investigation Division in the Pacific Northwest, indicated he was pleased with the 46-month sentences for Edward and Lori Wiley-Drones and stated, “Being a parent is one of the most important things we will have the pleasure of doing in our lifetime.  So when greed clouds people’s judgment to the point where they cause harm to their children, as a law enforcement officer it’s my duty and responsibility to vigorously pursue the investigation.  This sentencing proves that in our community, crimes against the vulnerable will not go unpunished.”

Ms. Loeffler commends the Internal Revenue Service, Criminal Investigation Division for the investigation of this case.