Former Anchorage Prosecutor convicted in wire fraud and money laundering scheme amounting to $31 million
Largest money laundering scheme in Alaska history
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that a former Anchorage resident and former municipal prosecutor Mark J. Avery was convicted of three counts of wire fraud, six counts of money laundering, one count of bank fraud, and one count of making false statements to a bank after a two week trial before U.S. District Judge Ralph R. Beistline.
Avery, 57, of San Francisco, California, was indicted by a federal grand jury in Anchorage in 2013 alleging he defrauded May Wong Smith and the May Smith Trust, of over $52 million dollars. Avery was, at the time, a trustee of the trust and used his influence to obtain access to $52 million of trust assets, all of which he expended in a period of six months. The jury’s verdict found that, in 2005 and 2006, Avery committed over $31 million in wire fraud related to the scheme to defraud the May Smith Trust. The verdicts involve the largest money laundering convictions by amount ever prosecuted in Alaska.
The jury did not reach verdicts on one count of wire fraud and three counts of money laundering. The jury acquitted Avery of one count of wire fraud.
Avery was re-charged after the Ninth Circuit Court of Appeals reversed Avery’s conviction on similar charges for honest services wire fraud in 2013 based on a Supreme Court decision that found the theory of honest services fraud under which Avery was previously convicted unconstitutional. The revised indictment filed against Avery, a trustee and lawyer to the May Smith Trust, charged that Avery engaged in a scheme to defraud the trust and May Wong Smith. Avery held those positions from early 2002, and received yearly compensation in the amount of $600,000 in trustee fees for his role as trustee and fiduciary to these trusts. Avery was also owner/operator of Avery and Associates, L.L.C., Security Aviation, Inc., and Regional Protective Services, L.L.C. Avery’s companies, many of which were created after receipt of trust funds, were engaged in air charter services, aeromedical evacuation, legal services, development of real property, and court imposed electronic monitoring.
During the trial, the jury heard that May Wong Smith was born in China in 1922 and shortly after World War II married Stanley Smith, a citizen of Australia. Stanley Smith amassed millions of dollars from post-war business investments and became a quiet benefactor of various charitable organizations. Stanley Smith died in 1968 and May Wong Smith never remarried.
The May Smith Trust was established on October 10, 1982, to provide for May Wong Smith’s support and maintenance during her life and certain charitable purposes after her death.
In the early 1980s, May Wong Smith began to show signs of dementia. From that time, her mental condition began to deteriorate to the point where she was not capable of living without assisted care. Due to her mental condition she had full time live-in care from at least 1991 until her death in Nassau, Bahamas, on July 15, 2006. In spite of her compromised mental capacity, she remained a trustee until her death in July 2006.
The indictment alleged that Avery engaged in a scheme that involved pledged assets of the May Smith Trust as collateral for a $52 million dollar loan made to Avery. The jury’s verdicts found that Avery defrauded May Wong Smith and the May Smith Trust by using the $52 million loan funds for his personal use and to invest in various businesses without any indicia of normal business practices in that the money was obtained and spent with no written business plan, no controls over how the money was to be spent, no repayment terms, no promissory note and none of the common safeguards of commercial investments. At trial the evidence showed that Avery ran through all $52 million he obtained from the trust in six months using the funds for various purchases including two World War II era fighters, a P-51D Mustang, and an F4U-4 Corsair, other antique aircraft, real estate, a personal mortgage payoff, a 47' Carver Yacht, and a 37' heavy-duty patrol boat.
Avery also was convicted of bank fraud and making false statements to a bank in connection with a $500,000 line of credit made to Wells Fargo in October 2006. Avery failed to list the $52 million dollar debt when applying for the loan, which, if listed, would have been material in Wells Fargo’s decision in evaluating the loan.
Sentencing is set for May 17, 2016. Avery remains released on bail pending sentencing.
The IRS-Criminal Investigation and the FBI conducted the investigation leading to the indictment and conviction in this case. U.S. Attorney Loeffler commended the FBI and IRS for their dedication and exemplary efforts in the prosecution and conviction of Avery.