Former Anchorage Prosecutor Sentenced to Over 13 Years in Prison for Massive Wire Fraud and Money Laundering Scheme
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 was sentenced to 160 months in prison for perpetrating a massive wire fraud and money laundering scheme encompassing $52 million. This is the largest wire fraud and money laundering conviction by amount ever prosecuted in Alaska.
Mark Avery, 57, who last resided in San Francisco, California, was sentenced today by U.S. District Judge Ralph R. Beistline. In addition to the prison term, Avery was also ordered to serve five years of supervised release, pay a $100,000 fine, and pay restitution to the May Smith Trust in the amount of $45,925,737.57. Avery was convicted on Feb. 29, 2016, following a two-week jury trial, 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.
Avery was indicted by a federal grand jury in Anchorage in 2013. The indictment alleged that he defrauded the 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 siphoned over $31 million of trust assets in a wire fraud scheme that defrauded the May Smith Trust.
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 charged that Avery engaged in a scheme to defraud the trust and May Wong Smith. Avery served as a trustee and lawyer to the May Smith Trust from early 2002, and received yearly compensation in the amount of $600,000 in trustee fees for his fiduciary role. 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.
In the early 1980s, May Wong Smith began to show signs of dementia and her mental condition began to deteriorate to the point where she was not capable of living without assisted care. 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. Due to her mental condition, she had full time live-in care, who were hand-picked by Avery, 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 wherein he pledged assets of the May Smith Trust as collateral to secure a $52 million loan for himself. 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. 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 exhausted the $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 was also convicted of bank fraud and making false statements to Wells Fargo Bank in October 2006 in connection with a $500,000 line of credit. 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.
“Today’s sentencing brings to a close a lengthy investigation of one of the largest fraud cases perpetrated in Alaska,” said U.S. Attorney Loeffler. “Mr. Avery’s conduct involved a massive breach of fiduciary obligations and just convictions for someone who used his access to these huge funds to defy the wishes and bequests of the Smiths and spend their trust funds on personal debts, whims, wishes and pie in the sky ventures unsupported by any business planning. I commend the dedication of the IRS, FBI and prosecutors in this office who picked up this investigation and brought it forward to today’s result.”
“IRS Criminal Investigation is uniquely trained to follow the money in sophisticated and complex financial crimes such as the one perpetrated by Mark Avery. We will continue to partner with the FBI and DOJ in defense of those victimized by white collar crime,” stated Special Agent in Charge Teri Alexander.