ANCHORAGE, Alaska (CN) - A decade after allegedly burning through $52 million from an elderly widow's personal trust to pay debts and buy vintage warplanes, a yacht and more, the fraud trial of the widow's now-disbarred lawyer began Tuesday.
In opening comments Tuesday in Anchorage Federal Court, lawyers from each side offered their versions of how Mark Avery, a disbarred lawyer based in Anchorage and San Francisco, managed to spend millions of a trust he was supposed to protect in just six months.
"This case is about trust and betrayal of trust," Assistant U.S. Attorney Bryan Schroder said at the start of his opening statement to the jury. Avery and his defense team deny any fraud took place.
"He did not lie or cheat to obtain the money," Avery's attorney Mike Dieni told jurors when it was his turn. "Trustees wanted to invest in an air charter as a new way to make money and to use themselves."
The $52 million spent from May Wong Smith's personal trust, valued at $100 million in 2005 and set aside for her care, was approved by all three trustees - including Avery. Dieni said the trustees were allowed to conduct business with the personal trust along with the May and Stanley Smith Charitable Trust, valued at $350 million in 2005.
Both are California-based trusts.
The two sides pointed out that trustees were paid $600,000 a year to administer the trust, were allowed to bill the trust on top of that salary for "their special work" and collect commissions.
Both prosecution and defense agree that the original three trustees were friends with May Smith and her husband Stanley, who passed away in 1968. May Smith never remarried and started both trusts in 1982, one to care for her as she aged and the other to support charities that she and her husband believed in.
Mark Avery became a trustee only when his father Luther, an original trustee and noted San Francisco tax attorney serving as the trust's lawyer, died. The remaining two trustees, John P. Collins Jr. - an investment banker managing the trust's investments - and Dale Matheny, an accountant managing the books, were in their 70s and liked the idea of using an air charter to get around since flying commercial was more taxing in their old age, according to both sides.
Dieni further explained the evidence will show that Avery used trust money to buy assets - which the prosecution claims were luxury personal items - associated with the plans for the air charter service, or were paid for with Avery's own salary or money earned from his security businesses.
Avery's attorney also laid out an alternate version: hat it was not Avery who committed the fraud, but business partner Rob "Commander" Kane - someone with a long history as a "pathological liar" who duped Avery.
Schroder, however, told jurors that rather than allowing the trustees to use the assets to make more money for the trust, the trustees and charity as originally intended, Avery misused his position to cover personal debts and buy luxury items. He also mismanaged the air charter plan and then tried to cover it up, Schroder said.