SHERMAN, Texas — Both sides made truth the issue in closing arguments during the three-week-long federal trial of aircraft trust company owner Debra Lynn Mercer-Erwin, who claimed she never confessed to committing any crimes.
“She lied to you and got caught,” prosecutor Lesley Brooks told the jury. "They come in here and call the agents liars. That’s offensive.”
Brooks said Mercer-Erwin made two un-taped proffer statements to federal agents in the presence of several of her own attorneys. A third interview with Mercer-Erwin, when first arrested, was taped.
“If you think those agents are lying about what she (Mercer-Erwin) said, then who better to correct them than her own attorneys,” Brooks said. “And they (the defense) didn’t call them (to the witness stand).”
Mercer-Erwin’s defense attorney, however, accused the federal agents of acting improperly by not recording two of three interviews.
“It tells me that our United States government knows how to record an interview,” attorney Joe E. White Jr. said. “It tells me they made a conscious decision not to record. Now how convenient is that?”
Two federal agents have previously testified that Mercer-Erwin acknowledged taking part in a Ponzi scheme involving fake plane deals with her alleged co-conspirator during un-taped proffer interviews after her arrest in December 2020. The agents also testified that she admitted that as many as ten of her planes ended up in the hands of drug smugglers.
Mercer-Erwin, through her Oklahoma City-based company Aircraft Guaranty Corp., is alleged to have registered planes on behalf of foreign drug dealers.
Prosecutors alleged she failed to adequately vet the foreign nationals she registered planes for and willfully turned a blind eye to criminal activity involving the planes she registered.
Under U.S. law, foreign nationals cannot get U.S. registration for their aircraft. However, the FAA allows foreign nationals to gain U.S. registration for their aircraft by transferring the title to a trust company.
This is the first trial in which an aircraft trust company owner has been charged and tried for allegedly registering planes that were put in the hands of drug traffickers.
Prosecutor Ernest Gonzalez told jurors that regulations require aircraft trust companies to be “accountable” and not allow the aviation industry to “shift the burden” elsewhere.
He said drug cartels need planes to operate and don’t want trust companies “to ask questions” when registering planes.
Gonzalez said Mercer-Erwin admitted in a proffer statement that 10 of her planes had drug connections. He said her company, Aircraft Guaranty, was putting planes “in a position” to smuggle drugs by failing to do proper vetting.
“She’s blinding herself to what is right in the face,” Gonzalez said during closing arguments.
Two planes registered by Mercer-Erwin’s company were found in Central America carrying a total of more than three tons of cocaine, records show. Mercer-Erwin has been indicted in connection with those planes as well as a third plane shot down by the Venezuelan military on a clandestine runway in July 2020.
“How many warnings do you need to make a determination that you’ve got a problem,” Gonzalez said.
Aircraft Guaranty had a thousand planes in trust, earning at least $1.2 million annually, he said.
White argued that federal officials have “tried to demonize” the non-citizen trust system. He also said Mercer-Erwin did required vetting and has said the company should not be “deputized” to do the work of other federal agencies.
He also argued that prosecutors failed to prove their drug conspiracy case. “Who did Debbie conspire with regarding the planes?” he asked jurors.
White said prosecutors hadn’t shown direct evidence Mercer-Erwin knew there were drugs aboard any planes.
“There’s not one text message…that Deb Mercer-Erwin had anything to do with drugs coming into this country,” White said. “Where is the evidence that she is a drug distributor?”
“The government says she turned a blind eye to drugs,” White said. “But in order to turn a blind eye, you have to know what you’re turning a blind eye to.”
Mercer-Erwin also has been accused of running a Ponzi scheme with her alleged accomplice, Federico Machado, through her other Oklahoma City-based company, Wright Brothers Aircraft Title.
Prosecutors said a key piece of evidence in the alleged Ponzi scheme is a “secret ledger” that went back and forth via emails between her and Machado.
In her testimony, Mercer-Erwin sought to distance herself from Machado and the ledger. “It was (Machado’s) account of his transactions,” she testified. “I didn’t have a clear understanding of the ledger he was providing me.”
However, court testimony has shown that “ledger” and corresponding banking records showed that investors wired escrow deposits into a Wright Brothers Aircraft Title trust account. Investors signed “escrow agreements” with Mercer-Erwin’s company dictating the escrow demands were to remain in the account, to be returned to the investor once the plane sales were completed, or upon the investor’s request for reimbursement.
Instead of the deposits staying in the account as required, government witnesses have testified that ledger and bank records showed money flowed from the escrow account to repay prior investors and into the coffers of entities controlled by Machado.
“She wants you to believe through verbal agreements, rather than the written agreements, that it was okay to move money,” Gonzalez told jurors.
“She followed actions and directions of Machado, her partner in crime,” Gonzalez said. “It just shows she is part of the scheme with Machado.”
Gonzalez told juror that Mercer-Erwin funneled $75 million from the escrow account to her alleged accomplice, Federico Machado, and pocketed $4.9 million in escrow fees. Machado is a fugitive in Argentina.
Mercer-Erwin made $142,000 in interest from the escrow account. “She made interest money by having that dirty money in there,” Gonzalez said.
White, however, questioned why prosecutors failed to call any of the alleged Ponzi victims to testify.
“Why didn’t they interview anybody?” White told jurors. “Tell me who the victims are because I want to know…What was the scheme and who got defrauded?”
Prosecutors said investors were duped into what was supposed to be short-term loans with low risk and high rewards. Though no investors appeared at the trial, WFAA has confirmed that investors claim alleged to have lost some $240 million, according to court records and their civil attorneys.
Prosecutors acknowledged during closing arguments that they have the burden of proof in charges against Mercer-Erwin that include wire fraud, money laundering, drug trafficking and export violations. However, they said records bolster their case.
“They (the defense) think you’re too dumb to follow the evidence,” prosecutor Brooks told the jury.
Investigators and prosecutors have said a series of stories WFAA first aired in 2019 spurred a federal investigation that resulted in the indictments of Mercer-Erwin, her daughter, Kayleigh Moffett, Machado and others. The WFAA investigation looked into how it came to be that more than a thousand planes were registered in the tiny East Texas town of Onalaska, which has no airport.
Moffett has pleaded guilty to wire fraud and not properly reporting that planes had been taken out of the country. She accepted a deal for five years of probation.