SHERMAN, Texas — A federal prosecutor claimed the president of an Oklahoma City-based aircraft trust company “looked the other way” when she allegedly conspired to traffic drugs and conceal the registered ownership and whereabouts of planes.
“This is a crime of greed,” said federal prosecutor Heather Rattan in an opening statement. “It’s all about the money.”
The attorney, however, for Debra Lynn Mercer-Erwin, claimed she followed the legal advice of her lawyers at the time and was not responsible for the location or flights of planes in her trust.
Joe E. White Jr. claimed Mercer-Erwin was deceived into handling escrow payments tied to an alleged Ponzi scheme with Federico Machado also charged in the wide-ranging probe.
Machado is now an international fugitive. He’s fighting extradition from Argentina.
In court Tuesday, prosecutors alleged Mercer-Erwin pocketed $4.9 million from the Ponzi scheme. Prosecutors claim Machado got $75 million, much of which went into his Guatemalan mining operation.
Mercer-Erwin’s daughter, Kayleigh Moffett, took a late-minute plea deal the day before the trial in exchange for 5 years of probation.
She pleaded guilty to wire fraud and not properly reporting that planes had been taken out of the country.
Moffett’s attorney declined to speak to WFAA when he left the courthouse.
Prosecutors have previously said that a series of stories WFAA first aired in 2019 spurred a federal investigation that resulted in the indictments of Mercer-Erwin and Moffett and five other people.
WFAA discovered that the company registered aircraft as non-citizen trusts that were repeatedly found outside of the United States.
Their company, Aircraft Guaranty Corp, in 2019, had more than a thousand planes registered to two P.O. boxes in a tiny East Texas town called Onalaska. The company has since moved to Oklahoma City.
Onalaska, which has no airport, was the epicenter of a practice that resulted in foreigners anonymously registering their planes. The FAA allows foreign nationals to gain U.S. registration for their aircraft by transferring the title to a trust company.
All U.S.-registered aircraft has an N tail number. However, if you checked the FAA’s records, the aircraft under non-citizen trusts would be registered in the name of the trust company, not the actual name of the foreign owner.
Much of the case centers around who is responsible for the aircraft: the trustee who registers the aircraft or the real owner.
The federal prosecutors have contended that Mercer-Erwin is responsible for what goes on with foreign aircraft registered to her in a trust.
Rattan, the prosecutor, claimed that Mercer-Erwin improperly allowed planes registered to her company to be taken out of the country without the proper paperwork being filed. And on several occasions AGC would transfer ownership of drug-laden planes that had been seized.
Instead of notifying federal authorities about the drug laden plane, Rattan claimed Mercer-Erwin wanted to “get our name off that plane.”
But White, Mercer-Erwin’s attorney disputed the allegations.
White told jurors that the Federal Aviation Administration approved all of the registered trusts submitted to them by AGC.
“When she found out about those planes with drugs on board, she terminated the trust and operating agreement,” White said.
Prosecutors allege the Ponzi scheme involving Wright Brothers, Mercer-Erwin’s company, took place over a four-year span. Millions in investor money that was supposed to be held in escrow for plane purchases, instead was sent to Machado or pocketed by Mercer-Erwin.
“The accounts were not held in escrow,” Rattan told the jury.
Rattan said Mercer-Erwin was “accepting money and wiring money out to Fred Machado and keeping money for herself.”
Mercer-Erwin’s attorney, however, claimed his client was simply deceived by Machado, just like federal prosecutors who were hoping to work a plea agreement with him.
“He (Machado) conned Ms. Erwin and he conned the government,” White said.
Homeland Security Special Agent Justin Marshall testified that Machado first met with investigators in September 2020 in Guatemala.
Already indicted, he agreed to cooperate and turned over the contents of his phone and laptop.
Machado also met with federal investigators in North Texas at least twice, but then fled.
White asked Marshall if he had seen Machado since January 2021.
“Only on TV,” he said, referring to a story that WFAA aired in February. WFAA interviewed Machado via ZOOM while he was serving house arrest awaiting a decision on possible extradition to the United States.