The federal trial of Debra Lynn Mercer-Erwin, the proprietor of an aviation trust firm based in Oklahoma City, came to a close this Thursday after a jury in Sherman, Texas, found her guilty of charges related to an international drug trafficking conspiracy and a Ponzi scheme.
A federal jury convicted the 60-year-old of two drug conspiracy felonies, as well as money laundering and wire fraud that robbed investors of up to $240 million, according to WFAA.
This marks the first instance where an aviation trust company founder has been tried and convicted on such charges.
As The Dallas Express reported, together with her co-conspirator Federico Machado, Mercer-Erwin was accused of running a Ponzi scheme using her Oklahoma City-based business Wright Brothers Aircraft Title.
Mercer-Erwin and Machado are said to have used investor deposits to secure private aircraft ownership to pay off investors from previous plane deals.
They also allegedly charged customers escrow fees without placing the funds in the designated escrow account.
Mercer-Erwin also allegedly ignored the criminal activity involving the planes registered under her second company, Aircraft Guaranty Corp.
As of 2019, the company operated out of Onalaska, a small town in East Texas, and had registered over a thousand planes there under foreign owners despite there being no airport, per the news release from the U.S. Attorney’s Office of the Eastern District of Texas.
Irregularities in the paperwork became apparent when several planes from this trust were discovered by authorities to be carrying high volumes of cocaine.
“Mercer-Erwin became a drug dealer when she became aware of planes she had registered were being used to transport large quantities of cocaine,” U.S. Attorney Brit Featherston explained in the news release.
“Mercer-Erwin knew that many of her clients were in the illegal drug business and she hid their identities and the sources of their money in order to reap a large profit,” Featherston continued. “She became a money launderer when she created fake sales of planes that were not actually for sale in order to hide and move drug money.”
Mercer-Erwin and her daughter Kayleigh Moffett faced several indictments in relation to these drug conspiracy charges starting in 2020, along with Machado, Carlos Villaurrutia, and four others yet to be taken into custody, according to court documents.
Shortly before her mother’s trial, Moffett pleaded guilty to wire fraud charges in a plea deal with prosecutors that gave her five years on probation, according to WFAA.
Over the course of Mercer-Erwin’s trial, evidence and testimonies laying out both sides were presented in the court presided over by U.S. District Judge Amos Mazzant in Sherman for 13 days.
Federal prosecutor Heather Rattan opened, “This is a crime of greed. … It’s all about the money,” according to WFAA.
On behalf of the prosecution, a forensic accountant gave testimony regarding the Ponzi scheme while other witnesses told the court that planes belonging to the defendant’s trust were found carrying large stashes of cocaine.
Since U.S. law prohibits foreign nationals from obtaining U.S. registration for their aircraft, the FAA allows them to obtain an “N” tail number through a trust company such as Mercer-Erwin’s. This affords greater access and potentially less scrutiny within the U.S., according to WFAA.
During her first indictment in 2020, Mercer-Erwin provided various proffer statements in which she allegedly admitted to hoping to get a “big payout” from the Ponzi scheme and that she was aware that 10 of her planes had drug connections, according to WFAA.
Yet during the trial, she claimed to not understand the ledger she and Machado allegedly kept, which was a key piece of evidence for the wire fraud charge.
Nevertheless, the jury decided after nearly three days of deliberation to hold Mercer-Erwin accountable on all charges but one, a felony charge to commit export and registration violations.
Judge Mazzant denied her attorney Joe E. White Jr.’s request to release her on bond and she is now in the custody of the U.S. Marshals.
As she was being taken away, Mercer-Erwin told her daughter that she intends to appeal the guilty verdict, according to WFAA.
Ernest Gonzalez, the lead federal prosecutor, highlighted the importance of this trial as a message to aircraft trust company operators.
“I think it is vital for them to know exactly where these planes are, who’s operating them, what’s being done,” Gonzalez said, according to WFAA.
Mercer-Erwin faces a maximum punishment of life in prison, with a sentencing hearing yet to be scheduled by the U.S. Probation Office, per the news release from the U.S. Attorney’s Office of the Eastern District of Texas.
