1 00:00:00,880 --> 00:00:06,660 In this episode of American Greed, in Alaska, Mark Avery is blowing through a 2 00:00:06,660 --> 00:00:08,240 fortune in record speed. 3 00:00:08,620 --> 00:00:13,340 How often do you see somebody spending $53 million in six months? 4 00:00:13,620 --> 00:00:19,360 He is grabbing up expensive toys, motorhomes, a yacht, even snowmobiles. 5 00:00:19,640 --> 00:00:23,120 That's what everybody in Alaska wants to have, but not all of it at once. 6 00:00:23,900 --> 00:00:29,040 And while Alaskans like their guns, Avery appears to be outfitting his own 7 00:00:29,040 --> 00:00:30,040 private army. 8 00:00:30,300 --> 00:00:34,760 It was wall -to -wall guns and hand grenades and everything you could think 9 00:00:34,920 --> 00:00:38,300 And then suddenly, his army becomes an airport. 10 00:00:39,600 --> 00:00:45,400 He buys six helicopters, eight former Soviet fighter jets, and a fleet of 11 00:00:45,400 --> 00:00:46,400 War II fighters. 12 00:00:46,880 --> 00:00:48,620 It was a rodeo every day. 13 00:00:48,820 --> 00:00:51,220 We'd come to work and say, what did they buy today? 14 00:00:52,380 --> 00:00:55,620 Avery seems lost in a paramilitary fantasy. 15 00:00:56,430 --> 00:01:00,950 He said it was for secret agents between missions. And that was like, whoa, 16 00:01:01,790 --> 00:01:04,090 whoa. I'm not believing this. 17 00:01:04,750 --> 00:01:08,090 And who is paying for Avery's wild spending? 18 00:01:08,510 --> 00:01:11,630 That's where his fantasy turns into fraud. 19 00:01:28,460 --> 00:01:33,400 Of all the great American bombers in aviation history, one of the most 20 00:01:33,400 --> 00:01:38,860 is a plane named the Corsair, famously fierce fighter during World War II. 21 00:01:39,220 --> 00:01:42,400 The Japanese called it Whistling Death. 22 00:01:42,940 --> 00:01:48,340 But from that illustrious past in combat, one classic Corsair takes a 23 00:01:48,340 --> 00:01:50,220 fancy in October 2005. 24 00:01:53,230 --> 00:01:58,610 Here at a small airport in California, the feared fighter is reduced to a toy, 25 00:01:58,770 --> 00:02:00,670 given as a birthday surprise. 26 00:02:04,050 --> 00:02:06,970 It's a present with a staggering price tag. 27 00:02:07,590 --> 00:02:09,870 2 .4 million dollars. 28 00:02:12,890 --> 00:02:18,810 Mark Avery has bought the plane for a friend he has known for just over one 29 00:02:18,810 --> 00:02:20,470 year, Rob Kane. 30 00:02:21,590 --> 00:02:23,470 Unbelievable. Thanks, man. 31 00:02:23,910 --> 00:02:28,310 Unbelievable. It's kind of the world's most expensive bro hug, you know. 32 00:02:28,650 --> 00:02:30,330 It's like, I love you, man. 33 00:02:30,970 --> 00:02:33,170 I'm giving you a $2 .4 million airplane. 34 00:02:34,990 --> 00:02:39,070 I want to cry, man. 35 00:02:39,350 --> 00:02:40,350 This is it. 36 00:02:40,910 --> 00:02:42,650 What is going on here? 37 00:02:43,330 --> 00:02:47,890 The answer is found in the strange alliance between Rob Kane and Mark 38 00:02:53,040 --> 00:02:58,800 Avery grows up in San Francisco, living a privileged life in an expensive house 39 00:02:58,800 --> 00:03:04,440 near the Presidio, a neighborhood where today houses routinely sell for millions 40 00:03:04,440 --> 00:03:05,440 of dollars. 41 00:03:06,520 --> 00:03:10,780 His father is Luther Avery, a prominent attorney in town. 42 00:03:11,460 --> 00:03:15,920 Probably one of the most well -recognized and successful tax estate 43 00:03:15,920 --> 00:03:18,320 attorneys in the city of San Francisco at his time. 44 00:03:18,920 --> 00:03:23,700 And part of Luther Avery's success is built on the success of an Australian 45 00:03:23,700 --> 00:03:29,480 named Stanley Smith, who made a fortune selling iron ore to the Japanese after 46 00:03:29,480 --> 00:03:30,480 World War II. 47 00:03:31,480 --> 00:03:35,120 Stanley Smith was, you'd probably call him a salt of the earth man. 48 00:03:35,360 --> 00:03:36,740 He was a hardworking man. 49 00:03:37,660 --> 00:03:43,360 By the 1950s, Smith is worth tens of millions of dollars, and he decides to 50 00:03:43,360 --> 00:03:46,700 share his wealth. He gives his money away quietly. 51 00:03:49,230 --> 00:03:52,810 The quote that's attributed to him is he's not one to get up and take a bow 52 00:03:52,810 --> 00:03:53,830 doing things like that. 53 00:03:55,250 --> 00:04:01,910 After Stanley Smith dies in 1968, $350 million of his fortune is placed in a 54 00:04:01,910 --> 00:04:04,390 charitable foundation to support those in need. 55 00:04:04,910 --> 00:04:08,930 Homeless children, people with disabilities, veterans. 56 00:04:10,190 --> 00:04:16,290 At the same time, $100 million of Smith's money is set aside to ensure the 57 00:04:16,290 --> 00:04:17,329 -being of his wife. 58 00:04:17,870 --> 00:04:19,130 May Wong Smith. 59 00:04:20,430 --> 00:04:23,690 For years, May's money is kept perfectly safe. 60 00:04:24,690 --> 00:04:29,690 He was invested in the most secure method possible in cash, U .S. 61 00:04:29,690 --> 00:04:32,530 there's no risk of loss whatsoever through the term of her life. 62 00:04:34,530 --> 00:04:39,390 Watching over the Smiths' millions are three trustees charged with protecting 63 00:04:39,390 --> 00:04:40,269 the money. 64 00:04:40,270 --> 00:04:44,050 But they are actually milking the trusts for all they can. 65 00:04:44,780 --> 00:04:48,620 They are paid a stunning salary of $400 ,000 a year. 66 00:04:49,440 --> 00:04:54,060 And according to the trust agreement, they can name their price on any 67 00:04:54,060 --> 00:04:55,720 professional services they provide. 68 00:04:56,300 --> 00:04:59,220 They were all living very well off of this trust. 69 00:04:59,500 --> 00:05:04,920 This was sort of a self -fulfilling, long -term business relationship that 70 00:05:04,920 --> 00:05:09,940 benefited everybody as long as they kept it quiet, kept it secret. 71 00:05:12,300 --> 00:05:14,860 Luther Avery is one of the trustees. 72 00:05:15,360 --> 00:05:20,620 And by the early 90s, he is helped in that role by his son, Mark, who is now a 73 00:05:20,620 --> 00:05:23,640 lawyer, a career that is something of a fallback. 74 00:05:25,060 --> 00:05:29,200 We know from our investigation from his own statement that he was interested in 75 00:05:29,200 --> 00:05:30,200 joining the military. 76 00:05:30,340 --> 00:05:32,440 So he tried that avenue and it didn't work. 77 00:05:33,240 --> 00:05:37,480 And that's because of a childhood accident that causes an eye injury and 78 00:05:37,480 --> 00:05:39,700 prevents Avery from pursuing his dreams. 79 00:05:40,480 --> 00:05:43,780 If he could have been, he would have been in the first responder world 80 00:05:43,780 --> 00:05:44,780 somewhere. 81 00:05:45,560 --> 00:05:50,200 He would have been in the military, or he would have been a fireman, or he 82 00:05:50,200 --> 00:05:51,300 have been a police officer. 83 00:05:52,220 --> 00:05:55,680 I think those things interested him, and he liked that world. 84 00:05:57,820 --> 00:06:02,220 As he hits his mid -30s, Avery is restless working in San Francisco. 85 00:06:02,560 --> 00:06:03,760 He's looking for change. 86 00:06:05,760 --> 00:06:08,460 He heads to Alaska, the last frontier. 87 00:06:10,250 --> 00:06:13,910 A place where he might find the rough and ready adventurous life he craved. 88 00:06:16,350 --> 00:06:17,350 But no. 89 00:06:18,990 --> 00:06:24,050 He ends up back working in law as a city and then a state prosecutor. 90 00:06:25,390 --> 00:06:28,630 Eventually, he tries his hand at small business. 91 00:06:29,450 --> 00:06:33,010 Avery at various points had tried to start a number of businesses. 92 00:06:33,650 --> 00:06:36,050 And none of them succeeded. 93 00:06:36,570 --> 00:06:37,570 Because he just... 94 00:06:37,770 --> 00:06:40,310 didn't have good business plans, and he didn't do follow -up. 95 00:06:40,690 --> 00:06:45,710 In 2001, he is living in a duplex on a busy street with his wife and children. 96 00:06:46,130 --> 00:06:47,130 He's broke. 97 00:06:48,050 --> 00:06:52,450 Our investigation revealed that he was significantly in debt from real estate, 98 00:06:52,590 --> 00:06:55,070 loans, just consumer, average consumer purchases. 99 00:06:55,550 --> 00:06:58,450 And then Avery gets the bailout he needs. 100 00:06:58,830 --> 00:07:01,150 His father, Luther Avery, dies. 101 00:07:01,530 --> 00:07:06,310 And Mark inherits his father's position as a trustee for the Stanley and May 102 00:07:06,310 --> 00:07:07,310 Smith funds. 103 00:07:07,680 --> 00:07:10,600 with a salary of $600 ,000 a year. 104 00:07:11,340 --> 00:07:12,740 $50 ,000 a month. 105 00:07:13,020 --> 00:07:14,580 That's a lot of money to think about. 106 00:07:15,800 --> 00:07:21,600 Now, with a sizable and reliable income, Avery leaves the duplex and upgrades to 107 00:07:21,600 --> 00:07:25,000 a 5 ,000 -square -foot house outside of Anchorage. 108 00:07:25,580 --> 00:07:30,480 The former Mr. Avery said when he became a trustee, it was like going from the 109 00:07:30,480 --> 00:07:34,640 ghetto to the White House because their standard of living changed tremendously. 110 00:07:35,680 --> 00:07:40,600 And while buying his new house, Avery meets the son of his real estate agent, 111 00:07:40,880 --> 00:07:46,580 Rob Kane, a man who claims he lives the life Avery can only dream of. 112 00:07:47,480 --> 00:07:54,220 Kane says he is an FBI informant, a former Navy SEAL who works covertly for 113 00:07:54,220 --> 00:07:59,280 CIA. He was once a commander in the Philippine Coast Guard and has a 114 00:07:59,280 --> 00:08:00,280 to prove it. 115 00:08:00,540 --> 00:08:03,640 He was a physically imposing guy who had... 116 00:08:04,310 --> 00:08:09,610 Incredible stories about his own background, about being a paid U .S. 117 00:08:09,830 --> 00:08:14,310 working in the Philippines undercover for the U .S. government. 118 00:08:15,970 --> 00:08:21,830 Bill Barstow, now retired, worked for 30 years as a federal financial trustee 119 00:08:21,830 --> 00:08:22,830 for Alaska. 120 00:08:22,950 --> 00:08:26,430 When you hear these bizarre things, on the other side, there was always some 121 00:08:26,430 --> 00:08:31,330 kernel truth that you might think, well, maybe. 122 00:08:32,690 --> 00:08:34,070 Maybe there's something there. 123 00:08:34,409 --> 00:08:36,169 And there is something there. 124 00:08:36,570 --> 00:08:41,010 Cain has worked in the Philippines. He has sold information to the FBI. 125 00:08:42,010 --> 00:08:46,650 However... He wasn't on the United States government's books as an 126 00:08:46,650 --> 00:08:49,950 any capacity, but he would just run around the world and try to collect 127 00:08:49,950 --> 00:08:52,570 information on people and sell it to whoever would buy it. 128 00:08:52,810 --> 00:08:57,590 But for Mark Avery, there is enough truth in Cain's stories to become a 129 00:08:57,590 --> 00:09:00,270 in almost everything Cain says. 130 00:09:01,330 --> 00:09:06,810 Finally, it seems he has a genuine connection to the macho world he wanted 131 00:09:06,810 --> 00:09:07,769 part of. 132 00:09:07,770 --> 00:09:12,190 But I think Rob tried to portray himself as a CIA operative more than anything 133 00:09:12,190 --> 00:09:16,490 else. So now all of a sudden you've got that, you know, kind of black ops world 134 00:09:16,490 --> 00:09:18,870 out there that I think that got him excited. 135 00:09:19,310 --> 00:09:24,770 By 2005, Mark Avery has a new friend, but he also has an old problem. 136 00:09:25,150 --> 00:09:27,410 He is in deep debt once again. 137 00:09:27,950 --> 00:09:33,230 He had accumulated approximately $600 ,000 in various personal debt, credit 138 00:09:33,230 --> 00:09:35,210 cards, vehicles, things of that nature. 139 00:09:35,550 --> 00:09:41,210 Most people could get by on $600 ,000 a year, but not Mark Avery. 140 00:09:41,590 --> 00:09:47,290 What it says is that he's a compulsive spender, that nothing was ever enough. 141 00:09:47,590 --> 00:09:52,830 And now, as he looks for his next influx of cash, he turns to the $100 million 142 00:09:52,830 --> 00:09:54,790 that belongs to May Wong Smith. 143 00:09:55,410 --> 00:09:59,490 At this point, May is 82, living in the Bahamas. 144 00:09:59,690 --> 00:10:01,910 She is suffering from Alzheimer's disease. 145 00:10:02,650 --> 00:10:07,070 And Avery comes up with a scheme that will eventually give him direct access 146 00:10:07,070 --> 00:10:10,110 her millions to finance his next business. 147 00:10:11,630 --> 00:10:13,390 He's not thinking of May Smith anymore. 148 00:10:13,990 --> 00:10:17,250 This is about Mark Avery and Mark Avery's plans. 149 00:10:18,370 --> 00:10:22,190 And in May 2005, he puts his plans in action. 150 00:10:23,320 --> 00:10:29,200 He meets with his co -trustees and sells them on a wild idea to borrow $50 151 00:10:29,200 --> 00:10:34,940 million against Mae Smith's trust to buy a pair of Gulfstream jets that they can 152 00:10:34,940 --> 00:10:38,340 all use when checking on nonprofits around the world. 153 00:10:39,120 --> 00:10:45,100 That made no sense because you could go to a pay -by -the -flight jet and say, I 154 00:10:45,100 --> 00:10:50,140 want 400 hours a year, and whenever you want a plane, there's a Learjet there 155 00:10:50,140 --> 00:10:51,940 for you to do whatever you want. 156 00:10:52,590 --> 00:10:57,550 But Avery argues the trust can actually make money on the jets by renting them 157 00:10:57,550 --> 00:11:00,730 out as charters and for medevac purposes. 158 00:11:01,550 --> 00:11:05,470 It's a clever pitch that adds one more perk to the trustee's job. 159 00:11:06,630 --> 00:11:09,730 And so they go along with Avery's scheme. 160 00:11:11,710 --> 00:11:15,650 I think the idea of flying around in a private jet would be appealing to 161 00:11:15,650 --> 00:11:18,890 if it was offered to them. But it certainly was appealing. 162 00:11:20,460 --> 00:11:24,900 Back in Alaska, Avery seems unworried about a $50 million loan. 163 00:11:25,740 --> 00:11:30,760 And that's because Rob Kane assures him he can open doors throughout the world. 164 00:11:31,240 --> 00:11:36,280 But what Avery doesn't know is that according to federal investigators, Rob 165 00:11:36,280 --> 00:11:38,100 is not to be trusted. 166 00:11:38,660 --> 00:11:42,920 The United States government and other governments had found Mr. Kane to be a 167 00:11:42,920 --> 00:11:49,000 fabricator, a liar, habitual at that, that he was a thief and a con man. 168 00:11:49,760 --> 00:11:53,320 and had absolutely no credibility with the United States government. 169 00:11:54,180 --> 00:11:59,500 And so in the summer of 2005, half of the money that was to be spent only for 170 00:11:59,500 --> 00:12:04,720 the care of Mae Smith is now in the hands of a man who is perpetually in 171 00:12:04,720 --> 00:12:06,200 financial hot water. 172 00:12:06,940 --> 00:12:11,040 And working with him is a man described as a liar. 173 00:12:11,460 --> 00:12:13,360 They are a dangerous combination. 174 00:12:14,760 --> 00:12:18,580 Up next, what are Cain and Avery really up to? 175 00:12:19,230 --> 00:12:24,550 It was kind of a scary time for me because I didn't trust these gentlemen 176 00:12:24,550 --> 00:12:26,030 wasn't sure what they were doing. 177 00:12:43,270 --> 00:12:45,770 In Alaska, in the early summer of 2005, 178 00:12:46,860 --> 00:12:52,880 Mark Avery has access to $50 million, money and trust for the care of an 179 00:12:52,880 --> 00:12:58,500 woman. But the day after Avery gets his hands on it, he uses it to take care of 180 00:12:58,500 --> 00:12:59,500 himself. 181 00:12:59,800 --> 00:13:03,660 Avery pays off a mortgage, credit cards, auto loans. 182 00:13:04,500 --> 00:13:09,740 He ends up paying off $400 ,000 of personal debt. That's the first thing he 183 00:13:09,740 --> 00:13:10,740 does. 184 00:13:11,020 --> 00:13:14,000 Two weeks later, Avery heads to Whittier. 185 00:13:14,300 --> 00:13:17,080 known as the Gateway to Prince William Sound. 186 00:13:18,020 --> 00:13:23,300 There, he buys a 47 -foot yacht with a price tag of $230 ,000. 187 00:13:24,200 --> 00:13:29,400 Next, it's a patrol boat known as a moose boat, typically used by law 188 00:13:29,400 --> 00:13:32,740 enforcement. The cost, $500 ,000. 189 00:13:33,540 --> 00:13:39,140 And there are more goodies for Avery. Two motorhomes, one for him and one for 190 00:13:39,140 --> 00:13:40,140 Rob Kane. 191 00:13:40,590 --> 00:13:44,130 And multiple snowmobiles and ATVs. 192 00:13:44,730 --> 00:13:46,590 That's what everybody in Alaska wants to have. 193 00:13:47,150 --> 00:13:48,830 But not all of it at once. 194 00:13:49,290 --> 00:13:51,450 And not all of it at all. 195 00:13:52,550 --> 00:13:56,950 But you can see that that's where his mind was. I'm going to get this $50 196 00:13:56,950 --> 00:13:59,130 million. I'm going to treat it as my own. 197 00:14:03,930 --> 00:14:07,430 And then, later in June, Avery has a new idea. 198 00:14:08,090 --> 00:14:13,170 Instead of buying a jet or two, how about buying his own aviation company? 199 00:14:13,650 --> 00:14:19,190 He set his eyes on Security Aviation, one of Alaska's most respected air 200 00:14:19,190 --> 00:14:20,190 companies. 201 00:14:20,390 --> 00:14:24,170 The owner is willing to sell the company to Avery for $7 million. 202 00:14:25,270 --> 00:14:27,190 Avery pays him $8 million. 203 00:14:28,150 --> 00:14:30,770 He wanted the company, and he didn't want to negotiate. 204 00:14:30,990 --> 00:14:34,970 So another million dollars to him, and it wasn't his money, really didn't 205 00:14:34,970 --> 00:14:35,819 matter. 206 00:14:35,820 --> 00:14:40,020 At Avery's side, every step of the way is Rob Kane. 207 00:14:40,780 --> 00:14:45,600 I don't know exactly what his position was on paper, but everybody that seemed 208 00:14:45,600 --> 00:14:48,780 to work there looked at Avery and Kane as one and one A. 209 00:14:49,340 --> 00:14:54,320 Avery primarily stays in the background, but Kane is in everyone's face. 210 00:14:54,680 --> 00:14:56,400 He was very dominating. 211 00:14:56,860 --> 00:14:58,760 He had a very commanding presence. 212 00:14:59,900 --> 00:15:05,140 Deborah Moradian is the bookkeeper and human resources manager for security 213 00:15:05,140 --> 00:15:07,180 aviation. He was intimidating. 214 00:15:07,900 --> 00:15:08,900 He was. 215 00:15:09,600 --> 00:15:14,920 Kane asks to be called Commander Kane, a reminder of the distinguished military 216 00:15:14,920 --> 00:15:16,600 career he claims to have. 217 00:15:16,960 --> 00:15:21,720 And whenever anyone will listen, Kane has a story to tell about his days as a 218 00:15:21,720 --> 00:15:23,280 secret government operative. 219 00:15:23,820 --> 00:15:27,680 I remember one in particular, just bits and pieces of it, where he was being 220 00:15:27,680 --> 00:15:28,680 chased in the jungle. 221 00:15:29,310 --> 00:15:32,610 He and his group of men with machine guns and machetes. 222 00:15:33,790 --> 00:15:36,050 Mark Avery believes those stories. 223 00:15:36,330 --> 00:15:41,090 And, trusting Kane's competence and connections, he relies on him for almost 224 00:15:41,090 --> 00:15:43,290 every decision he makes about his business. 225 00:15:43,770 --> 00:15:49,150 Mark found his access to be so valuable that he would do anything to keep him 226 00:15:49,150 --> 00:15:53,630 close and to keep him employed and use him as a source. 227 00:15:53,830 --> 00:15:56,730 He buys a $700 ,000 house for Kane. 228 00:15:57,260 --> 00:16:00,020 and gives him $20 ,000 a month in salary. 229 00:16:01,040 --> 00:16:04,040 Cain insists that it be paid in cash. 230 00:16:04,640 --> 00:16:08,600 If you're a spy and you've got this persona that you've got to be able to 231 00:16:08,600 --> 00:16:11,780 and run at any time, that you've got to keep it in cash, it's got to be off 232 00:16:11,780 --> 00:16:13,900 paper. And that's what he told everybody. 233 00:16:14,420 --> 00:16:19,720 People are unsure about Rob Cain, but the initial business plans for security 234 00:16:19,720 --> 00:16:21,400 aviation seem solid. 235 00:16:22,120 --> 00:16:26,660 Douglas Gallant owns the hangar where Security Aviation keeps its fleet. 236 00:16:27,060 --> 00:16:33,980 They had a good idea, and that was to provide consolidated medevac service all 237 00:16:33,980 --> 00:16:38,640 over the state and then get bigger planes in, more planes. 238 00:16:39,680 --> 00:16:41,120 It sounded good. 239 00:16:41,800 --> 00:16:45,960 Right away, they bring in the long -range jets that fit with their plans. 240 00:16:46,380 --> 00:16:49,920 But soon, the purchases start to feel excessive. 241 00:16:50,730 --> 00:16:54,430 Avery buys not just one helicopter, but six helicopters. 242 00:16:55,870 --> 00:17:00,670 Soon, a PT -26 training crane used during World War II shows up. 243 00:17:01,430 --> 00:17:03,470 And later, a real prize. 244 00:17:03,830 --> 00:17:07,550 The bomber that won the war, a P -51 Mustang. 245 00:17:08,369 --> 00:17:09,849 It's a bad plane. 246 00:17:10,550 --> 00:17:15,530 I don't care what you fly, how little you fly, how much you fly, your dream is 247 00:17:15,530 --> 00:17:17,069 to get a P -51D. 248 00:17:18,109 --> 00:17:19,109 No problem. 249 00:17:19,640 --> 00:17:23,040 Avery puts down $1 million, and the bomber is his. 250 00:17:23,720 --> 00:17:26,579 It was a rodeo every day. Every day was a circus. 251 00:17:27,180 --> 00:17:31,320 We'd come to work and say, what happened last night? What did they buy today? 252 00:17:32,140 --> 00:17:37,620 And while it seems Avery and Kane are building an Air Force, they also have a 253 00:17:37,620 --> 00:17:40,040 preoccupation with high -level security. 254 00:17:40,840 --> 00:17:44,360 It was the most intense security system I've ever seen. 255 00:17:45,200 --> 00:17:47,800 Come into an interlock, you'd go to a gate. 256 00:17:48,250 --> 00:17:52,410 You make video contact. They open the outer gate and close it. They make more 257 00:17:52,410 --> 00:17:53,770 careful video contact. 258 00:17:54,170 --> 00:17:58,050 Security systems are one thing, but guns on the roof? 259 00:17:58,470 --> 00:18:03,290 They wanted to put a sniper position on the roof of the hangar because it 260 00:18:03,290 --> 00:18:06,150 afforded an excellent view of most of the runways. 261 00:18:07,210 --> 00:18:12,670 And over at the security aviation office close to downtown, there is also heavy 262 00:18:12,670 --> 00:18:15,050 security and lots of guns. 263 00:18:15,880 --> 00:18:19,040 There were gentlemen walking around. They were all dressed like they were in 264 00:18:19,040 --> 00:18:22,320 military, and some of them had rifles on their backs. 265 00:18:22,860 --> 00:18:26,320 One gentleman had a room that was just full of ammunition. 266 00:18:26,820 --> 00:18:33,720 It was wall -to -wall weapons and guns and hand grenades and just everything 267 00:18:33,720 --> 00:18:39,160 you could think of. It was kind of a scary time for me because I didn't trust 268 00:18:39,160 --> 00:18:41,320 these gentlemen, and I wasn't sure what they were doing. 269 00:18:42,410 --> 00:18:47,970 And while employees wonder what's happening, Avery and Kane, now fast 270 00:18:48,310 --> 00:18:50,010 are living the good life. 271 00:18:50,670 --> 00:18:55,950 They had two very large houses, 5 ,000 square feet plus, overlooking a valley 272 00:18:55,950 --> 00:18:57,250 north of Anchorage and Eagle River. 273 00:18:57,790 --> 00:19:03,990 Two Class A motorhomes, which they used, a yacht, snow machines, trips to 274 00:19:03,990 --> 00:19:06,190 Disneyland on the Gulf Stream, no charge. 275 00:19:06,990 --> 00:19:09,650 There is just one thing Avery needs to do. 276 00:19:10,120 --> 00:19:12,880 Report to the other trustees in San Francisco. 277 00:19:13,380 --> 00:19:18,260 He waits until the end of July and then fills them in about security aviation. 278 00:19:19,300 --> 00:19:23,300 He assures them his business venture will make a profit, but he has already 279 00:19:23,300 --> 00:19:28,180 gotten his hands on $43 million of the $50 million he was allowed. 280 00:19:28,860 --> 00:19:33,560 At that point, I suspect the trustees just felt like there wasn't much they 281 00:19:33,560 --> 00:19:35,800 could do other than hope this was going to work out. 282 00:19:37,740 --> 00:19:38,740 Up next. 283 00:19:39,150 --> 00:19:42,510 A fleet of fighter jets arrives, and no one knows why. 284 00:19:42,850 --> 00:19:45,830 I don't think they had any plan whatsoever for how to use them. 285 00:19:59,090 --> 00:20:05,410 On a spring afternoon outside of Anchorage, retired Air Force pilot Joe 286 00:20:05,410 --> 00:20:07,790 is heading out to spend a weekend hunting. 287 00:20:09,610 --> 00:20:13,970 And like many Alaskans, his transportation is his own small plane. 288 00:20:17,690 --> 00:20:22,550 Forty years ago, Griffith was piloting an entirely different kind of aircraft. 289 00:20:24,610 --> 00:20:30,510 Over three tours in Vietnam, he flew close to 300 combat missions. 290 00:20:31,190 --> 00:20:32,590 I love fighters. 291 00:20:33,050 --> 00:20:36,970 I just have a fond spot in my heart because I've spent a lot of hours in 292 00:20:37,010 --> 00:20:39,850 and they've brought me back from the Badlands many, many times. 293 00:20:41,270 --> 00:20:46,830 And so in August 2005, he is thrilled when he pays a visit to Security 294 00:20:46,830 --> 00:20:50,370 and sees the new jets the company has just bought. 295 00:20:50,750 --> 00:20:53,210 Boy, it looked like a really neat airplane to me. 296 00:20:55,690 --> 00:20:59,450 They are fighter, Czechoslovakian L -39s. 297 00:20:59,750 --> 00:21:02,130 The Soviets used them for combat training. 298 00:21:02,670 --> 00:21:07,210 And when the Soviet Union collapsed, they threw the jets onto the open 299 00:21:08,950 --> 00:21:14,730 Eventually, Mark Avery buys eight L -39s, and the question is, why? 300 00:21:15,490 --> 00:21:20,290 I think they bought them initially because they had a lot of money, and 301 00:21:20,290 --> 00:21:21,570 thought they were cute airplanes. 302 00:21:22,110 --> 00:21:25,730 I don't think they had any plan whatsoever for how to use them. 303 00:21:26,110 --> 00:21:28,910 There was no business plan. I asked him that. 304 00:21:29,130 --> 00:21:30,630 His response was... 305 00:21:31,370 --> 00:21:32,790 Since we had it, they would come. 306 00:21:33,330 --> 00:21:37,870 It seems with Rob Payne's encouragement, Mark Avery has bought himself a small 307 00:21:37,870 --> 00:21:40,250 air force that has no purpose. 308 00:21:41,230 --> 00:21:45,610 And so when Joe Griffith is hired to fly the jets, he comes up with ideas. 309 00:21:47,050 --> 00:21:51,990 The jets could be used by the air force as opposition aircraft to train pilots 310 00:21:51,990 --> 00:21:52,990 for combat. 311 00:21:53,010 --> 00:21:57,250 Or maybe they could tow targets so pilots can practice shooting at a moving 312 00:21:57,250 --> 00:21:58,430 enemy in the air. 313 00:21:59,240 --> 00:22:03,660 Believe me, that's a whole different bag than shooting at a fixed target on the 314 00:22:03,660 --> 00:22:08,420 ground. As word spreads that security aviation is putting up a fleet of 315 00:22:08,420 --> 00:22:12,980 jets, experienced pilots from across the country arrive in anchoring. 316 00:22:14,020 --> 00:22:19,860 It's some good guys, the real deal. I mean, we're combat veterans and doing 317 00:22:19,860 --> 00:22:21,960 civilian work in Afghanistan and Iraq. 318 00:22:23,940 --> 00:22:24,940 Find me. 319 00:22:25,020 --> 00:22:29,440 Mark Avery finds himself in the high -action military world where he always 320 00:22:29,440 --> 00:22:30,440 wanted to be. 321 00:22:31,580 --> 00:22:34,020 I think that's the world he enjoyed. 322 00:22:34,940 --> 00:22:38,020 I think, at the end of the day, why he spent all this money. 323 00:22:39,060 --> 00:22:42,240 Because he could, in effect, buy himself into that world. 324 00:22:42,540 --> 00:22:47,460 But as the weeks go by, there is a realization that what is happening here 325 00:22:47,460 --> 00:22:48,500 not be real. 326 00:22:49,320 --> 00:22:54,200 They virtually proved everything I submitted, but it was really hard to get 327 00:22:54,200 --> 00:22:55,200 rolling. 328 00:22:55,820 --> 00:23:00,620 Increasingly, it feels to employees at Security Aviation like some kind of game 329 00:23:00,620 --> 00:23:02,320 created by Rob Kane. 330 00:23:02,780 --> 00:23:08,320 He lived in a world that to some degree wasn't real, but he was living out real 331 00:23:08,320 --> 00:23:14,780 time. And I thought Mark Avery was like Walter Mitty. He wanted to be like Rob 332 00:23:14,780 --> 00:23:20,440 Kane. And in Kane's world, he and Avery will soon be running secret missions for 333 00:23:20,440 --> 00:23:21,440 the U .S. government. 334 00:23:22,920 --> 00:23:26,020 Eventually, news of their plans leaks out. 335 00:23:26,320 --> 00:23:32,240 It was their goal to operate these aircraft under the guise of medevac so 336 00:23:32,240 --> 00:23:38,280 that they could fly internationally into hot zones and extract 337 00:23:38,280 --> 00:23:44,640 dignitaries and then also to possibly extract terrorists 338 00:23:44,640 --> 00:23:48,740 and take them to various locations for interrogation. 339 00:23:49,200 --> 00:23:52,660 through some sort of joint venture between the FBI and the CIA. 340 00:23:53,240 --> 00:23:59,360 Now the security systems, the armory of weapons, even the sniper position begin 341 00:23:59,360 --> 00:24:00,360 to make sense. 342 00:24:00,740 --> 00:24:04,940 If you were bringing really bad people through there, or you're bringing people 343 00:24:04,940 --> 00:24:09,620 of high value through there, you'd want to protect them. And Avery is on board 344 00:24:09,620 --> 00:24:11,780 with the Black Ops mission. 345 00:24:12,660 --> 00:24:15,200 Mark, Thut, Rob hung the moon. 346 00:24:17,320 --> 00:24:21,180 You could not tell him any different. He was convinced that Rob knew what was 347 00:24:21,180 --> 00:24:22,180 going on. 348 00:24:22,600 --> 00:24:26,180 Later, Avery is asked about the downtown office building. 349 00:24:26,660 --> 00:24:31,380 His response was, they had bedrooms and a gym and showers. 350 00:24:31,660 --> 00:24:38,280 And I said, what for? And he said, it was for safe houses for secret 351 00:24:38,280 --> 00:24:42,620 agents between missions. And that was like, whoa, whoa. 352 00:24:43,500 --> 00:24:44,820 I'm not believing this. 353 00:24:45,630 --> 00:24:51,050 But Avery has faith in Rob Kane, and he goes along, footing the bill for what 354 00:24:51,050 --> 00:24:53,110 Rob Kane tells him is possible. 355 00:24:53,470 --> 00:24:58,010 It was a fantasy in his mind, but I think he convinced himself of it to a 356 00:24:58,010 --> 00:24:59,010 certain extent. 357 00:24:59,690 --> 00:25:03,670 Perhaps the best evidence that Kane and Avery are living in a world of their own 358 00:25:03,670 --> 00:25:10,130 comes in October 2005, when Kane makes it known he wants another renowned World 359 00:25:10,130 --> 00:25:12,770 War II fighter bomber, a Corsair. 360 00:25:14,190 --> 00:25:18,710 So what would you do with a Corsair? You can't fly it. None of these guys had 361 00:25:18,710 --> 00:25:19,710 pilot's licenses. 362 00:25:20,250 --> 00:25:24,670 The Corsair is powerful and exceedingly dangerous to fly. 363 00:25:25,130 --> 00:25:28,790 In the Navy, it was known as the ensign killer. 364 00:25:29,390 --> 00:25:31,870 But what Kane wants, Avery provides. 365 00:25:32,070 --> 00:25:34,870 He makes that Corsair a birthday surprise. 366 00:25:36,750 --> 00:25:37,750 This is yours. 367 00:25:39,120 --> 00:25:43,560 Avery has spent $2 .4 million on this present for Kane. 368 00:25:43,760 --> 00:25:44,519 Uh -oh. 369 00:25:44,520 --> 00:25:45,520 Thanks, man. 370 00:25:45,900 --> 00:25:51,800 Unbelievable. And more than 4 ,000 miles away in a house in the Bahamas, Mae 371 00:25:51,800 --> 00:25:57,060 Smith has no idea that millions of dollars saved for her care is going to 372 00:25:57,060 --> 00:26:00,120 fun and games of two men in Anchorage, Alaska. 373 00:26:00,600 --> 00:26:07,020 I think buying an exotic World War II fighter that's rare. 374 00:26:08,010 --> 00:26:13,410 that you can't even fly, even if you were a good pilot, was about as far 375 00:26:13,410 --> 00:26:17,470 of benefiting Mae Smith as one could possibly imagine. 376 00:26:19,710 --> 00:26:23,370 Up next, the cost of their mission goes up. 377 00:26:24,410 --> 00:26:29,290 I told the guy who was going to fly them, you're taking your life in your 378 00:26:29,290 --> 00:26:30,290 hands. 379 00:26:42,920 --> 00:26:47,940 Anchorage, with a population of 300 ,000, is the largest city in Alaska. 380 00:26:48,660 --> 00:26:54,260 But people who live here describe it as a small town where news of any curiosity 381 00:26:54,260 --> 00:26:55,320 spreads quickly. 382 00:26:56,080 --> 00:27:01,400 At the end of 2005, security aviation is the talk of the town. 383 00:27:02,540 --> 00:27:08,180 We're getting reports from concerned citizens about these fighter jets. 384 00:27:09,820 --> 00:27:14,460 Guys driving around in dark SUVs with a pistol holster on each leg, with machine 385 00:27:14,460 --> 00:27:18,400 guns talking about possibly bringing terrorists through Anchorage, and people 386 00:27:18,400 --> 00:27:19,400 were getting concerned. 387 00:27:19,880 --> 00:27:24,940 The impression given off by security aviation is that the business is part of 388 00:27:24,940 --> 00:27:28,280 shadowy operation that needs to be kept secret. 389 00:27:28,720 --> 00:27:34,300 It wasn't at all. It was all totally legitimate, except that... 390 00:27:34,560 --> 00:27:39,440 Rob kept it looking like it was some kind of clandestine military operation. 391 00:27:39,760 --> 00:27:41,620 And that was a terrible mistake. 392 00:27:41,820 --> 00:27:44,320 And I told Mark that. I said, Mark, this is a mistake. 393 00:27:44,680 --> 00:27:46,880 You need to override Rob. 394 00:27:47,440 --> 00:27:53,360 But Mark never overrode Rob on anything. If Rob said it, it was golden. 395 00:27:53,940 --> 00:27:59,060 Meanwhile, Griffith is doing all he can to get the L -39s in good working order. 396 00:27:59,280 --> 00:28:02,620 The most recent jets purchased are in bad shape. 397 00:28:03,340 --> 00:28:08,960 When I powered up the first one, half the avionics in it, the instrumentation 398 00:28:08,960 --> 00:28:09,960 didn't work. 399 00:28:10,220 --> 00:28:12,140 So I refused to fly them. 400 00:28:12,600 --> 00:28:17,660 And then in January, a young pilot named Stephen Freeman shows up at the 401 00:28:17,660 --> 00:28:22,560 security aviation hangar. He is working for the Illinois company that sold Avery 402 00:28:22,560 --> 00:28:24,400 a few of the L -39s. 403 00:28:24,620 --> 00:28:29,740 There is a dispute about payment, and Freeman is here on behalf of the seller 404 00:28:29,740 --> 00:28:31,380 repossess one of the jets. 405 00:28:32,780 --> 00:28:38,060 I told the guy who was going to fly them, I says, those airplanes aren't 406 00:28:38,060 --> 00:28:40,760 airworthy. They've not been flown in months. 407 00:28:41,620 --> 00:28:46,960 They were disassembled and reassembled here. You're taking your life in your 408 00:28:46,960 --> 00:28:51,740 hands. The pilot disregards Griffith's warning and takes off. 409 00:28:52,000 --> 00:28:57,100 He got to catch a can, got in the weather, probably iced up a little bit. 410 00:28:58,170 --> 00:29:03,310 According to the report from the National Transportation Safety Board, at 411 00:29:03,490 --> 00:29:08,270 as Freeman approaches the airport, the air traffic controller tells him it 412 00:29:08,270 --> 00:29:10,770 doesn't look real favorable for a contact approach. 413 00:29:11,190 --> 00:29:13,290 I'll turn the lights up to high for you. 414 00:29:13,850 --> 00:29:16,090 Freeman answers, okay, thanks. 415 00:29:16,730 --> 00:29:20,750 At 1247, he says, I got the field in sight. 416 00:29:21,470 --> 00:29:26,290 I'm sure he had inadequate instrumentation to do an instrument 417 00:29:27,120 --> 00:29:32,140 At 12 .48, another pilot reports that Freeman is over the water by the narrow. 418 00:29:33,120 --> 00:29:36,960 The air traffic controller tells Freeman to make an immediate climb. 419 00:29:38,200 --> 00:29:42,240 Moments later, when he asks for Freeman's position, there is no 420 00:29:44,900 --> 00:29:47,680 Freeman crashes into a mobile home park. 421 00:29:47,980 --> 00:29:48,980 He is killed. 422 00:29:49,180 --> 00:29:53,560 The NTSB rules that the accident is due to pilot error. 423 00:29:54,440 --> 00:30:00,220 That was a very sad thing. I went to his funeral in North of Houston. 424 00:30:00,440 --> 00:30:06,040 He had a young wife and a couple of kids, and he knew better. 425 00:30:06,400 --> 00:30:11,220 For the federal investigators watching Avery and Kane, the death of Stephen 426 00:30:11,220 --> 00:30:13,600 Freeman means it's time to act. 427 00:30:13,940 --> 00:30:20,360 The administration at the time, the FBI, the head of our office, elected because 428 00:30:20,360 --> 00:30:22,680 of the death that this had gone on far enough. 429 00:30:23,920 --> 00:30:27,580 The response comes early on the morning of February 3rd. 430 00:30:28,120 --> 00:30:32,760 I came around the corner of my dog, and there was like 100 federal agents there 431 00:30:32,760 --> 00:30:36,140 in black outfits with balaclavas and M -16s. 432 00:30:37,060 --> 00:30:38,780 I thought that wasn't a good sign. 433 00:30:39,460 --> 00:30:42,180 Clearly, the feds had pulled out all the stuff. 434 00:30:42,940 --> 00:30:49,400 It was probably the largest search warrant operation in the history of the 435 00:30:49,400 --> 00:30:55,000 state. While the search goes on at the airport, The FBI also searches Rob 436 00:30:55,000 --> 00:30:56,000 house. 437 00:30:56,140 --> 00:30:59,220 Kane is later interviewed by a local news station. 438 00:30:59,540 --> 00:31:02,920 I got a pretty good sense of what's going on when my dogs are barking at, 439 00:31:02,920 --> 00:31:03,960 know, darkness in the morning. 440 00:31:04,940 --> 00:31:11,100 Inside his house, agents find what they call an amateur spy kit, bounty hunter 441 00:31:11,100 --> 00:31:15,720 badges, fake Navy SEAL identification, and FBI badges. 442 00:31:16,680 --> 00:31:21,320 But the FBI's most sensational discovery is found back at the hangar. 443 00:31:21,610 --> 00:31:26,430 Two rocket pod launchers designed for the L -39s that could carry missiles 444 00:31:26,430 --> 00:31:28,330 capable of serious damage. 445 00:31:29,070 --> 00:31:33,890 And with rumors spreading of a secret paramilitary operation going on at 446 00:31:33,890 --> 00:31:36,690 Security Aviation, the government respond. 447 00:31:38,690 --> 00:31:43,770 The concern was that under federal law, they had not been demilitarized. 448 00:31:43,990 --> 00:31:49,970 And they could have been certainly hung on several of the aircraft that Mr. 449 00:31:50,010 --> 00:31:51,010 Avery had purchased. 450 00:31:51,500 --> 00:31:57,480 And so in February, the Fed seized the L -39s. And Rob Kane and Security 451 00:31:57,480 --> 00:32:02,760 Aviation are indicted on charges of unlawful possession of destructive 452 00:32:03,660 --> 00:32:07,840 Joe Griffith, called as a witness for the defense, argues that the rocket pods 453 00:32:07,840 --> 00:32:09,040 are just for show. 454 00:32:09,980 --> 00:32:13,320 I brought a cardboard box in with some PVC. 455 00:32:14,360 --> 00:32:18,380 shoved through it, and I said, those rocket pods that you're calling 456 00:32:18,380 --> 00:32:23,960 weapons are no more dangerous than that cardboard box with the plastic pipe 457 00:32:23,960 --> 00:32:26,740 stuck through them. And the jury loved it. 458 00:32:27,280 --> 00:32:32,240 After a day of deliberation, the jury agrees with Griffith. The rocket pods 459 00:32:32,240 --> 00:32:33,240 not dangerous. 460 00:32:33,360 --> 00:32:34,920 Kane is free to go. 461 00:32:36,330 --> 00:32:39,970 It certainly gave the investigation and the office a black eye. 462 00:32:40,250 --> 00:32:44,370 But after the rocket pod debacle, the feds turned their full attention to the 463 00:32:44,370 --> 00:32:45,370 biggest question. 464 00:32:45,750 --> 00:32:48,290 Where is Mark Avery getting his money? 465 00:32:49,330 --> 00:32:52,330 It was always the real story was the financial fraud story. 466 00:32:53,290 --> 00:32:56,910 And that's the part that you can't talk about because it's under investigation. 467 00:32:57,790 --> 00:33:01,930 Up next, Avery's desperation moves into high gear. 468 00:33:02,840 --> 00:33:06,200 When they wanted to sell planes they really hadn't ever touched. 469 00:33:06,840 --> 00:33:07,840 Wow. 470 00:33:14,300 --> 00:33:19,940 By the spring of 2006, there is a perceptible change at security aviation. 471 00:33:20,500 --> 00:33:24,340 It seems that the days of wild spending are over. 472 00:33:24,660 --> 00:33:30,900 Eight months or so into the operation, it became apparent that... 473 00:33:31,360 --> 00:33:34,880 They were having trouble paying their bills, fuel bills, parts bills. 474 00:33:35,380 --> 00:33:38,500 And then there is the inevitable announcement. 475 00:33:39,100 --> 00:33:43,340 One day, the employees were all called to the hangar, and there was an 476 00:33:43,340 --> 00:33:48,660 announcement made that payroll would not happen as scheduled and that it would 477 00:33:48,660 --> 00:33:49,660 be happening soon. 478 00:33:49,960 --> 00:33:51,860 Obviously, nobody was happy about that. 479 00:33:52,240 --> 00:33:55,660 Employees called us. It was just a surreal time. 480 00:33:56,520 --> 00:33:59,780 where, you know, one day money seems like there's no object, and then the 481 00:33:59,780 --> 00:34:01,000 day the people are getting laid off. 482 00:34:01,720 --> 00:34:04,920 Soon it becomes clear Avery is not running a business. 483 00:34:05,220 --> 00:34:07,080 He is just spending money. 484 00:34:08,060 --> 00:34:10,600 Well, I don't think he had any business sense. You know, I don't think he was 485 00:34:10,600 --> 00:34:16,139 doing any projections of, you know, profitability on any of this. 486 00:34:16,760 --> 00:34:21,420 In just six months, Mark Avery has done what no one could guess is possible. 487 00:34:21,780 --> 00:34:25,219 He has burned through all of the money entrusted to him. 488 00:34:26,600 --> 00:34:31,580 How often do you see somebody spending $53 million in six months? I mean, 489 00:34:31,580 --> 00:34:32,580 just, that's incredible. 490 00:34:32,860 --> 00:34:37,679 It's really hard to fathom. And as Avery desperately looks for cash to pay his 491 00:34:37,679 --> 00:34:40,860 bills, he turns to his most extravagant purchases. 492 00:34:41,860 --> 00:34:46,620 When they wanted to sell planes they really had never touched, I thought, 493 00:34:47,400 --> 00:34:54,159 So I put them together with the broker that found the course there, and he 494 00:34:54,159 --> 00:35:00,820 just... lowball the living stuff right out of them. They took it. He paid $2 .4 495 00:35:00,820 --> 00:35:05,120 million for the Corsair birthday present. He dumps it for $1 million. 496 00:35:05,980 --> 00:35:08,220 He paid $1 million for the Mustang. 497 00:35:08,560 --> 00:35:10,420 It goes for $800 ,000. 498 00:35:11,060 --> 00:35:14,760 But the money that comes in is too little too late. 499 00:35:15,080 --> 00:35:17,600 Avery's real problems are just beginning. 500 00:35:18,040 --> 00:35:23,700 He has never spelled out for the other trustees exactly how he is spending the 501 00:35:23,700 --> 00:35:30,640 money. The investigation showed Mark never emailed the trustees and said, 502 00:35:30,760 --> 00:35:34,800 I'm buying this today and here's why. I'm buying this today and here's why. 503 00:35:35,300 --> 00:35:37,660 He had every opportunity to do that and he never did. 504 00:35:38,700 --> 00:35:43,720 And when his fellow trustees finally learned that Avery spent May Smith's 505 00:35:43,720 --> 00:35:47,360 to pay off personal loans and to buy himself toys. 506 00:35:48,270 --> 00:35:53,710 They strip him of his position as a trustee and his $600 ,000 a year salary. 507 00:35:55,270 --> 00:35:58,010 Mark Avery is broke again. 508 00:35:59,530 --> 00:36:03,630 Mark Avery, before he was a trustee, was broke. 509 00:36:04,410 --> 00:36:09,710 Once he got the $600 ,000 a year as a trustee, he was still broke. And then by 510 00:36:09,710 --> 00:36:13,870 the time the case was over, he was still broke, even after the $50 million. 511 00:36:16,710 --> 00:36:19,470 And so Avery declares bankruptcy. 512 00:36:21,110 --> 00:36:27,170 Bill Barstow, as the bankruptcy trustee, starts to unravel the mystery of the 513 00:36:27,170 --> 00:36:30,510 millions that's disappeared in just a matter of months. 514 00:36:31,210 --> 00:36:36,030 No one could believe that this man could spend that kind of money in such a 515 00:36:36,030 --> 00:36:39,510 short period of time and that he must have hidden some of it. 516 00:36:40,190 --> 00:36:45,630 As Barstow's investigation moves forward and Avery understands the case against 517 00:36:45,630 --> 00:36:47,910 him, He decides to cooperate. 518 00:36:49,210 --> 00:36:54,490 He pled guilty to being essentially a bad trustee under the wire fraud 519 00:36:54,570 --> 00:36:57,970 that he did not provide Mae Smith with honest services. 520 00:36:58,310 --> 00:37:03,330 Avery is sentenced to eight years, and he heads to federal prison in Latuna, 521 00:37:03,410 --> 00:37:04,410 Texas. 522 00:37:04,470 --> 00:37:11,310 Two years go by, and suddenly in 2010, there is one more bizarre twist in Mark 523 00:37:11,310 --> 00:37:12,750 Avery's strange saga. 524 00:37:14,090 --> 00:37:19,210 The U .S. Supreme Court makes a ruling that invalidates all convictions for 525 00:37:19,210 --> 00:37:21,430 honest services fraud. 526 00:37:22,610 --> 00:37:25,030 Avery successfully appeals his conviction. 527 00:37:25,470 --> 00:37:26,610 He's a free man. 528 00:37:27,170 --> 00:37:32,050 It seems at this moment that he can start life over with a relatively clean 529 00:37:32,050 --> 00:37:33,050 slate. 530 00:37:35,810 --> 00:37:40,710 Up next, can the government make one more try to lock up Mark Avery? 531 00:37:41,870 --> 00:37:45,530 Maybe a picture is worth a thousand words. A video now is maybe worth 10 532 00:37:49,030 --> 00:37:49,510 In 533 00:37:49,510 --> 00:38:00,490 the 534 00:38:00,490 --> 00:38:05,590 fall of 2013, Mark Avery is a free man, now living in California. 535 00:38:06,400 --> 00:38:11,300 It seems his multimillion -dollar spending spree in Anchorage is a thing 536 00:38:11,300 --> 00:38:15,520 past. But federal investigators have a different idea. 537 00:38:16,700 --> 00:38:21,500 Amongst the office, we elected to recharge him with straight -up theft, 538 00:38:21,500 --> 00:38:25,820 fraud, and money laundering, not denial of honest services that you were a bad 539 00:38:25,820 --> 00:38:27,940 trustee. Instead, the charge was you're a thief. 540 00:38:28,280 --> 00:38:31,080 Avery is indicted in October 2013. 541 00:38:32,120 --> 00:38:33,900 And in February 2016, 542 00:38:34,720 --> 00:38:38,120 his trial opens at the federal courthouse in Anchorage. 543 00:38:38,820 --> 00:38:43,960 Avery takes the stand and points the finger at his former friend, Rob Kane. 544 00:38:44,640 --> 00:38:47,440 I was a bit of a sucker, Avery says. 545 00:38:48,440 --> 00:38:52,860 He said that Rob knew all these people, and he told me we could do all these 546 00:38:52,860 --> 00:38:56,280 different things, and I believed that he was going to come through. But that is 547 00:38:56,280 --> 00:38:59,060 a very tough argument for Avery to sell. 548 00:39:00,359 --> 00:39:03,440 Ultimately, he was the president of the company. He was the one that borrowed 549 00:39:03,440 --> 00:39:04,440 the money. 550 00:39:05,560 --> 00:39:06,920 He was the head of the ship. 551 00:39:07,460 --> 00:39:12,680 Avery's defense team also argues that his intentions were good. He was trying 552 00:39:12,680 --> 00:39:15,460 help the trust by making wise investments. 553 00:39:15,800 --> 00:39:19,280 But the jury has shown the video of the birthday surprise. 554 00:39:20,800 --> 00:39:22,000 This is yours, bro. 555 00:39:22,600 --> 00:39:25,840 Maybe a picture is worth a thousand words. A video now is maybe worth ten 556 00:39:25,840 --> 00:39:26,840 thousand. 557 00:39:27,560 --> 00:39:28,560 Thanks, man. 558 00:39:28,700 --> 00:39:29,700 Unbelievable. 559 00:39:30,480 --> 00:39:35,360 But perhaps the biggest moment in the trial comes when his ex -wife testified. 560 00:39:36,320 --> 00:39:41,140 She was in a lot of pain, and the jury had a lot of connection with her because 561 00:39:41,140 --> 00:39:44,200 she was almost asking them in her testimony, why? 562 00:39:45,080 --> 00:39:46,600 Why are we doing all these things? 563 00:39:46,800 --> 00:39:50,500 We were happy when we didn't have the money. We lived modestly. 564 00:39:50,920 --> 00:39:52,140 Why all these things? 565 00:39:52,480 --> 00:39:55,200 It is the question on everyone's mind. 566 00:39:55,620 --> 00:39:56,620 Why? 567 00:39:56,920 --> 00:40:02,920 What Mark Avery did was an example of unmitigated, 568 00:40:02,920 --> 00:40:06,600 compulsive spending. 569 00:40:07,360 --> 00:40:11,980 For some people, nothing is ever enough. 570 00:40:13,380 --> 00:40:17,940 Mark Avery wanted to be a big man in the community. 571 00:40:18,160 --> 00:40:23,000 And when he got the opportunity to spend $53 million, that will make you a big 572 00:40:23,000 --> 00:40:25,900 man in any community, especially Anchorage, Alaska. 573 00:40:27,440 --> 00:40:29,900 But he didn't have a way out once that was done. 574 00:40:30,420 --> 00:40:34,400 After two weeks of trial, the jury finds Mark Avery guilty. 575 00:40:34,680 --> 00:40:40,380 He is convicted of 11 counts, including three counts of wire fraud and six 576 00:40:40,380 --> 00:40:41,720 counts of money laundering. 577 00:40:42,500 --> 00:40:46,280 He is sentenced to 13 years and four months in federal prison. 578 00:40:47,680 --> 00:40:51,780 And Rob Kane, he is not criminally charged in the case. 579 00:40:52,760 --> 00:40:56,380 He leaves Anchorage and goes to live with his mother in Arizona. 580 00:40:57,120 --> 00:40:59,700 He did not respond to requests for comment. 581 00:41:02,240 --> 00:41:04,820 But there is good news for security aviation. 582 00:41:05,300 --> 00:41:08,300 The original owner buys back the company. 583 00:41:08,860 --> 00:41:11,380 Today, the business is thriving. 584 00:41:11,880 --> 00:41:15,800 They got the bad guys, cut it out and got the company back where it belonged. 585 00:41:16,380 --> 00:41:19,820 In the Bahamas, Mae Smith dies in 2006. 586 00:41:20,640 --> 00:41:24,320 What is left in her fund is transferred to the charitable trust. 587 00:41:29,550 --> 00:41:35,110 And that means the money Mark Avery squandered is money that should have 588 00:41:35,110 --> 00:41:38,070 people who Stanley Smith wanted to help. 589 00:41:40,090 --> 00:41:46,410 So there's $50 million lost to people somewhere that would have benefited from 590 00:41:46,410 --> 00:41:51,210 that money directly and then compounded over time. So their victims out there 591 00:41:51,210 --> 00:41:57,310 are untold. Mark Avery still maintains he is not guilty of the charges against 592 00:41:57,310 --> 00:41:59,650 him. and is appealing his conviction. 593 00:41:59,890 --> 00:42:05,890 And so, while he keeps his case alive, in Alaska, his story is remembered as a 594 00:42:05,890 --> 00:42:10,310 bizarre episode of reckless spending, waste, and greed. 595 00:42:11,890 --> 00:42:17,070 On the next American Greed, he makes millions scamming the U .S. government, 596 00:42:17,070 --> 00:42:20,830 story that inspired the motion picture. Once a gunrunner, always a gunrunner. 597 00:42:20,890 --> 00:42:22,470 Meet the real war dogs. 598 00:42:22,850 --> 00:42:24,330 American Greed, next. 599 00:42:24,790 --> 00:42:26,410 CNBC, get yours. 600 00:42:27,000 --> 00:42:28,000 Thank you.