"Broken Trust"

INVESTIGATIVE CATEGORY — SHOWCASE Certificate of merit

WFAA
Contributors: Tanya Eiserer, Reporter
Mark Smith, Producer
Rick Rysso, Editor/Photographer
06/28/2023

“Broken Trust” revealed a U.S. trust registration loophole that allowed drug cartels to disguise ownership of their planes and expand their drug routes.

The WFAA series was the culmination of a four-year investigation that triggered a federal probe that that led to indictments, convictions, proposed legislation, and an estimated $1 billion disruption to drug cartel flights.

“Broken Trust” began with a question: Why were airplanes registered to addresses in Onalaska - a tiny East Texas town without an airport?

Digging through records, WFAA discovered more than a thousand planes registered to two Onalaska P.O. boxes. That's more airplanes registered in Onalaska than major cities, such as Seattle, San Antonio, San Diego, and New York City.

“Broken Trust” uncovered the reason: Onalaska was the epicenter of a practice that allowed foreign nationals to obtain U.S. registration by transferring the title of their aircraft to a trust company.

Although there were legitimate reasons for trusts, WFAA found the Onalaska-based trust company, Aircraft Guaranty Corp., failed to vet foreign plane owners. This allowed drug traffickers to obtain coveted U.S. “N” tail numbers and conceal ownership of their planes. By gaining U.S. registered credentials, the drug planes drew less scrutiny when crossing international borders.

The WFAA stories spurred a federal investigation that led to drug trafficking and money laundering charges against Aircraft Guaranty owner Debra Mercer-Erwin, and seven other defendants.

WFAA reporter Tanya Eiserer and producer Mark Smith provided daily coverage of the nearly month-long federal trial. Ultimately, Mercer-Erwin was convicted in a landmark court case. She faces up to life in prison.

The “Broken Trust” stories, along with federal probe and indictments, disrupted drug smuggling routes from Venezuela and Colombia, into Central America. Air flight records showed that the number of “N” registered drug flights in Central America fell from hundreds per month, to only a few.

“As soon as this case was indicted the effect was immediate. The number of planes with drugs diminished considerably,” federal prosecutor Ernest Gonzalez told WFAA.

Drug cartels would obtain U.S. registered aircraft, and fly from Mexico to cocaine-producing countries in South America. Then, drugs were loaded onto the planes, which were flown to clandestine airstrips in Central America. From there, the drugs were unloaded and smuggled north into the United States and Europe.

Romero said traffickers flew jets that could carry several tons of cocaine worth $200 million or more. The planes of choice were Hawker and Gulfstream jets.

By prosecuting Mercer-Erwin, the trust company owner, and shutting down her company, lawmen testified that drug trafficking using U.S. registered planes – particularly Hawker and Gulfstream jets - largely dried up. This caused an estimated $1 billion disruption to the drug trade, according to U.S. and Latin American lawmen.

The WFAA stories also helped trigger proposed federal legislation designed to tighten loopholes in the trust registration system.
Troubled by the findings, federal agencies began a national audit of trust companies.

Prosecutors and lawmen praised WFAA and “Broken Trust” for providing a road map for their criminal investigations that led to indictments and convictions of drug traffickers. The federal probe also led to the discovery of a $240 million Ponzi scheme involving Mercer-Erwin and Federico Machado.

WFAA tracked down Machado, who became a fugitive after also being charged with drug trafficking and money laundering. Despite facing charges that he engaged in a Ponzi scheme, WFAA was able to convince Machado to go on camera and acknowledge his role in the scheme.

Our Machado interviews, along with the impact on drug trafficking, gained widespread international coverage throughout Latin America.

“Broken Trust” uncovered flaws in the trust registration system, revealed federal and international probes into drug cartels, and aired daily trial coverage that culminated in the conviction of a key linchpin who helped disguise the ownership of cartel drug planes.

Our entry includes the main "Broken Trust" story, and five additional stories highlighting daily coverage of Mercer-Erwin's federal trial.

WFAA believes “Broken Trust” and the daily coverage merits consideration as an investigative entry in the Headliners Showcase Awards.