Mugshot courtesy of WFAA
In 1919, in the early years of aviation, the International Air Navigation Convention prescribed an aircraft-marking system, involving a single letter to indicate nationality followed by a string of letters and/or numbers that make up a radio call sign for a plane. While these N-numbers are required in the U.S. for all legally registered and operational planes, an Oklahoma City woman had different intentions when she began using her business to illegally register aircraft in the U.S. for drug trafficking.
Debra Lynn Mercer-Erwin, age 60, has been convicted of numerous federal crimes, linking her faux-flying operation with international drug trafficking, money laundering, wire fraud and conspiracy to name a few. The U.S. Attorney’s Office in the Eastern District of Texas reported that from 2010 to 2020, Mercer-Erwin enabled the distribution of cocaine in the U.S. through illegally registered aircraft. She registered these planes under foreign corporations and other individuals for export into other countries.
Planes within the U.S. use a specific N-number, which indicates its registration and legal operations and has been required on all U.S. aircraft since March 22, 1927. Non-U.S. citizens are only allowed to register an aircraft with the FAA if that aircraft has been placed in a trust managed by a U.S. trustee. As the owner of Wright Brothers Aircraft Title (WBAT) and Aircraft Guaranty Corporation (AGC), Mercer-Erwin would use WBAT as an escrow agent for the transactions that involved AGC, which became the designated party used for FAA filings for AGC aircraft.
“In the aircraft world, planes registered in the United States and displaying a ‘N’ tail number, are coveted as being properly vetted and trusted to legally operate around the world,” U.S. Attorney Brit Featherston said. “Mercer-Erwin found ways to exploit the registration process in order to profit from illegally obtained money being paid for her services.”
AGC was operating in a town without an airport, Onalaska, Texas. As a trustee for over 1,000 aircraft with foreign owners, AGC allowed foreign nationals to receive an N-number on their aircraft. The U.S. registration means that many countries would be less likely to inspect the aircraft for airworthiness or try to force an American aircraft down. This allowed many of these illegally registered aircraft to be used in crime organizations in Columbia, Venezuela, Ecuador, Belize, Honduras, Guatemala and Mexico. These planes would smuggle cocaine into the U.S., which would then be used to buy more cocaine or more aircraft.
Those who fly commercially in a post 9/11 world understand the hassle of getting through TSA and the security surrounding aviation. With private aviation, there are fewer security measures for passengers or aircraft owners, which Mercer-Erwin took advantage of, disguising the identity of the foreign owners and exploiting her role as trustee to make a profit.
“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 Featherston said. “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. 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. Transnational criminal organizations require assistance to operate in the U.S. and Mercer-Erwin facilitated the drug dealing by exploiting the plane registration process.”
The investigation began in 2019 when WFAA began looking into Mercer-Erwin’s company Aircraft Guaranty. WFAA reported that during the investigation, it was found that over, 1,000 planes had been registered to just two P.O. boxes in Onalaska. The planes were later moved to Oklahoma City. A federal investigation followed and Mercer-Erwin was arrested in December 2020. WFAA reports that Mercer-Erwin also hoped to receive an even bigger payout from a Ponzi scheme she ran from 2014 to 2020, involving the fake sale of up to 100 aircraft and involving nearly $500 million.
WFAA notes that a forensic accountant testified that Mercer-Erwin had funneled $75 million from her WBAT escrow account to her alleged accomplice, Argentinian fugitive Federico Machado, also pocketing $4.9 million in escrow fees. The sham sales would place a deposit into the WBAT account and buyers were then responsible for the accrued interest and an escrow fee. Unlike a traditional, legal sale, the money would not remain in the escrow account and Mercer-Erwin would transfer the funds into accounts controlled by her co-conspirators.
When the fake sales would eventually fall through, the deposit would be returned and the process would be repeated for another fake sale, each shady transaction funding the next. Her escrow fees ranged from $25,000 to $150,000 per sale. Co-defendants included Mercer-Erwin’s daughter Kayleigh Moffett and Carlos Rocha Villaurrutia, who both plead guilty on April 10. Moffett pleaded guilty to wire fraud and conspiracy to commit export violations and Villaurrutia pleaded guilty to conspiracy to manufacture and distribute cocaine, knowing it would be imported into the U.S., conspiracy to commit money laundering and conspiracy to commit export violations. There are four other defendants with active arrest warrants but they are not in custody and remain innocent until proven guilty.
Mercer-Erwin was indicted by a federal grand jury in February 2021 and faces up to life in a federal prison. According to WFAA, prosecutors said that a secret ledger went back and forth in emails between her and her alleged accomplice Machado, which she claims she did not clearly understand.
The small probe into questionable activities by WFAA led to a large federal case, in which Mercer-Erwin tried to register planes and run a false operation out of a tiny Texas town with a population of barely 3,000. A formerly respected member of the aviation community, she was a member of organizations like the NBAA, EBAA, International Aviation Womens Association and was formerly on the Board of Directors for the National Aircraft Finance Association. Now, she is facing life in federal prison.
“This investigation and successful prosecution serves as an example of how federal, state, and international law enforcement agencies work together to take down those involved in large-scale money laundering in support of international drug trafficking organizations,” said Special Agent in Charge Trey McClish of the Dallas Field Office of the Department of Commerce’s Office of Export Enforcement (OEE). “OEE and our law enforcement partners will continue to identify, investigate and dismantle transnational criminal organizations who pose a threat to our national security.”
When planes numerous AGC aircraft were found carrying large amounts of cocaine Mercer-Erwin denied any involvement and began to attempt to distance herself from investigations. AGC aircraft were not seized, but rather found by foreign officials, either destroyed or abandoned near covert landing strips in South American countries. Some of these aircraft still contained multi-ton kilos of cocaine and many were not in the location they were reported to be in.
Drug bust in Belize, photo from WFAA
Mercer-Erwin refused to cooperate with authorities when each of her cocaine planes was found. She would transfer ownership of the planes using fake information to try and conceal her involvement with the falsified aircraft. Guatemalan News shared the Drug Trafficking Prosecutor’s Office of the Public Ministry of Guatemala date, reporting that 24 aircraft registered under trusts with the FAA with links to drug trafficking landed illegally on Guatemalan territory. According to this information. 6,654 packages of cocaine with an estimated value of over $89 million were seized in just Guatemala. WFAA said that witnesses in the trial testified that within weeks of Mercer-Erwin’s indictment, the number of drug flights with U.S. registered planes with an N-number through a U.S. trust dropped significantly in Central America.
“This guilty verdict stems from the collaborative efforts of our trusted international, federal, state and local law enforcement partners,” said Lester R. Hayes Jr., Special Agent in Charge of HSI Dallas. “Disrupting the illegal activities of transnational criminal organizations is one of HSI ‘s highest priorities and is enhanced by our partnerships at all levels. After listening to the testimony of high-ranking leaders of the Columbian and Nicaraguan governments, I am convinced this investigation has significantly decreased the flow of narcotics smuggled into the U.S.”
Mercer-Erwin faces up to life in prison for her crimes. This is the maximum statutory sentence prescribed by Congress and the actual sentencing will be determined based on the advisory sentencing guidelines and statutory factors. A sentencing hearing will be scheduled once the presentence investigation has been completed by the U.S. Probation Office.
Nearly 100 years ago, when these N-numbers were written out as a legal requirement for aircraft, the illegal operation involving cocaine smuggling across international borders and a related Ponzi Scheme were not events thought likely to transpire. Next time you see a plane flying with an N-number painted across its tail, just hope it has been registered somewhere other than one of two P.O. boxes in Onalaska, Texas.