8 indicted in alleged cocaine trafficking conspiracy involving aircraft purchased and registered in East Texas town of Onalaska

A federal grand jury in the Eastern District of Texas has indicted eight people in a “complex” international drug trafficking conspiracy that involved purchasing and illegally registering aircraft in Onalaska for use by drug cartels to smuggle cocaine from Central and South America to the United States, according to a Department of Justice press release.

Debbie Mercer, 58, and Kayleigh Moffett, 33, both of Oklahoma City; Federico Machado, 53, of Florida; Carlos Villaurrutia, 40, of McAllen; and four others were indicted on charges of conspiracy to manufacture and distribute cocaine, conspiracy to commit money laundering, conspiracy to commit wire fraud, conspiracy to commit export violations and conspiracy to commit federal registration violations involving aircraft. The suspects allegedly engaged in approximately $350 million in criminal activity since 2016, according to the release.

A seven-count superseding indictment returned by a federal grand jury earlier this week was unsealed Friday. The defendants have been arrested and will be arraigned in federal court next week.

“The threat posed by transnational crime cannot be overstated,” said acting U.S. Attorney Nicholas J. Ganjei. “The use of United States-registered aircraft by these criminal organizations and their networks of associates poses a clear and present danger to the security of our nation. The American public can expect EDTX to be relentless in its fight against the sometimes invisible, but always dangerous, threat of transnational organized crime.”

The indictments delivered “a significant blow to the transnational criminal organizations around the world by exposing a money laundering and drug trafficking scheme perpetuated by sophisticated drug cartels,” said Ryan L. Spradlin, Special Agent in Charge at Homeland Security Investigations in Dallas.

The defendants allegedly purchased and illegally registered aircraft under foreign corporations and other individuals for export to other countries, according to unsealed court documents. The indictment specifically alleges that Mercer and Moffett, through their company Aircraft Guarantee Corporation, registered thousands of aircraft in the East Texas town of Onalaska, which doesn’t have an airport.

Several of the illegally registered and exported aircraft were allegedly used by transnational criminal organizations in Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala and Mexico to smuggle large quantities of cocaine destined for the U.S., the indictment states. Illicit proceeds from the subsequent drug sales were then allegedly transported as bulk cash from the U.S. to Mexico and used to buy more aircraft and cocaine, according to the indictment.

Aircraft purchases were typically completed by wiring funds from casa de cambios and/or banks in Mexico to shell corporations operating in the United States as aircraft sellers/brokers, the indictment states.

Foreign governments seized U.S.-registered aircraft allegedly containing multi-ton shipments of cocaine that were held in trust by AGC for the benefit of foreign corporations or individuals, according to the indictment.

The indictment identifies Machado, through his company South Aviation, and Villaurrutia, who allegedly used his companies TEXTON, TWA International and Ford Electric, as aircraft sellers/brokers operating in the United States.

The indictment separately charges Mercer, Moffett and Machado with engaging in a fraud scheme related to the acquisition of aircraft. Machado allegedly recruited investors to invest in aircraft purchase deposits for sales transactions that never took place, the indictment states. Investors allegedly placed their funds in an escrow account held by Wright Brothers Title Company, which was owned and managed by Mercer and Moffett, while Machado then allegedly used those funds for purposes other than the purchase of aircraft, according to the indictment.

The defendants face a minimum of 10 years and up to life in federal prison for the drug conspiracy charges and up to 20 years for the money laundering, export and wire fraud violations if convicted.