Couple sentenced for stealing $830,000 from adopted son

Couple sentenced for stealing $830,000 from adopted son

Jerzy Shedlock

March 27, 2013

An Alaska couple was sentenced Wednesday in Anchorage for spending about $830,000 from a trust fund established for their adopted child on their own personal purchases, like jewelry and a renovated home in Washington.

Lori Wiley-Drones, 57, and Edward Drones, 62, were sentenced in U.S. District Court in Anchorage to 46 months in prison on five counts of wire fraud and a single count of filing a false income tax return. The couple's nearly four-year sentence will be followed by three years of probation, according to a press release from the U.S. Attorney's Office District of Alaska.

The Drones' prosecution follows two additional wire fraud cases in the past month, one in which a male nurse and a disbarred California attorney stole $2 million from an elderly Alaska woman and another case in which two men sold surplus federal property intended for state nonprofits.

The press release describes the Drones' scheme to steal state money intended for an adopted child, who is not named in the release. In 1996, the couple became foster parents to a boy who came from a background of abuse. Later, they adopted the child and then filed a lawsuit on his behalf, charging the state with failing to protect the unidentified boy.

The Drones won the lawsuit, and a trust fund of more than $830,000 was established for the boy. According to information solicited during the Drones' recent prosecution, the couple got rid of the boy's financial trustee after the state-appointed professional refused Lori's demand the child purchase the family's home, according to the press release.

Edward then filled the financial role for the boy. He only was able to do so because he lied about not having to file for bankruptcy in the last 10 years. When the father assumed control of the boy's trust fund, he assured court officials that he understood his obligation to keep the child's property separate from his own. Also, he said he'd never use the child's property for his own benefit.

He threw those pledges out the window, according to the press release -- immediately sharing control of the trust fund with his wife.

The defendants admitted to spending "virtually all of the trust money" over the next 10 months. Lori bought a renovated house in Washington. The couple, together, paid $125,000 in credit card bills, used $67,088 to purchase cars and $38,000 to purchase jewelry. By December 2010, a mere $15.05 was left in the boy's trust fund, according to the press release.

The Drones filed a false income tax return and avoided reporting the stolen funds as income in 2010.

The court ordered the defendants to pay the victim $829,417 in restitution. The maximum penalty for wire fraud is 30 years imprisonment with a $250,000 fine; filing false tax returns carries a three year term of imprisonment and a fine of $100,000.

District Court Judge Sharon L. Gleason said the Drones decimated their adoptive son's trust fund as well as destroyed his ability to trust, an attribute all the more important because of his childhood trauma. The Drones compromised the boy's future, the judge said, for Coach Purses, fine jewelry and cars. The Internal Revenue Service's Criminal Investigation Division led the investigation against the Drones.

Jerzy Shedlock can be reached at jerzy(at)alaskadispatch.com