So which of these sounds more natural? Martin swiveled Jason’s chair around to face him and hunkered down to his level. His eyes warm and friendly as always. “If you can’t trust the people sending you the reports, what makes you think you can trust the person doing the audits?” “What makes you think everyone needs to be distrusted (or mistrusted)?”
I'd plumb for distrusted on account mistrust is usually irrationally evoked. Isn't distrust based on a history of letdowns whereas the other is just being phobic?
I'd look it up in a dictionary (but it's in another room, and I'm lazy). For me, "distrusted" is a sort of gut instinct, where something tells you that your trust might me misplaced. "Mistrusted" is a realization after the fact, where you realize that you put your trust in the wrong place. "I distrusted him from the moment he opened his mouth." "After she failed to show up for the third time, my mistrust in her had been understandable."