Cops: Pilot Who Faked Death In Custody
With his personal and financial worlds crumbling around him, investment adviser Marcus Schrenker opted for a bailout.
In a feat reminiscent of a James Bond movie, the 38-year-old businessman and amateur daredevil pilot apparently tried to fake his death in a plane crash, secretly parachuting to the ground and speeding away on a motorcycle he had stashed away in the pine barrens of central Alabama.
Now police say the man has been arrested in northern Florida, ending a three-day search.
U.S. Marshals spokesman Michael Richards says Schrenker was apprehended around 10 p.m. EST Tuesday in a tent at a campground in Quincy, Fla.
Richards says one of Schrenker's wrists was cut, but he's alive and in custody.
Schrenker was on the run not only from the law but from divorce, a state investigation of his businesses and angry investors who accuse him of stealing potentially millions in savings they entrusted to him.
"We've learned over time that he's a pathological liar - you don't believe a single word that comes out of his mouth," Charles Kinney, a 49-year-old airline pilot from Atlanta told
CBS' The Early Show
. Kinney alleges Schrenker pocketed at least $135,000 of his parents' retirement fund.
Authorities in Indiana were probing Schrenker's financial management businesses -
Heritage Wealth Management Inc.
, Heritage Insurance Services Inc. and
- for possible securities violations.
"The charges are evolving as we speak. We wanted to move very quickly on this case," Indiana Secretary of State Todd Rokita told
i>The Early Show
. "We filed two charges regarding his failure to renew his securities license and then for improperly transacting amounts - acting as an investor representative in the state of Indiana in an improper fashion."
Authorities were investigating Schrenker's businesses on allegations that he sold clients annuities and charged them exorbitant fees they weren't aware they would face.
"Toward the end of our relationship, I began to discover that many, if not most, of the investments ... were placed in vehicles that greatly benefited him through very exorbitant commissions," investor Mike Kinney told
The Early Show
.
State Insurance Commissioner Jim Atterholt said Schrenker would close the investors out of one annuity and move them to another while charging them especially high "surrender charges" - in one case costing a retired couple $135,000 of their original $900,000 investment.
"This is what we call affinity fraud," Rokita said. "It's one of the worst kinds of frauds, because it's perpetrated by people we think we can trust."
On Friday, two days before the crash, a federal judge in Maryland issued a $533,500 judgment against Heritage Wealth Management Inc., and in favor of OM Financial Life Insurance Co. The OM lawsuit contended Heritage Wealth Management should return more than $230,000 in commissions because of problems with insurance or annuity plans it sold.
That's not the only legal problem he'll have to face if he's found: Florida officials believe he'll face a host of charges related to the crash.
"You just can't let an unmanned aircraft just maliciously fly into a residential area without facing any consequences," Santa Rosa County Sheriff's Office spokesman Scott Haines said Tuesday on
The Early Show
.
The events of the past few days appear to have been a last, desperate gambit by a man who had fallen from great heights and was about to hit bottom.
On Sunday - two days after burying his beloved stepfather and suffering a half-million-dollar loss in federal court the same day - Schrenker was flying his single-engine Piper Malibu to Florida from his Indiana home when he radioed from 2,000 feet that he was in trouble. He told the tower the windshield had imploded, and that his face was plastered with blood.
Then his radio went silent.
Military jets tried to intercept the plane and found the door open, the cockpit dark. The pilots followed until the aircraft crashed in a Florida Panhandle bayou surrounded by homes. There was no sign of Schrenker's body. They now know they should never have expected to find one.
More than 220 miles to the north, at a convenience store in Childersburg, Alabama, police picked up a man using Schrenker's Indiana driver's license and carrying a pair of what appeared to be pilot's goggles. The man, who was wet from the knees down, told the officers he'd been in a canoe accident.
After officers gave him a lift to a nearby motel, Schrenker apparently made his way to a storage unit he'd rented just the day before his flight. He climbed aboard a red racing motorcycle with full saddlebags, and sped off into the countryside.
The search was turned over to the U.S. Marshals. Some law enforcement officials said they believed Schrenker had fled the country.
At 38, Schrenker was at the head of an impressive slate of businesses. Through his Heritage Wealth Management Inc., Heritage Insurance Services Inc. and Icon Wealth Management, he was responsible for providing financial advice and managing portfolios worth millions.
And by outward appearances, he was doing quite well.
Death-Defying Stunt
He collected luxury automobiles, owned two airplanes and lived in a 10,000-square-foot house in an upscale neighborhood known as "Cocktail Cove," where affluent boaters often socialize with cocktails in hand. In May 2000, he wowed onlookers by flying a special airplane at 270 mph, 10 feet above the water and under two bridges in Nassau, Bahamas.
"This stunt should not be attempted by any pilot that wishes to stay alive," read the caption on a self-made video of the flight posted on YouTube.
He'd come a long way from his humble beginnings in northwest Indiana, where he and his two brothers were raised after their parents' divorce by their mother and stepfather, a Vietnam veteran who worked at U.S. Steel Corp.
But officials now say Schrenker's enterprise was ready to topple.
The tangled web of Schrenker's financial affairs began to unravel more than two years ago.
The aviation buff had convinced dozens of active and retired Delta Air Lines pilots - including Kinney - to allow him to manage their retirement accounts. But some of the pilots stopped investing with him after a court case raised questions about his past.
In 2006, with Delta in federal bankruptcy proceedings, he convinced a group of pilots opposed to Delta's move to terminate their pension plan to let him help.
"He had a way about him - you trusted the guy," says David M. Smith, one of the retired pilots. "He was very credible. He talked a good story. So, we entrusted him with a task he never produced."
Two days before the Sept. 1, 2006, hearing at which Schrenker was supposed to testify about an analysis he had done on the pension plan's viability, he suddenly withdrew from the case.
"It happened very fast," Smith recalled. "He literally was a no-show. He literally just disappeared. We were shocked at the whole thing."
The retired pilots were unsuccessful in stopping Delta from terminating the pension plan, and the group accepted a small settlement from the airline.
Smith believes Schrenker may have been running from a past unknown to many of his clients at the time, a past that was disclosed just days earlier in a deposition of him by a Delta lawyer.
"They uncovered things that literally made your jaw open," said Smith, adding that he and other pilots stopped letting Schrenker manage money for them after the deposition. "I believe he was scared to death that Delta was going to expose him."
According to the 156-page deposition obtained by The Associated Press, a judge in a 2003 bankruptcy reported being "deeply concerned" that Schrenker was not disclosing thousands of dollars in monthly income to the court and not reporting the income on his tax returns.
"It is obvious to the court that the debtor has access to a significant cash flow that he is using for his personal benefit that has not been disclosed in this bankruptcy filing and in his personal tax returns," one document reads.
Kinney said he and his parents had invested hundreds of thousands with Schrenker, but considered him more like a family friend than a financial consultant.
Schrenker, his wife and three children vacationed twice at Kinney's parent's lake house on northern Georgia's Lake Lanier. But a few years ago, cracks began to surface in the relationship.
Kinney's brother discovered $60,000 was inexplicably missing from his 85-year-old father-in-law's investment with Schrenker. Schrenker told the family not to worry, that the money was still there in complex financial statements.
"It's still the most disgusting thing I've been a part of - to know that someone let you hold their new baby on one side and was basically stealing you from on the other," Kinney said.
In recent weeks, Schrenker's life began to spin out of control. According to documents in a lawsuit filed in Indianapolis, Schrenker sent a frantic e-mail to plaintiffs on Dec. 16.
"I walked out on my job about 30 minutes ago," it read. "My career is over ... over one letter in a trade error. One letter!! ... I've had so many people yelling at me today that I couldn't figure out what was up or down. I still can't figure it out."
It's unclear to what "error" he is referring. In another e-mail to a neighbor following his disappearance, Schrenker made reference to having "just made a 2 million dollar mistake." But it appeared he was hoping to work things out.
"I'd rather lose everything than screw a person out of a dime," he wrote to the plaintiffs in the Indianapolis case.
But things were now out of his hands.
On Dec. 31, officers searched Schrenker's home, seizing the Schrenkers' passports, $6,036 in cash, the title to a Lexus and deposit slips for bank accounts in Michelle Schrenker's name, as well as six computers and nine large plastic tubs filled with various financial and corporate documents.
In the supporting affidavit, investigators suggested Schrenker might have access to at least $665,000 in the offshore accounts of a client.
But it wasn't just his finances that were in turmoil.
Just a day before, Michelle Schrenker had filed for divorce. She told the people searching the house that her husband had been having an affair and had moved into a condominium a week earlier.
Schrenker's mother is just happy to know that he is alive. She hopes whoever finds him will treat him well and give him a chance to explain what he did and why.
"Sometimes we just all have too many problems," Marcia Galoozis said at her home outside Gary, Indiana "And I don't know what all his problems are, but sometimes we just don't think straight, get our heads twisted on wrong."
Hours after Schrenker vanished, neighbor Tom Britt received what he believes is an e-mail from Schrenker.
Britt told
CBS' The Early Show
that he received the message at 7:38 p.m. Monday - approximately 24 hours after Schrenker had radioed the distress call from his airplane.
"By the time you get this, I'll be gone," the e-mail said. Britt turned the message over to authorities, fearing it was a suicide note.
The ominous message told his friend that the situation was a misunderstanding and warned: "I embarrassed my family for the last time."
"You started looking at his wife divorcing him, you start looking at all the other stories that kind of underlie this whole thing, you know, it could be the last act of a desperate man," Britt told
The Early Show
.
In the e-mail, Britt is asked to set the record straight and Schrenker says he's stunned after reading coverage of the case on the Internet. According to the e-mail, the accident was caused when the window on the pilot side imploded, spraying him with glass and reducing cabin pressure.
"Hypoxia can cause people to make terrible decisions and I simply put on my parachute and survival gear and bailed out," the e-mail reads.