May 10, 2009

VOL 26 NO 19

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Financial fraudster's flight of fantasy

Marcus Schrenker appeared to have it all. But when he tried to stage an elaborate suicide the extent of his illusion became clear, writes Ann Dermody

Michelle and Marcus Schrenker with some of their expensive toys

The wreckage of the plane in a Florida swamp

The Schrenker home in 'Cocktail Cove'

One of his businesses

Inside the cockpit of the crashed plane

Schrenker captured on CCTV leaving his hotel room in Alabama

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The panicked voice crackled over the Atlanta control tower radio. The pilot was reporting severe turbulence. Clearly distressed, he said the windshield of his single engine Piper Meridian had imploded and he was bleeding profusely. He needed help. Then, just as suddenly, the radio went quiet. The small plane would later be found slammed into a swamp in northwest Florida, presumably taking the life of the pilot, Marcus Schrenker.

To acquaintances and neighbours, Marcus and Michelle Schrenker's address in an exclusive development known locally as 'Cocktail Cove' in McCordsville, Indiana, seemed an ideal match for their lavish lifestyle. Theirs was the biggest house on a block of mansions, and their existence seemed like one big round of fruity bright party-drinks. In fact the neighbourhood had got its name for the penchant of its residents to mingle on each others expensive boats at sunset, cocktail in hand.

By Middle America's standards the Schrenker's were a Hollywood couple who had met in college. She with the long blonde tresses, prom queen looks and perfect figure was the ultimate 'yummy mummy'. He was the dashing and handsome provider, bringing home an ever-increasing supply of bacon to the 'big house' on the hill. A devoted family man, with three successful companies who liked to indulge in the grown-up toys of expensive cars and two small planes. Not surprisingly theirs were always the biggest and best parties, often with elaborate lakeside fireworks displays to round out the night.

But late last year the cracks that were rocking the couple's marriage behind the scenes gave a seismic rumble. Within days once-coveted lives would be laid bare to show a very different reality, and the couple many aspired to, who'd come to symbolise the 'get ahead' 2000s, would become poster children for its ultimate downfall.

Schrenker's rise through the financial ranks had been quick and impressive, even by the standards of the economic boom. By 38, his last birthday, he was head of an impressive portfolio of businesses that gave financial advice and managed millions of dollars. It was all a long way from his humble beginnings in northwest Indiana. Growing up in a modest house, he and his two brothers were raised by his mother and stepfather, a Vietnam veteran, who worked at a steel company.

Perhaps because of the limited possessions of his youth, Schrenker developed a taste for extravagance. He collected luxury cars, lived in a 10,000 square foot waterfront home and owned two airplanes worth an estimated $2m. Neighbours remarked how success seemed to have bought him the freedom of not being chained to an office, and commented that he always seemed to be out in the yard.

But the truth is by the end of last year Schrenker's world was already folding in on itself behind closed doors. As an investment advisor who managed pension funds, he had been worth millions of dollars thanks to the three financial companies he owned: Heritage Wealth Management, Heritage Insurance Services and Icon Wealth Management. But things had taken a decidedly downward turn for the handsome young man who favoured tailored Armani suits. He had started an affair and his wife Michelle of 13 years, with whom he had three small children, announced in December that she wanted a divorce.

Professionally, things were even worse. A year previously the Indiana Department of Insurance had filed a complaint on behalf of seven of Schrenker's investors who claimed he hadn't told them they would face steep fees of more than $100,000 if they switched annuities. By December 2008 authorities had raided his home seeking evidence in further investigations. On 6 January this year, just days before his plane's now infamous ride, Schrenker was charged with unlawful transactions by an investment adviser, and his bail was set at $4m. Three days later another hearing in a Maryland court saw him lose over $500,000 against one of his companies.

To say Marcus Schrenker wasn't having a great year was something of an under­statement. But as it would turn out his woes had been going on far longer than a year. In the previous decade at least eight lawsuits had been filed against him. They included accusations beyond the realms of his businesses, like slander and failing to pay a contractor for work on one of his homes.

Then in January this year, in the midst of his life crumbling around him, he hatched a plan to fake his own death.

On Saturday 10 January he drove from his Indianapolis suburb to a storage facility in Harpersville, Alabama. In the back of a pickup he had another of his toys – a bright red Yamaha motorcycle. The bike's saddlebags were crammed with money and supplies. He told the storage owner that he would be back for the bike the following Monday. On Sunday 11 January he flew his single-engine plane from an airfield in Indiana with a flight schedule to Destin, Florida. Over Alabama he made the distress call that was picked up by air traffic controllers in Atlanta. What probably happened next is that Schrenker set the plane on autopilot and parachuted out. The plane flew on without him, eventually crashing just 75 metres from a residential area at 9.20pm. It was some 200 miles beyond where Schrenker had ejected.

But while Schrenker might once have been a financial whizz, he was not a very competent Houdini. Controllers at the tower had alerted authorities and military jets had scrambled to follow the empty plane. When they tracked it they could already see its door was open and the cockpit empty. The plane, when it was inspected, had an atlas and campground directory inside ? with the Florida and Alabama pages torn out.

After parachuting safely, Schrenker hiked his way to a house in Childersburg, Alabama, about 15 miles away, banging on the door around 2.30am. He told the startled home­owners he had been in a canoeing accident. They gave him a lift to the nearest police station but the local police didn't make the link with Schrenker and the plane crash. Instead they brought him to a hotel where he checked in under a false name and paid in cash. When police returned to the hotel next morning Schrenker had already gone. He was now the target of a widespread manhunt.

Making his way through the woods Schrenker went back to the storage facility where he had stashed his motorcycle and sped away to a campground in Quincy, Florida, several hundred miles away. Checking-in he told the owners he and some friends were on a cross-country road trip and again he used cash to purchase firewood and a six pack of Budweiser. He also asked for internet access. It was now 12 January and Schrenker's disappearance and the scale of debt he'd left behind were making national news. He sent a bizarre note to a neighbour Tom Britt, back in Indiana, that some interpreted as a suicide note. In the email Schrenker claimed the crash had been a 'misunderstanding'. He said he was embarrassed and scared of returning home and would most likely be 'gone' by the time Britt read the email.

But by Tuesday night authorities had closed in. The campground's owners Troy and Caroline Hastings had been contacted by the sheriff to see if they'd noticed anything suspicious. When Schrenker had failed to check out by 5pm Troy approached his tent and noticed a large red stain on the flap. He called the police and investigators arrested Schrenker who had apparently attempted suicide. Near unconscious and confused, he had a slashed left wrist and a self-inflicted wound near his elbow. He was flown to a nearby hospital for treatment and was stabilised.

While initially the public response was one of enthrall, at the almost James Bond-like stunt he had pulled, very quickly the extent of Schrenker's swindling started to emerge. Angry investors back in Indiana and beyond, accused the businessman of stealing potentially millions from them. Worse, many were neighbours and friends.

"We've learned over time that he's a pathological liar," said Charles Kinney, whose parents had invested with Schrenker, and who claim to have lost $135,000.

Suspicion soon transferred to his wife Michelle, who claimed to know nothing of her husband's financial dealings but who was named on several of the businesses. Many believed she must at least have been wary of Marcus's recent behaviours. But Michelle claims her husband had already moved out and was living in a condo before his bizarre flight, so she didn't have tabs on his where­abouts. Nonetheless the same day Schrenker had emailed Britt, a judge froze the couple's assets, essentially cutting off Michelle's income, and leaving her and her three children vulnerable to losing their home.

But not everyone has turned their back on the once popular couple. One neighbour that was also financially burned by Schrenker, is standing by Michelle and has offered her and the children a place to stay should the courts take the big house in 'Cocktail Cove.'

This week a federal judge ruled Marcus Schrenker is competent to stand trial. The proceedings are scheduled to begin in Florida on 8 June.