Report: Ind. pilot can't repay scammed investors
INDIANAPOLIS – Investors who lost millions in the financial schemes of an Indiana money manager who tried to fake his own death in a plane crash will likely get back only pennies on the dollar under a plan submitted by his court-appointed receiver.
Even after selling off a house, cars, stunt plane and other relics of Marcus Schrenker's once high-flying lifestyle, there isn't enough money to repay investors more than a fraction of their losses, according to a report filed by the receiver appointed to inventory his assets.
The Oct. 12 report says the receiver came up with only $556,000 in cash after seizing Schrenker's bank accounts and auctioning his property. Schrenker owes $3.9 million to investors whose money he misappropriated and another $9 million to creditors.
"Unfortunately, that's what's there," said Kenneth J. Munson, one of the attorneys who signed off on the report filed in Hamilton Circuit Court.
Schrenker had claimed to have more than $1 million in offshore bank accounts in a letter to his estranged wife, Michelle, but accountants were unable to substantiate those claims, the report says, and the cost of tracing that money — if it exists — would outweigh any benefit.
Under a plan included in the report, administrators and state and federal taxes would be paid first. That would leave only about $276,000 for investors, who would likely regain about 7 cents on each dollar lost, it said.
The repayment plan must be approved by a judge. A hearing is set for Dec. 3.
Part of the problem, said Hamilton County Chief Deputy Prosecutor Jeff Wehmueller, is that Schrenker's lifestyle was built largely on borrowed money, and he owed money on most of his assets.
"It's not hard to live the life of a millionaire if you borrow a million bucks," Wehmueller said.
Schrenker, 39, of Carmel, was sentenced earlier this month to 10 years in prison after pleading guilty to securities fraud charges. He already faced four years in federal prison on charges stemming from the January 2009 plane crash. As part of the plea deal, he agreed to pay more than $600,000 in restitution. Part of that would likely be paid under the receiver's plan, Wehmueller said.
Schrenker, an amateur daredevil pilot, used money he stole from investors to buy planes, luxury cars and a 10,000-square-foot home in an upscale suburban Indianapolis neighborhood nicknamed "Cocktail Cove," where affluent boaters often socialized, prosecutors say.
They say Schrenker bilked nine clients, including a friend of 10 years and his own aunt, out of about $1.5 million. The clients thought they were investing in a foreign currency fund that didn't exist.
The scheme began to unravel when the economy declined and some investors wanted to move their money into safer investments. Schrenker turned to daily trades in risky investments in the hope of generating enough money to cover up his scheme, but couldn't keep up with the losses, Wehmueller said.
Facing mounting legal problems, Schrenker put his small plane on autopilot in January 2009 and jumped out with a parachute. He said he pointed the plane toward the Gulf of Mexico, but the plane ran out of fuel and crashed in the Florida Panhandle.
Schrenker parachuted into Alabama and was found two days later at a Florida campground, bleeding where he had cut his own wrist.