New Charges for Pilot Suspected of Faking Death

Jan. 14, 2009— -- The missing pilot who bailed out of his plane, apparently to avoid a growing trail of lawsuits and investigations, now faces two new felony charges stemming from his atempted disappearing act.

The Coast Guard filed felony charges against Marcus Schrenker, 38, for allegedly making a phony distress call that "caused the Coast Guard to attempt to save lives when no help was needed," and for willfully damaging or destoying an aircraft, Petty Officer Tom Atkeson told ABCNews.com.

Atkeson, based out of New Orleans, said the first charge carries a prison sentence of up to six years.

When Schrenker radioed in his distress call, the Coast Guard dispatched a Jayhawk helicopter because he was so close to coastal waters, Atkeson said. After Air Force F-15s flew alongside Schrenker's abandoned plane until it crashed, the Coast Guard Jayhawk helped locate the downed plane and sent rescue swimmers to ensure the cockpit was indeed empty, he said.

These were the first of what was expected to be a variety of state and federal charges against Schrenker, who was under armed guard at a Tallahassee hospital today.

Tom Britt, Schrenker's friend who helped him advertise his businesses, said he's already been told that investigators would need evidence from him, including an e-mail Schrenker sent him that was used to trace Schrenker's location, to use against him at trial.

Britt said he believes Schrenker wanted to crash his plane into the ocean so that authorities would declare him presumed dead.

"He made a couple, what I would call dumb mistakes," Britt said.

One was when he sent an e-mail that led police right to his location, in Alabama, following the bailout from his plane.

When police and U.S. Marshals captured Schrenker Tuesday at a Florida campground, they found he had slit his left wrist in an apparent suicide attempt. His tent was stocked with spare clothes, a cell phone, a laptop computer and $2,000 to $3,000 in cash, according to Lt. Jim Corder of the Gadsden County Sheriff's Office.

"He was sort of semi-conscious," Assistant Deputy Chief U.S. Marshal Frank Chiumento told ABC's "Good Morning America" today. "He didn't say much. He was trying to mutter some words to us."

It was the latest development in a stunning downfall for Schrenker, who on Sunday parachuted out of his single-engine plane, which then continued on auto pilot for another two hours before it crashed into Florida swampland.

He later took off on a motorcycle he had stashed in advance in a self-storage facility in Alabama, police said.

While he was on the run, months of investigation into his insurance and investment advisory businesses culminated in two felony charges for securities violations.

Chiumento said Schrenker wasn't able to make intelligible comments about the series of events that led him to the campground in Quincy, Fla., some six hours from where he abandoned his plane.

"He muttered 'die' at one time, as if he didn't want the first aid we were rendering to him," he said.

His injuries, including a large slit to his left wrist and a puncture wound near the elbow, were not believed to be life-threatening.

Corder said that once Schrenker is released from the hospital he will be transferred either to the Gadsden County Jail or to a federal detention center in Tallahassee.

"We don't expect him to stay in [the hospital] more than a day or so," Corder told ABCNews.com.

Corder said federal authorities were able to trace Schrenker to the KOA Campground using an e-mail sent to a friend in Indiana. In the e-mail, Schrenker expressed remorse for embarrassing his family and hinted at possible suicide in the line "By the time you read this, I'll be gone."

The Federal Aviation Administration was en route to Florida, Corder said, to begin the lengthy process of determining which charges Schrenker will face from his three-day escapade.

"We're going to have to have a roundtable and figure out what laws were violated," Corder said. "Logistically, it's going to be a nightmare for law enforcement."

FAA spokeswoman Kathleen Bergen told ABCNews.com today that they have launched their own investigation in addition to assisting the National Transportation Safety Board, which is investigating the plane crash.

"The FAA is investigating the matter to determine if there were any violations of the aviation safety regulations," she said.

While the FAA does not have authority to hand down criminal charges, it can institute civil fines and revoke licenses and certificates needed to operate an plane or other aircraft.

Schrenker is already facing two counts of acting as an investment adviser after his license expired Dec. 31, according to documents provided by Indiana Secretary of State's Office spokesman Jim Gavin.

Gavin told ABCNews.com that a Hamilton County Superior Court judge froze Schrenker's assets and those of his wife late Monday. Schrenker parachuted out of his company-owned plane over Alabama Sunday; the plane continued flying on autopilot before crashing into Florida swampland two hours later.

Gavin said the assets will be frozen for 10 days until a scheduled hearing to determine the fate of Schrenker's considerable wealth. He currently has three businesses in his name: Heritage Wealth Management, Heritage Insurance Services and Icon Wealth Management.

His home and business were raided by authorities Dec. 31 as part of an investigation into possible securities fraud, Gavin said, based on "complaints made to the Indiana Securities Division ... by investors."

During the raid agents seized passports, $6,036 in cash, the title to a Lexus and deposit slips for bank accounts in Michelle Schrenker's name, according to The Associated Press. Also taken were six computers and nine large plastic tubs filled with various financial and corporate documents.

In an affidavit, investigators suggested Schrenker might have access to at least $665,000 in the offshore accounts of a client.

The judge set bond for Schrenker at $4 million cash. Each felony charge carries a possible sentence of two to eight years in prison.

Tracing a Mysterious E-mail

Britt, who received Schrenker's e-mail Monday evening, told ABCNews.com that the 300-word confessional didn't address his whereabouts at the time but included messages for his wife and children.

"When life becomes too much, people do stupid things," Britt quoted the e-mail as saying. "My heart just started racing, especially when I got to the bottom of the e-mail and it said, 'By the time you read this, I'll be gone.'"

Britt, taking that as a suicide threat, called 911 and was contacted by the U.S. Marshals Service, which asked him not to release the e-mail to the public.

"It was very remorseful," Britt said of the e-mail. "He felt very apologetic for what happened."

Schrenker's last known activity before police found him Tuesday was at a storage facility in Harpersville, Ala., Monday that he had rented using his stepbrother's name and identification a day before he jumped from the plane. There he stored a red motorcycle, which he picked up after jumping from the plane and took off, police said.

Schrenker and his investment advisory firm Heritage Wealth Management Inc. had numerous court judgments and lawsuits pending, including a $1.4 million lawsuit claiming Schrenker had failed to pay back commissions from insurance polices that never materialized.

"I'm terrified, horrified, I don't know what's happening," Schrenker's mother, Marcia Galoozis, told ABC News." "I have no idea, he could be delirious, could be concussional -- we don't [know] his state of mind. I think he just -- I don't know. If all this is true it's overwhelming."

Schrenker's disappearance came days after his stepfather was buried. His stepfather died from lung cancer only three weeks after he was diagnosed. Schrenker attended the funeral with his wife and children.

Galoozis said the family was shocked by the recent events.

"He loved his children, loved his family, loved his house," she said. "He loved people, he loved his family. I don't know what's happened."

Searching for Marcus

Schrenker was at the controls of a single-engine Piper Malibu when he sent out what authorities describe as a phony distress call while flying over northern Alabama, Sunday evening.

He told air traffic controllers that he was experiencing turbulence, that his windshield had blown into the plane and that he was bleeding profusely.

Federal Aviation Administration spokeswoman Kathleen Bergen said the controllers lost contact with Schrenker shortly after but continued to track his plane for more than two hours before it crashed in Milton, Fla., about 230 miles away.

Military jet pilots, who had been deployed to monitor the Piper Malibu, reported that the door to the plane was open midair and that the cockpit was dark. The jets followed the plane until it crashed.

While Florida police were investigating the crash, Schrenker turned up in Childersburg, Ala., and asked an officer to take him to the nearby Harpersville Motel, reportedly saying he had been in a canoeing accident. Unaware of the investigation in Milton, authorities obliged, noting that he was carrying goggles police described as those that might be used for flying.

According to a news release issued by the Santa Rose Sheriff's Office in Florida Monday, Schrenker was wet from the knees down but had no visible injuries -- contradicting his reported claim to the air traffic controllers that he was bleeding profusely.

Harpersville Police Chief David Latimer told ABCNews.com that Schrenker "said he wanted to meet some friends" at the motel.

Once they realized that he was linked to the Milton accident, police went back to the hotel and found that Schrenker, who had checked in under a fake name, had put on a black cap and run off into the woods, having paid for his room with cash.

"What he was doing was trying to get back to Harpersville so he could get the motorcycle and take off," Latimer said.

Police also found clothes in the storage facility's Dumpster they believe belong to Schrenker, "the same clothing he had on the surveillance video we obtained from Harpersville Motel," Latimer said.

"It's shocking, but it doesn't surprise me," Britt said, pointing out that Schrenker had the aviation skills and the money to pull off such a stunt.

Britt, who has known Schrenker for about five years and helped him advertise his newest business venture, Icon Wealth Management, said there were two distinct sides to Schrenker.

"There was kind of this nice guy and this loose cannon I keep hearing about," he said.

Britt said that while Schrenker would go out of his way to support the local community -- he once donated money to fight a municipal squabble -- he wasn't popular with many that did business with him. There were stories, Britt said, of threats and verbal arguments.

Britt said he's reached out to Schrenker's wife. The e-mail, he said, spoke of his love for Michelle Schrenker and their children.

Schrenker's wife, Michelle, had filed for divorce last month and a hearing had been set for Feb. 5, according to court documents.

Galoozis speculated that the economic crisis got to him because he invested other peoples' money.

"I just hope that he slows down, settles down, looks at the big picture and gets some help," Galoozis said.

Mounting Legal Troubles

Until the last week's events, life appeared to be good for Schrenker. He had a $4 million waterfront house, a beautiful wife and three children.

But he was living under mounting scrutiny as lawsuits and accusations about his business dealings began to pile up.

Schrenker and his investment advisory firm, Heritage Wealth Management Inc., were sued last month by Kansas-based Creative Marketing International Corp., which is trying to recoup $1.4 million in reported losses Creative Marketing claims it incurred after Schrenker failed to repay commissions from insurance and annuity policies.

According to the complaint, filed in U.S. District Court in the Southern District of Indiana's Indianapolis Division, Schrenker was hired by National Western Life Insurance Co., a client of Creative Marketing, to procure applications for life insurance and annuities.

But, according to the complaint, Schrenker failed to reimburse National Western for policies that had lapsed or were otherwise not enacted.

"Because CMIC [Creative Marketing] believes other similar inappropriate sales may have occurred, additional damages may have been incurred," the complaint reads.

Phone numbers for Heritage Wealth Management were disconnected and there was no listing for Schrenker's home address. Schrenker is also listed as owner of Icon Wealth Management, formed in February 2008, at the same address as Heritage. Numbers for Icon were also disconnected.

Schrenker was also ordered, by a default judgment issued Friday in Maryland's U.S. District Court, to pay Baltimore-based OM Financial Life Insurance Co. $533,564 in a breach of contract case similar to the Creative Marketing case.

OM Financial Life said that Schrenker had signed on to sell life insurance and annuity policies for the company, but failed to return more than $230,000 in commissions for policies that reportedly never materialized.

Included in the judgment against Schrenker and Heritage Wealth Management was $433,017 in damages, $66,397 in attorney's fees and more than $33,800 in interest.

And earlier this month, the Indiana Department of Insurance filed a motion to revoke the license of Schrenker and Heritage and fine them, citing a string of complaints from clients, some charging that he forged signatures and withdrew investment money causing large surrender penalties.

In one case, according to the state's complaint, Schrenker was accused of advising an 80-year-old client to purchase four deferred annuity contracts totaling more than $1 million. Schrenker then allegedly failed to fully explain the details of the contract, including surrender penalties and the fact that the client would not be provided retirement income until age 95.

The same complaint charged that Schrenker advised the 80-year-old client not to file 1099 tax forms and when $61,000 disappeared from the client's annuity funds for 19 months, Schrenker paid it back by way of cashier's check.

Joe Mazzone, a retired Delta captain from Auburn, Ala., told ABC News that he was one of Schrenker's victims, calling him "very slick, very soft-spoken, well-educated and very professional."

Mazzone said that Schrenker secretly bought 15- to 20-year annuities on his behalf, locking him into the policy. Mazzone alleged that Schrenker forged signatures and lied about not receiving commissions when he was actually taking in as much as 20 percent.

Mazzone said he and other Delta employees who took action against Schrenker were due in court in connection with the case on Jan. 22.

"All of us would like to see justice," Mazzone said. "He seemed like such a nice guy."

Schrenker is also being investigated by the FBI, though a spokesman couldn't provide any details, only saying the agency was looking into the case, according to agency spokesman Paul Daymond in Birmingham, Ala. He declined to discuss the focus of the probe.

A search of public records showed that Schrenker had filed for bankruptcy in February 2003.

Heritage's Web site describes the firm as "value hungry advisers, constantly driven to get maximum returns for the lowest amount of risk."

ABC News' Jason Ryan, Marisa Bramwell, Andrea Beaumont and Brad Martin contributed to this story.