Investors testified before an administrative law judge that Marcus Schrenker has been bilking clients out of their savings for years.
An Indiana financial adviser accused of trying to fake his death in a plane crash improperly moved money from accounts, forged signatures on investment documents and charged exorbitant fees for years, investors testified at a hearing Thursday.
An administrative law judge in Indiana heard from investors and their relatives who claim Marcus Schrenker bilked them out of hundreds of thousands of dollars before last week's plane crash in Florida.
While that hearing was going on, Schrenker was in federal court in Pensacola, Fla., where he pleaded not guilty to charges of deliberately crashing his airplane and making a false distress call. Judge Roger Vinson ordered the 38-year-old amateur pilot sent for a psychiatric evaluation after Schrenker's attorney claimed he is not mentally competent for trial.
Schrenker was arrested Jan. 13 at a campground near Tallahassee, Fla., where federal agents say he tried to kill himself after parachuting from his plane in Alabama and driving off on a motorcycle he had stashed nearby. His plane continued on autopilot for 200 miles before crashing in the Florida Panhandle. Authorities say he faced mounting legal problems and his wife had filed for divorce.
In Indiana, the state Department of Insurance has asked Judge Douglas Webber to permanently revoke Schrenker's license, fine him $270,000 and order him to pay $320,000 in restitution. He also faces two felony charges there accusing him of working as an investment adviser without being registered.
Thomas Reese of Atlanta testified that he had invested nearly all of his $1 million life savings from more than 30 years of work at a General Motors Corp. plant in annuities with Schrenker, then later found $61,000 withdrawn without authorization.
"It never did go to me, it went to him, to one of his accounts," Reese, 83, said by phone. He said it took 18 months to get the money back.
Schrenker, who lived in an upscale lakefront home in suburban Indianapolis, is named in more than a half-dozen lawsuits seeking millions of dollars. At least one stemmed from grievances investors brought in 2007 to the Indiana insurance department, which filed a civil complaint in January 2008 accusing Schrenker of closing out their annuities and shifting money into new ones.
The state claims the switches left investors to pay high penalties they hadn't know they'd face while Schrenker earned lucrative commissions.
No attorney or other representative for Schrenker attended Thursday's hearing before state insurance officials.
Webber allowed the hearing to go on anyway, saying Schrenker had tried repeatedly to delay it. He had attended previous hearings in August and September.
"I think it's reasonable to conclude that even if he were not incarcerated, he would not be willing to participate in this hearing," said Webber, who is expected to rule in about a month.
Gena Smith of Buford, Ga., testified that Schrenker took advantage of her father, William Hess, who died in February 2008, by selling him annuity investments he did not fully understand. She said her father had written "not my signature" underneath where his name had apparently been forged on an investment form that is now part of the state's evidence.
"This is absolutely not my father's signature," Smith said.
Webber also heard testimony from Donna Richardson, an assistant vice president of agent contracting and licensing with National Western Life Insurance Co.
Richardson, testifying from her office in Austin, Texas, said the company refunded most of the original investments of people whose National Western accounts Schrenker handled after learning he had falsified information on their annuity applications.
Those refunds, which Richardson estimated totaled between $7 million and $14 million, prompted Creative Marketing International Corp., a National Western affiliate, to sue Schrenker and one of his companies Dec. 22 in federal court in Indianapolis.
That lawsuit alleges that Schrenker owes the company more than $1.4 million in commissions related to National Western Life products.