Flying high in Cocktail Cove

In an upscale neighborhood known as "Cocktail Cove" near Indianapolis, a young investment adviser with big ambitions was making an even bigger name for himself. But it wasn't quite the reputation Marcus Schrenker might have wished. Pat Carlini lived nearby.

Pat Carlini: It seems like he just had run-ins with one neighbor after another."

Keith Morrison: Over what?

Pat Carlini: It could be the fact that somebody was building a house next to him.  And the stone on that house would look too much like the stone on his house.

That might sound like typical neighborhood pettiness. But to others, Marcus Schrenker had reputedly turned into the neighbor from hell. A pretty bad tenant, too. He rented office space at this building near his home.  Tom Britt runs the local newsletter.

Tom Britt: A couple years ago, he had an argument with his then-landlord.  The next day the guy wakes up and goes out to his dock and his boat isn't there.  And he gets a call from the fire department - saying that there was a boat registered to him that had gone over the dam and had crashed.  And nobody could ever pin it on Marcus.

All the while, Marcus was living the good life with his wife Michelle and their three children in their big house on the water.

Keith Morrison: What'd he tell you about that?

Michelle Schrenker: That he didn't do those things.  That it's ridiculous he did those things.

Four years ago, Michelle was by Marcus' side on the local news, after he sued the county sheriff's department for wrongful arrest following a dispute about one of his motorcycles.

Marcus Schrenker: He grabbed me and handcuffed me.  Threw me to the ground right here and basically wrestled me right here.

The sheriff's department denied any wrongdoing, and the lawsuit was settled. But on Cocktail Cove, there was something unsettling about Marcus' ability to grab the spotlight.

Michelle Schrenker: I know they always wondered about our income and that sort of thing.  I know there was a lot of talk about Marcus, but I just never...

Keith Morrison: Where, where do they get their money?

Michelle Schrenker: Yeah, but I just never paid much attention to it.

But others did.

Chris Proffitt: He made a big splash.  With the plane, flying over the reservoir, and buzzing people. I heard those stories.

Reporter Chris Proffitt of NBC affiliate WTHR in Indianapolis has covered the area around Geist for two decades.

Chris Proffitt: This was a guy that favored Armani suits. He had an attractive wife.  He had cars.  He had planes.  He seemed to have a really good life. I think it's become clear that Marcus wanted to give the appearance of success.

And did he ever. He had all the expensive boy toys a guy could want.

Michelle Schrenker: The things he bought are not things I use. I don't boat. I don't ride dirt bikes.  I don't like motorcycles.  I don't fly planes.

To Marcus, though, planes were the ultimate status symbols. And he loved to show his off: he'd even have a camera in the cockpit. He was a regular at airshows, where he could display his pilot skills, his daredevil streak.

For Marcus, planes were at the very center of everything. Look at the fullpage ad the Schrenkers did for a luxury car dealership: Marcus, Michelle, the Lexus, the airplane.

Michelle Schrenker: It was flattering that they asked us to do it.  I mean, it was nice. And we did it.  We may have gotten a Lexus there before and we knew the manager over there, who had lived in our neighborhood. So you know, it was no big deal.

No big deal.  Everything about Marcus Schrenker and his apparent success was no big deal.  He just seemed to rake it in. Despite some neighbors’ suspicions, there were few questions asked, few things out of place for this all-American success story of a family. But there was something a little odd a few years back.  In 2005, Marcus told his wife one day, out the blue, they were moving away, down South, to Atlanta.

Keith Morrison: How was the move?

Michelle Schrenker: It was hard.  It was sort of hard on me and hard on the kids to adjust, but we did it. And it wasn't a happy time.

The Schrenkers lived in another beautiful home in a gated subdivision bought for $1.65 million. It turns out Atlanta is home to thousands of pilots, and Marcus made a specific pitch to them on his Web site.  Marcus had entree in Atlanta. He already knew a pilot, Charles Kinney, and they became close.

Charles Kinney: I got to hold his baby. Play with his kids. We knew his family. He actually came to my parents' 50th wedding anniversary celebration.  Him and Michelle.

Some of Charles' family members invested with Marcus, as did pilot David Smith.

David Smith: We had a lotta fun. We went skeet shooting, we went down to see the shuttle launch. So we became pretty close friends rapidly.

Charles Kinney: His take is to get to know you at a very personable level.  And develop a friendship.  And he was very good at that.

But after 18 months or so in Atlanta, Marcus had another surprise for Michelle.

Michelle Schrenker: He woke up one morning and just said, "I've decided where I'm gonna buy a lot, in our old neighborhood, and we're gonna build a house and move back.

Before long, the Schrenkers were back on Cocktail Cove. Where did the money for the good life come from?  How did his business work?  Nobody seemed to know anything about it.  Even Michelle, to hear her tell it.

Keith Morrison: What did he do all day?

Michelle Schrenker: He managed it.  He made the trades.  He managed people's funds.  But I don't know. I didn't specialize in what he did. That was his business. My focus was not the business.  My focus was our family."

But Marcus was focusing on a new incarnation of the business. Heritage Wealth Management soon got a new name.  And Marcus called the man who runs the widely-read newsletter covering the Geist area. Look at this: a four page ad.

Schrenker's new company was called "Icon Group".  Had a nice ring to it.  It had offices in Indianapolis, and Sao Paulo, and Tokyo, and London - a far-flung empire.

Keith Morrison: But what'd you think when he put as the location of his company all the major cities in the world? I mean, come on.

Tom Britt: The way he portrayed it to me was he said that they were already established businesses and they were buying his business.  And he was just going to be managing and selling securities for him.

Life looked very good indeed for the Schrenkers last year, and remarkably, continued to look good even as markets the world over were collapsing.  And then, last fall, quiet signs of trouble.  Referring to Icon Group, he sent an e-mail to a friend saying "We have a compliance issue." Another said, "I've had to take some time off for stress."

And during the holidays, a close family friend got a phone call:

Cindy Gooding: I think it was Christmas Eve when another investor had contacted my husband and said, "Hey, something's just not right." And they did a little digging.

Christmas.  Joy was in the air around Cocktail Cove. But at the big house on the water? Well, joy would not be the word. Earlier, Michelle Schrenker had stumbled on a painful discovery.

Keith Morrison:  how did you find out?  How did he finally tell you?

Michelle Schrenker: He never really told me.  I caught him. And I saw him and her, going into the condo.

Keith Morrison: What'd you do?

Michelle Schrenker:  I confronted him.

An affair.  There was no denying it.  A woman from the local airport in which Schrenker had invested and where he spent a lot of time. In November, Michelle says, she filled out paperwork for a divorce but didn't go through with it.  The kids, she says, had been looking forward to a family Christmas.  A vacation.

Keith Morrison: Where were you gonna go on this family vacation?

Michelle Schrenker: Florida, to see his family...

Keith Morrison: So why didn't you go?

Michelle Schrenker: His parents got sick, and I said we'll just get a hotel somewhere and still go, and he said, well, we really can't afford it.

Can't afford it? The high-flying Marcus Schrenker couldn't afford a brief vacation in Florida?

Michelle Schrenker: "...and I said, "Okay fine, you know." And then a couple days later, ironically, he could afford to go to Key West. He could afford to go to Key West with his girlfriend. 

This is airport surveillance video from Dec. 29 showing Marcus and his girlfriend before leaving for Key West. And that, decided Michelle, was the end.  While he was away, on Dec. 30, 2008, she filed for divorce.  The next day, New Year's Eve, she was upstairs.

Michelle Schrenker: And my six-year-old came up and said Mommy, there's a policeman that wants to talk to you.

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