Small World
Over the past several months, I’ve been warning that financial scams will be falling from the sky. Little did I know that it might be, literally, true.
When I heard the story about the pilot who parachuted out of his plane, leaving it on auto-pilot to crash mere yards from waterfront homes in the Florida panhandle, it reminded me of Sam Israel, the hedge fund scam artist who tried to fake his own death this past summer. When I read that the pilot was a registered investment advisor, I knew that the stunt was triggered by misconduct at this business. When I read the name of the pilot - Marcus Schrenker - I knew I had heard it before. I searched past blog posts to see if we had written about him before; nothing.
Late yesterday I got a voicemail message from the man who built our house. His name is John Vaughn, and if you need a home built in the Atlanta area, he is the man to call. John reminded me that I had helped him mediate a dispute with Mr. Schrenker more than a year ago. Schrenker had refused to pay for upgrades to a house John built for him. His conduct was less than honorable, to say the least. I was not, therefore, surprised to learn that Indiana securities regulators had frozen his assets, and that he was on the lam.
They’ve caught Schrenker now, and the cause of his bizarre behavior will soon come to light. If you were to ask any of his clients, though, they would tell you that they had absolute trust in him, and never would have suspected him of wrongdoing. That is the point. You would say the same about your broker or investment advisor, wouldn’t you? My experience at the SEC and in nearly 20 years of protecting investors has taught me that that level of trust is almost always ill-informed, usually misplaced, and often punished with devastating consequences to the life savings of baby boomers and senior citizens.
Financial scams are indeed falling from the sky. But they always have, and always will. The only question is whether you will be on board when they hit the ground.