Yes, it's true, we called "Ponzi" on the early Schrenker news mostly tongue-in-cheek, but there were hints and now... the signs are all there.
1. Targeted a specific group and demographic with existing trust structures (pilots):
"It was all word of mouth, and when you're a pilot, you trust. That's what you do and what you're used to doing," said Joe Mazzone, 57, of Auburn, Alabama. "His modus operandi is, he flies into your city dressed up in a $1,000 suit and sits down with you, buys you lunch, and the next thing you know, he has you on his side, and you move your money to his Heritage Wealth Management."
[Note: Heritage Wealth Management, Inc., Schrenker's firm should not be confused with Heritage Wealth Management, LLC, the apparently unconnected San Diego firm]
2. Highlighted charisma over facts:
"This guy was the most charming guy you'll ever meet," said Kinney, who allowed Schrenker to manage his money starting about 2003. Kinney then encouraged his parents to invest about $2 million with Schrenker.
"This guy was family to me," Kinney told CNN. "He's a fantastic nice guy. He's well-spoken. His customer service was impeccable. You call the guy on the phone, you would get him.
3. Was vague about strategies and provided limited methodology descriptions:
"He told my parents that they were investing in various insurance products, but they didn't really know what that meant. I didn't really know, either. We trusted him," Kinney continued. "He said this is a safe place to put money, to avoid all the world's dangers like terrorism and impending doom and gloom associated with it.
4. Used unusual fee structures:
Both pilots say Schrenker gave them vague explanations about where their money was invested. Kinney and Mazzone said Schrenker assured them that he was not making commissions on their investments and that the pilots and their families would receive only one statement each year showing returns.
The signs are all there.
Warrant issued for missing pilot [CNN]