Friend that knows Mr. Paladino, tells me the guy used to fly A300s for AA and that he was always a good man to work along side of.
Now, not that commercial operators are any less responsible, but I highly doubt that a former AA pilot would even think about changing FL or turning off the transponder. I think that spotty radar coverage is what they should be looking at.
Doesn't the FDR on an Embraer record the transponder's status ?