Crumbley compares the work to eating a bowl of spaghetti. "You look at a strand and don't know where it starts and ends."
He says it's also like searching for rare coins in a garbage dump using a metal detector. "You will get a lot of false hits."
Forensic accountant Mike Kessler of Kessler International in New York says he usually starts at the end and works his way back to the beginning. "You track the money going backward," says Mr. Kessler.
Mr. Yormark likes to follow "the flow of the funds," which he says usually leads to where the funds have been used.
Yormark used this approach in 1991 when, then at Kroll Inc., he was hired to trace the assets of John McNamara, who was involved in a Ponzi scheme involving General Motors Acceptance Corp. (GMAC). From 1980 to 1991, Mr. McNamara, a developer and car dealer, said he was buying new vans and other vehicles, modifying them, and shipping them overseas for sale. GMAC would fund the purchases of the vehicles.
However, there weren't any vehicles, although McNamara had told GMAC he was buying 40,000 vehicles per month. "He was their best customer," recalls Yormark.
By the time the scandal was revealed, GMAC was out $436 million.
In tracing the assets, Yormark found much had gone into purchasing real estate, plus a gold mine in Nevada. GMAC got some of its money back, but Yormark is not certain how much.
In some Ponzi schemes, however, investors have been fortunate to get a significant amount back. In the late 1990s, Credit Bancorp siphoned $200 million in marketable securities from several hundred investors in a Ponzi scheme. Those investors got back all but $25 million.
