If The Loot's There, He'll Find It
By Richard Woodbury/Houston
Where did the money go? That's the most vexing question produced by the rampant fraud that has wiped out hundreds of banks and thrifts in recent years. But Edmund Pankau, a Houston private eye, knows how to find the booty. Case in point: last fall a real estate developer who was two years delinquent on a $2 million loan suddenly showed up at his Houston bank and offered to settle for $200,000. Bank officers wondered whether he might be harboring far more cash. They called in Pankau, who combed public records and found that the developer had come into a big inheritance. When confronted, the businessman agreed to pay his full $2 million debt plus $500,000 interest.
Investigators like Pankau are playing a growing role in helping sort out the savings and loan mess, a debacle that could cost more than $300 billion over the next three decades. According to top federal regulators, fraud was responsible for as much as 60% of all S&L failures in 1989. By hiring investigators to pick up the paper trail where overburdened prosecutors have left off, the new buyers of old thrifts can often recover a hefty share of the loot. "There's a real demand for specialists who can read between the lines," says Joseph Wells, chairman of a thriving new group called the National Association of Certified Fraud Examiners (membership: 3,000).
Operating out of a steel-and-glass Houston skyscraper once owned by a failed thrift, Pankau, 44, directs his own agency, Intertect. (Its fee: $60 to $100 an hour.) Pankau's 30 investigators assemble financial profiles of S&L scoundrels who have bled their institutions dry through bad loans and insider dealings. Often court judgments are pending against the culprits, but the regulators or new banks holding the bad notes need to know whether the assets are sizable enough to pursue. "These are world-class con men who were just as sophisticated in hiding their money as they were in committing their fraud," says Pankau, a onetime Internal Revenue Service agent and a trained accountant.
Armed with volumes of microfiche and microfilm, Pankau's investigators conduct financial probes that would make privacy advocates cringe. They use vehicle-registration lists purchased from the Drug Enforcement Administration, as well as vital statistics culled from Texas' 254 county courthouses. The most telltale documents are often probate records and property transfers. Pankau exposed a Dallas land developer after he shifted most of his millions into his four children's trusts, filed for bankruptcy and proceeded to live off the charity of his offspring. A Houston real estate promoter who had a series of big bank loans coming due handed off $12 million in assets to his wife in a "friendly" divorce, then filed for bankruptcy. After the detective documented the transfer for a creditors' committee, the panel promptly moved to overturn the divorce.
Some delinquent borrowers have tried to seek refuge behind Texas' homestead law, which shelters a debtor's home from hungry creditors. But Pankau nailed one scamp after he used proceeds from a commercial loan to hide $1 million in a River Oaks mansion. "If it's out there, we're going to find it," he insists. "The money all went into somebody's hands. It didn't go up in smoke."
With scores more S&Ls designated for sale or closure in the weeks ahead, the legacy of fraud is likely to keep paying handsomely for asset chasers like Pankau. His firm claims to have increased its revenues 50% in each of the past five years, and plans new offices in such growing white-collar-crime capitals as Arizona and Florida. Pankau has even taken a few lessons from the bad guys, spreading the ownership of his company among his three children, through trusts. That, he explains, is partly to protect himself from liability suits in case any of his targets try to get revenge in court.