Saturday, May 11, 2002

Erpenbeck accused in felony theft case

Former builder arrested on bad check charge

By Patrick Crowley,
The Cincinnati Enquirer

        BURLINGTON — A. William “Bill” Erpenbeck, who once headed one of the region's largest home-building companies, was arrested Friday on felony charges of passing a bad check for $258,493.99 to a contractor.

[photo] A. William “Bill” Erpenbeck (left), accompanied by his attorney, Glenn Whitaker, walks to the Boone County Sheriff's office to turn himself in.
(Gary Landers photo)
| ZOOM |
        But even as Mr. Erpenbeck, 41, was being booked by the Boone County Sheriff's Department, his lawyer was claiming that Mr. Erpenbeck is helping the federal authorities investigating his former company for bank fraud.

        “The bottom line is that Bill Erpenbeck has been cooperating with federal authorities for probably more than a month,” Cincinnati lawyer Glenn Whitaker said after delivering Mr. Erpenbeck to sheriff's deputies just after 4 p.m. Friday.

        Mr. Erpenbeck said little more than “hi” as he walked past a reporter and into the sheriff's office, where he was charged with one felony count of theft over $300. He faces one to five years in jail if convicted, Maj. Jack Banks of the Boone County Sheriff's Department said.

        After being photographed and fingerprinted, Mr. Erpenbeck was taken to the Boone County Detention Center. It was not clear whether he was placed in a cell. After about an hour, Maj. Banks said Mr. Erpenbeck was released on a $50,000 cash bond posted by an unidentified family member.

        A court date has not been set, and Mr. Whitaker did not say how Mr. Erpenbeck will plead. Mr. Erpenbeck, who lives in a $1.3 million Crestview Hills home he built but is now being foreclosed on, turned himself in to authorities after a warrant was issued for his arrest Friday morning.

        According to Maj. Banks, Mr. Erpenbeck was accused of writing a bad check to Morris Heating & Cooling. After the company deposited the check, it was returned because of insufficient funds in the Erpenbeck Co. account. Mr. Erpenbeck had signed the check but has since resigned from the company he founded in 1993.

        All but about 10 employees were laid off last week. The company is being run by Jeff Erpenbeck, Bill's younger brother.

        As recently as 2000, the Erpenbeck Co. logged sales of $84 million and was the region's fourth-largest home-building firm. But it is not clear now whether the company has the financial means to stay afloat.

        Mr. Whitaker said the company fell into financial problems by growing too fast and because the company and the Erpenbeck family lost what he called “a significant” amount of money in the mid-1990s in an investment fund called Ben Mar.

        Ben Mar actually ran a Ponzi scheme, a deal in which money paid by new investors is used to pay artificially high returns to original investors to attract more money. About $12 million was lost and one of the Ben Mar operators went to prison. The Erpenbeck family, including Bill Erpenbeck, invested a total of about $2 million in Ben Mar, though it is not clear how much money they actually lost on the scheme.

        “It's a very sad story,” Mr. Whitaker said. “It's really a story of a person trying to save his business and trying to do the right thing by a number of employees, subcontractors and employees.”

        In an investigation unrelated to the bad-check charges, the FBI and U.S. Attorney's office in Cincinnati are probing allegations of bank fraud involving The Erpenbeck Co.

        According to officials at Peoples Bank of Northern Kentucky in Crestview Hills, Erpenbeck Co. employees deposited roughly 200 checks in the past year totaling about $15 million that were actually made out to other lenders.

        The checks were cut by title companies at property closings and should have gone to the banks that made the construction loans on the houses. Instead, the money ended up in Erpenbeck Co. accounts at Peoples.

        The result has been that at least 200 homeowners do not hold clear title to their houses and condos. Many are suing, and Cincinnati lawyer Stan Chesley is seeking to pursue a class action suit against Peoples Bank in Boone Circuit Court.

        A number of banks have also filed suit against the Erpenbeck Co., including Peoples Bank, for nonpayment of loans. And an undetermined number of liens has been filed on Erpenbeck Co. properties by subcontractors seeking payment for work they did on the houses.

        But even though Mr. Erpenbeck is one of the targets of the investigation, he is also helping federal authorities on the case, his lawyer said.

        In fact, Mr. Whitaker said it was Mr. Erpenbeck who originally tipped the FBI and the U.S. Attorney for Southern Ohio's office in Cincinnati about the checks and the problems with the mortgages. Spokesmen for the FBI and the U.S. attorney were not available for comment.

        “There wouldn't have been an investigation without (Mr. Erpenbeck's) voluntary cooperation,” Mr. Whitaker said.

        Mr. Whitaker declined to provide any details about Mr. Erpenbeck's involvement or about what kind of information he is giving federal authorities.

        And while Mr. Erpenbeck is also being investigated, so are the title companies and banks involved in the disputed closings.

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