Wednesday, May 29, 2002

Erpenbeck suit status ruling due


Judge to decide June 10 if case will be class action

By Patrick Crowley, pcrowley@enquirer.com
The Cincinnati Enquirer

        BURLINGTON — June 10 could be a definitive day in the Erpenbeck banking scandal.

        That is when Boone Circuit Judge Jay Bamberger said he will decide whether the 209 homeowners caught up in the fiasco are brought together in a class-action suit against Peoples Bank of Northern Kentucky.

        “We have started a move toward resolution,” said Cincinnati lawyer Stan Chesley, who filed the suit along with Covington lawyer Brandon Voelker.

        The suit was filed on behalf of Charles and Sherry Mitchell, an Independence couple who bought an Erpenbeck home and then discovered that the first mortgage on the property had never been paid off by the builder, Erpenbeck Co.

STORY ARCHIVE
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INVESTIGATION
If you have any additional information on the business dealings of the Erpenbeck Co. or Peoples Bank of Northern Kentucky - or on the involvement of any parties not yet identified in our coverage - please email Enquirer business reporter James McNair at jmcnair@enquirer.com or Kentucky Enquirer reporter Patrick Crowley at pcrowley@enquirer.com.
        As many as 209 buyers of Erpenbeck homes are believed to be in a similar situation. Mr. Chesley and Mr. Voelker want to bring all the homeowners together in the class-action suit, which accuses Peoples of “fraud, negligence and unlawful” cashing of checks.

        The FBI and federal banking regulators are investigating the Erpenbeck Co. and its founder and former president, A. William “Bill” Erpenbeck, over allegations of bank fraud.

        During a hearing Tuesday, Judge Bamberger also ordered Peoples' lawyers to produce specific information June 10 about millions of dollars in cash and checks paid at property closings and then allegedly diverted into Erpenbeck Co. accounts at Peoples Bank.

        Though Peoples Bank officials have said they think that about $25 million in cash and checks was diverted by the Erpenbeck Co., an Edgewood-based house builder, there has never been a full disclosure about the details of all 209 transactions.

        John Bush, a lawyer representing Peoples Bank, said that information might be difficult for the bank to assemble.

        “We don't have the grasp on what that total number is,” Mr. Bush said. “We don't have all the loan files; some are with the closing agents.”

        Judge Bamberger told Mr. Bush to have either the details of the transactions or a reasonable explanation of why the information is not available to the bank.

        Mr. Chesley scoffed at the notion that the bank does not have all the details about the transactions.

        “I bet that's not what they told the banking regulators,” he said.

       



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