Thursday, August 08, 2002

Ex-exec of Peoples stays, copes

Menne hasn't fled to Florida; hopes to become landscaper

By Patrick Crowley,
The Cincinnati Enquirer

        VILLA HILLS — Four months ago, Marc Menne was a top bank executive, a community activist and local business leader who relaxed by tending to the elaborate garden in the back yard of his $600,000 home.

        Today, Mr. Menne is out of a job, one of those questioned in a federal investigation into alleged bank fraud, a key player in the $107 million Erpenbeck Co./Peoples Bank of Northern Kentucky scandal and someone who may turn his hobby into a new vocation.

        “Outwardly, he looks to be doing well,” said Mr. Menne's attorney, Covington lawyer Harry Hellings. “But he's pretty shaken. He really is a classy guy, but he's emotionally strung out, and he's doing the best he can possibly do.”

        Unlike the two other most prominent figures in the scandal — former Peoples president and CEO John Finnan and home builder A. William “Bill” Erpenbeck — Mr. Menne is staying put in Northern Kentucky.

        Mr. Finnan has sold his $650,000 Crestview Hills home and is moving to an apartment in Florida. Mr. Erpenbeck's $1.3 million home — located on Legends Way, the same street where Mr. Finnan lived — is being foreclosed on, and he has moved his family to a condo in Fort Myers, Fla.

        Mr. Menne and his wife, Alice, have their home on Appleblossom Drive listed for sale with Sibcy Cline. The couple, who have three children, are asking $619,900 for their 4,000-square-foot home. The Erpenbeck Co.-built house features four bedrooms, 3.5 baths, an alarm system, custom-built cabinets, a Bose sound system and 10-foot ceilings.

[photo] Mark Menne's home is listed for sale at $619,900
(Enquirer file photo)
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        According to neighbors, the couple want to sell the home and move to a smaller home on Cedarbrook Drive in Villa Hills. The federal government has placed a lien on the home but would take other assets in lieu of the property if the house were sold, said Fred Alverson, spokesman for the U.S. Attorney's Office for the Southern District of Ohio.

        That's what happened two weeks ago when Mr. Finnan sold his home. The government lifted the lien on Mr. Finnan's home after he turned over 36,601 shares of Peoples Bank stock to U.S. marshals.

        It is not known how much Peoples stock Mr. Menne owns. But while at the bank, he was a director and in January exercised $236,000 in stock options.

        Mr. Finnan and Mr. Menne are also selling a condo they jointly own in Fort Myers. They bought the oceanfront property in 2000 for $194,000. Although the government has also placed a lien on the condo, it has only about $18,000 in equity. If the property sells, that money would be placed in escrow until it could be determined whether the government has a claim on the cash, John Schuh, Mr. Finnan's attorney, has previously said.

        Mr. Menne was known in Northern Kentucky as a committed community activist, volunteering for the Northern Kentucky Chamber of Commerce, the St. Elizabeth Medical Center Foundation and Covington Catholic High School, from which he graduated in 1974.

        With her husband out of a job, Mrs. Menne has returned to work as a registered nurse, Mr. Hellings said.

        Mr. Menne, an award winning gardener, may eventually go into the landscaping business once all his legal issues are resolved, Mr. Hellings said.

        “He wants to get on with his life,” Mr. Hellings said.

        Mr. Menne, 46, was an executive vice president at Peoples Bank when board members discovered that he and Mr. Finnan were operating a side business called Jams Properties. Using Jams, Mr. Finnan and Mr. Menne bought model homes from the Erpenbeck Co. and leased the homes back to the company.

        The practice is common in the home-building business. But Peoples board members, concerned about possible conflict of interest between the bank's leading executives and one of its top borrowers, fired Mr. Finnan and Mr. Menne April 30.

        Board members were also concerned over the relationship because in late April it was revealed that federal authorities were investigating allegations of bank fraud involving the Erpenbeck Co. and its relationship with Peoples Bank.

        According to federal officials and bank directors, employees at the Erpenbeck company diverted 211 checks totaling $16.7 million into the company's accounts at Peoples. The checks were cut at property closings involving Erpenbeck-built homes and were supposed to pay off construction loans. Instead, the checks ended up in Erpenbeck Co. accounts at Peoples, which is now in the process of selling off its assets — eight branches, selected loans and deposits — to Florence-based Bank of Kentucky.

        Because the checks did not pay off the construction loans, the 211 homeowners do not hold clear titles. Peoples has said that when the expected sale of the bank is completed in the next few months money will be set aside to pay off the $16.7 million in mortgages.

        No charges have been filed, but federal officials have been exploring any potential links among Mr. Erpenbeck and Mr. Finnan and Mr. Menne.

        Mr. Hellings said while Mr. Menne does bear some responsibility for his actions and dealings with Mr. Erpenbeck, the home builder duped his client.

        “Bill Erpenbeck was lying” to Mr. Menne, Mr. Hellings said. “He should have known some things, but nobody else knew what was going on either. I really at this point don't know what he did wrong.”

        Mr. Hellings would not elaborate on the conversations he and Mr. Menne have had with federal prosecutors and authorities over his role in the scandal. But he did say that comments Mr. Finnan has made in a federal lawsuit hold mostly true for Mr. Menne as well.

        On July 17, Mr. Finnan filed a motion to dismiss a federal lawsuit in U.S. District Court in Covington filed by Morris Heating and Cooling of Burlington and two other subcontractors that are trying to establish a class action suit against Peoples Bank and Mr. Finnan.

        In the suit, Mr. Finnan portrayed himself and Mr. Menne as victims of the Erpenbeck Co. in their dealings through Jams. Mr. Erpenbeck has not responded to the claims made in the suit.

        “Contrary to public opinion, Jams Properties LLC, Finnan and Menne were probably the largest individual victims of Erpenbeck's fraud,” Mr. Finnan said. “In no less than seven instances, Jams paid money to Erpenbeck to purchase properties to be leased back to Erpenbeck and Erpenbeck failed to pay underlying mortgages on the properties leaving Jams, Finnan and Menne exposed to prior recorded mortgages totaling in excess of $890,000.”

        Mr. Hellings claimed Mr. Menne as well as Mr. Finnan fell prey to the Erpenbeck Co. in another way.

        From 1997, when Jams was formed, to earlier this year, the partnership purchased 19 homes from Erpenbeck for $4.8 million.

        On about half of the deals Mr. Finnan and Mr. Menne gave checks to the Erpenbeck Co., but rather than paying off the loans the money was deposited into Erpenbeck accounts.

        “The same thing happened to (Mr. Finnan and Mr. Menne) that happened to these other homeowners,” Mr. Hellings said.


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