Wednesday, October 09, 2002

Erpenbeck spending of assets a concern

By James McNair
The Cincinnati Enquirer

COVINGTON — A court-appointed trustee in the bankruptcy case against A. William “Bill” Erpenbeck said Tuesday he will ask for an order prohibiting the home builder from spending money on frivolous pursuits such as his recent “carousing” in Key West, Fla.

Appointed to the case by U.S. Bankruptcy Judge William Howard, Michael Baker of Covington told the judge Tuesday that the spending restrictions might be necessary as he begins the laborious process of counting Mr. Erpenbeck's assets.

“There is considerable concern that there may be a wasting of assets here,” Mr. Baker said, “and I would move the court to issue an order restricting the debtor from expending any assets till we can get a handle on what's there.”

Mr. Erpenbeck, who is under federal investigation of bank fraud in the wake of his company's collapse in April, was not in court Tuesday. His bankruptcy lawyer, Robert Goering of Cincinnati, said it was the “first I've heard” of Mr. Erpenbeck's alleged jaunts out of town.

Judge Howard instructed Mr. Baker to seek a temporary restraining order should he decide to pursue the matter. Meanwhile, the judge rejected Mr. Goering's motion to dismiss the bankruptcy case, which was brought in July by three companies that claimed Mr. Erpenbeck personally guaranteed their $405,853 worth of unpaid labor and materials.

Mr. Goering wanted the case dismissed because he said Mr. Erpenbeck has been advised by his criminal lawyer, Glenn Whitaker, to seek the shelter of the Fifth Amendment and refuse to answer most questions. The move was opposed by Mr. Baker, two lawyers for the three subcontractors and a lawyer for the government.

Arguing to keep the case alive, Mr. Baker said he has identified three sets of assets that could be tapped for payouts to creditors. He cited an approximate $60,000 payment due Mr. Erpenbeck from the Ben-Mar Investments scam that defrauded many prominent Northern Kentuckians in the mid-1990s. He also cited Mr. Erpenbeck's home in Crestview Hills, worth as much as $1.7 million, excluding the value of its contents.

Mr. Baker then indicated another possible Erpenbeck stash — fraudulent conveyances made on the eve of the Erpenbeck Co.'s collapse.

“It is clear to me that, from newspaper articles regarding this entire debacle, that about 10 or 11 months ago there were potential preferential transactions made to certain creditors,” Mr. Baker said. “It warrants investigation, particularly with regard to inter-family transactions in the last 12 months.”

The government has not filed criminal charges in the Erpenbeck case, but it did put civil shackles on two dozen homes owned by Mr. Erpenbeck, two former executives of Peoples Bank of Northern Kentucky and a home-buying venture run by the ex-bankers. The civil actions charge that the homes were bought, at least in part, with proceeds of bank fraud.

Lawsuits filed by banks, subcontractors and home buyers, as well as liens and other claims, put the total fallout about $107 million.



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