By Patrick Crowley
The Cincinnati Enquirer
BURLINGTON - Almost a year after the Erpenbeck Co. scandal was uncovered, 132 homeowners stung by the company are close to having bank liens released from their homes.
Lenders, title companies and title insurance companies have ended months of negotiations and reached an agreement over how to divvy financial responsibility for $17.3 million in construction loans that were not paid off by the Erpenbeck Co.
The final settlement papers are expected to be signed in two weeks, lawyers said during a hearing Monday before Boone Circuit Judge Jay Bamberger.
More than 50 of the liens have already been settled, but once the final papers are signed, all the liens will be removed and homeowners will finally hold clear title to their homes.
"This is an example of the judicial system working," said Cincinnati lawyer Stan Chesley, who represented the homeowners in a class-action suit. "Within less than a year, everybody will have their liens released and everybody will be made whole."
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Employees of the Erpenbeck Co., including its former president Bill Erpenbeck, are the focus of a federal criminal investigation for allegedly diverting millions of dollars in checks cut at home closings into the company's accounts at Peoples Bank of Northern Kentucky. Because of its exposure to the Erpenbeck Co., Peoples was forced to liquidate to raise cash to pay construction loans that should have been paid with the closing checks.
Board members at Peoples, which has remained a corporate entity only to settle the liens, first found out about the Erpenbeck Co.'s problems and the bank's exposure on March 28, 2002.
That is when the bank's top two executives - President John Finnan and executive vice president Marc Menne - revealed the Erpenbeck Co. problems to Peoples board members.
Finnan and Menne were fired within days and are also targets of the criminal investigation.
"It's finally over, or at least it will be shortly," Buck Wiseman, an attorney for Peoples Bank, said Monday. "We have reached an agreement in principle with the exception of about two properties, but we can get those released as well. The settlement agreements are already in draft form and substantially finished.
"The court has directed us to have those concluded within two weeks," Wiseman said.
Here is the breakdown of how the $17.3 million in liens will be satisfied.
Peoples Bank will use money raised in its July sale to The Bank of Kentucky to pay 70 percent of the costs.
Four banks that made major construction loans to Erpenbeck - Peoples, US Bank, Bank One and Provident - will pay 10 percent.
Eight title insurance companies will pay 10 percent.
Twenty-two title companies that served as closing agents will also pay 10 percent.
Not all homeowners who purchased Erpenbeck-built homes and still have liens on their property are covered by the settlement.
About 50 people purchased homes with cash. They are also seeking legal remedies, including the release of liens.
And the Erpenbeck Co. also faces dozens of lawsuits seeking millions from contractors, vendors and other lenders
About $1.5 million was raised Saturday when Bill Erpenbeck's former home in Crestview Hills and many of his belongings were sold at a public auction. Most of that money will go to pay off mortgages on the $1.3 million home.
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