By James McNair and Patrick Crowley
The Cincinnati Enquirer
With Bill Erpenbeck pleading guilty to fraud and joining the prosecution, federal authorities are now focusing on four other people believed to have played roles in the $34 million scheme, sources said Thursday.
Ex-builder Bill Erpenbeck has promised restitution and help in prosecuting others.
Erpenbeck, former president of the now-insolvent home-building company that bore his family name, agreed to assist the government's investigation and, if necessary, testify in court against the remaining suspects. By cooperating, Erpenbeck hopes to minimize a prison sentence that could run as long as 30 years.
U.S. District Judge Susan Dlott is not expected to render a sentence for three to four months. Meanwhile, federal authorities think that Erpenbeck's cooperation increases their chances of obtaining guilty pleas from other potential defendants.
"There's nothing in this business that's a shoo-in, but it's very positive to bring the remainder of the case to a conclusion," FBI spokesman Jim Turgal said. "It was extremely important to get Bill's plea entered with the court and to start the judicial process rolling."
Erpenbeck pleaded guilty to one count of federal bank fraud and admitted responsibility for the diversion of $34 million in home-sale proceeds into company accounts at Peoples Bank of Northern Kentucky and U.S. Bank. The money should have gone to construction lenders.
Erpenbeck, 42, was allowed to remain free without posting bond. But Dlott ordered him to surrender his passport and to restrict his movements to between central Florida and Greater Cincinnati. Erpenbeck moved his family from Crestview Hills to Fort Myers, Fla., in May 2002, after his company's sudden collapse one month earlier.
In the government's sights now are Michelle Marksberry, who represented Erpenbeck Co. at home-sale closings, and Lori Erpenbeck, Bill's sister and former head of the company's accounting department, sources said. The U.S. Attorney's Office also alleges in civil forfeiture actions that two former Peoples Bank executives, John Finnan and Marc Menne, helped themselves to the proceeds of bank fraud.
Richard Goldberg, a Cincinnati lawyer who represents Finnan - Peoples' longtime president - said Thursday that he doesn't know what will come of Bill Erpenbeck's willingness to assist prosecutors. But he said that if Finnan is offered a plea deal, the lawyer will "listen to anything presented."
"John has been cooperative" with federal authorities, Goldberg said. "But I can't predict what is going to happen. I'm not sure who (Erpenbeck) is going to point the finger at."
Lawyers for Marksberry, Lori Erpenbeck and Menne did not return telephone calls Thursday. Sources say Marksberry has received a proposed plea agreement.
At Bill Erpenbeck's plea hearing Wednesday, FBI Agent Kevin Gormley said five people diverted home-sale proceeds into company bank accounts. The group, he said, included Bill Erpenbeck, the company's "closing representative," the employee "in charge of accounting" and at least two other unnamed persons. Fred Alverson, spokesman for the U.S. Attorney's Office, would not say if Erpenbeck's guilty plea will accelerate the case against others.
Glenn Whitaker, Erpenbeck's lawyer, said the plea won't result in a surge of new evidence from Erpenbeck. He said his client has already told the government everything he knows.
Asked how Erpenbeck feels about the prospect of testifying against his own sister, an employee and former bankers, Whitaker said, "He'll tell the truth. I don't think he's necessarily happy about testifying against Finnan and Menne, but he'll tell the truth."
Goldberg said Erpenbeck's plea agreement should not spare him from the most punishment. "He apparently was the ringleader at the top of the food chain," Goldberg said. "It seems to me the most culpable should be treated as such."
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