Friday, May 03, 2002

Lenders add up Erpenbeck exposure


Dozens meet to discuss how to handle builder's troubles

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

        COVINGTON — Thirty-seven representatives of Tristate banks and title companies crammed into a law firm conference room Thursday to begin assessing damage from the Erpenbeck Co. troubles and to determine how any losses will be absorbed.

[photo] The headquarters of the Erpenbeck Co. in Edgewood.
(Ernest Coleman photo)
| ZOOM |
        The gathering on the 18th floor of the RiverCenter Tower was large enough that delegates, mostly lawyers, were asked to sign in and wear makeshift name tags. The meeting followed a flurry of lawsuits and liens against the Edgewood-based home builder in recent weeks and the revelation that the FBI is investigating it for possible bank fraud. No charges have been filed.

        After three hours, the group dispersed. Participants came away with a list of the loans made to Erpenbeck Co. and the title companies involved in its real estate transactions. Otherwise, they only agreed to share information and try to make everyone — home buyers, vendors, banks and title companies — whole.

        “When you get that many people, you're not going to get 100 percent consensus,” said Ivan Diamond, of the host law firm Greenebaum, Doll & McDonald. “But I think there is an overwhelming consensus among the people to try and work together and solve these problems.”

        Among the banks represented Thursday were Firstar, Bank One, Provident and Peoples Bank of Northern Kentucky, whose top two officers left their jobs Tuesday because of its exposure to Erpenbeck.

        Title companies included Community Title, Kentucky Land Title, LandAmerica Financial and Vintage Title.

        “Everybody's trying to work together to get this done fairly quickly and with the least painful results to people who are really involved, including the home owners,” said Thomas Coffey, a Cincinnati lawyer representing Kentucky Land Title in Fort Mitchell. “There's a lot of cooperation.”

        Parties with financial ties to the 9-year-old Erpenbeck Co. are scrambling to assert claims to prepaid deposits, unpaid debts and real estate serving as collateral to bank loans.

        Because Erpenbeck is suspected of siphoning home-purchase proceeds, mortgage lenders and title companies are trying to determine how much money may be missing.

Bill Erpenbeck
Bill Erpenbeck
        Executives at Peoples have said A. William “Bill” Erpenbeck, who stepped down in March as president of the Erpenbeck Co., deposited into his business accounts checks made out to lenders.

        He received those checks at home sale closings and, as was the local custom for some major home builders until recently, assumed responsibility for paying the appropriate parties.

        Kenneth Reed, a lawyer representing Vintage Title, which has offices in Blue Ash and Fort Mitchell, said Mr. Erpenbeck deposited two checks from Vintage totaling about $400,000 in his own accounts. The checks were made out to Provident and Firstar banks.

        “The checks are insured and the home owners are going to be taken care of,” Mr. Reed said. “But it's going to take some time to sort everything out.”

        “We're trying to represent our client and to protect the homeowners that Erpenbeck basically — it appears — stole money from,” said David Wallace, another lawyer for Kentucky Land Title.

        Mr. Erpenbeck has not returned repeated calls seeking comment. Company officials also could not be reached.

INVESTIGATION
    If you have any information about the investigation of The Erpenbeck Co. or the inner workings or business practices of the company, please contact Enquirer staff writer James McNair at 513-768-8498 or at jmcnair@enquirer.com.
        In Erpenbeck developments from Boone County to Butler County, homeowners are panicking over the validity of their ownership. In many instances, unpaid subcontractors have filed liens against their homes. In others, residents report Erpenbeck mortgages not being released upon home sale closings.

        “I find it difficult to believe the individual home owners could be liable for Erpenbeck's failure to pay their bills since our payment was correctly made at the time of the house closing,” said Jim Martin, who bought an Erpenbeck house in the Claiborne subdivision in Independence last August.

        The law firm where Thursday's meeting took place represents Peoples Bank of Northern Kentucky. Because of its extensive banking ties with Erpenbeck, the six-office bank is at the center of the controversy.

        Anxious to clean the slate, Peoples on Wednesday hired a distinguished former regional president of Huntington Bank, Merwin Grayson, as its president and chief executive.

        Participants in the meeting shook their heads when asked if anyone knew how much money is unaccounted for in the Erpenbeck affair.

        “That's one of the things we are trying to get a handle on,” said Buck Wiseman of Greenebaum, Doll & McDonald.

        The lawyers and title companies said they would undoubtedly meet again, but did not set a date.
       



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