Dragged into court by creditors and under investigation for bank fraud by the FBI, the Erpenbeck Co. terminated the majority of its employees Thursday afternoon, said a source close to the company.

        The discharge of 40 employees left the Edgewood company with a staff of 10, said the source, who asked not to be identified.

        Erpenbeck, Greater Cincinnati's fourth-biggest home builder, has come under increasing financial pressure in recent weeks. Subcontractors have abandoned construction sites and filed liens as the builder has been unable to pay its bills. Banks have called due $12.4 million in delinquent loans.

        Company co-founder A. William “Bill” Erpenbeck resigned as president in March and was replaced by his younger brother Jeff. As recently as Monday, the company's lawyer, Bill Geisen, said Jeff Erpenbeck was attending to the company's problems and customers.

        Reached at his home Thursday night, Jeff Erpenbeck would not answer questions about the company.

        Erpenbeck has been in a state of decline for some time. Its $62 million in revenue in 2001 was a 26 percent drop from the year before. After the Sept. 11 terrorist attacks, the company went into a cost-cutting mode and laid off about 20 employees. The downsizing continued in 2002.

        “They've let a lot of people go, and a lot of people have left voluntarily over the past several weeks,” said Dan Dressman, executive vice president of the Home Builders Association of Northern Kentucky.

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