Sunday, May 19, 2002

Is my money really safe at Peoples?




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        I never knew how easy it might be to trick my bank. Now, I'm just a nervous customer trying to justify keeping my money in the bank.

        I bank at Peoples Bank of Northern Kentucky, a small but growing bank with eight branches in Kenton, Boone and Campbell counties.

        Until recently, I was enamored with my bank.

        Its friendly folks knew my face, if not my name. It has convenient hours, a drive-through teller, ATMs.

        Most employees I've encountered go out of their way to be helpful, drawing up bank records for free, calling me when they see a questionable check drawn on my account, cheerfully correcting my math.

        Peoples understands that I majored in journalism, not math, in college.

Mystery deposits

        That's why I can't get my arms around Peoples' role in the Erpenbeck Co. scandal.

STORY ARCHIVE
Click here for all Enquirer reports on Erpenbeck Co.
INVESTIGATION
If you have any additional information on the business dealings of the Erpenbeck Co. or Peoples Bank of Northern Kentucky - or on the involvement of any parties not yet identified in our coverage - please email Enquirer business reporter James McNair at jmcnair@enquirer.com or Kentucky Enquirer reporter Patrick Crowley at pcrowley@enquirer.com.
        Erpenbeck Co., one of Northern Kentucky's biggest home builders, is being sued and investigated for allegedly misusing funds from home sales and construction, leaving dozens of homeowners without clear titles and contractors with unpaid bills.

        At least $15 million from 50 to 100 checks written to lenders after home sale closings wound up in Erpenbeck Co.'s accounts at Peoples Bank.

        I find it hard to believe Peoples employees blindly deposited checks written out to others into Erpenbeck Co.'s accounts, but that's what top officials at Peoples say happened.

        New bank president Merwin Grayson said Thursday that only one employee questioned the practice last year.

        A teller at Peoples' Edgewood branch caught someone at Erpenbeck Co. depositing a check made payable to another bank. Bill Erpenbeck, company president at the time, promised a branch manager it wouldn't happen again.

        But it did, and by the time a pattern was discovered, it had happened at least 50 times.

        Mr. Grayson and other bank officials blame bank policy. They say bank employees checked signatures on the backs of the checks against the names on accounts to receive the deposits. They didn't always check those signatures or account names against the names written on the fronts of the checks.

No red flags

        Bank employees spotted the fraud late, but called the FBI, Mr. Grayson said. No tellers have been fired over it, but Peoples' top two executives were forced out.

        If this is true, then theoretically it should have been easy for anyone to steal money this way. I could have stolen my neighbor's checks, signed my name on the backs and deposited them into my Peoples account.

        But the whole time, I'd have worried. How long before my neighbors noticed their checks missing? Their banks would have copies of the canceled checks, with my signature and account number on them. I'd have been nailed in days or weeks, I bet.

        Why didn't that happen with Erpenbeck Co.? Bank officials said the checks were misdirected for more than a year.

        Also, was it really blind policy that let all those fraudulent checks clear, or was Peoples this trusting and lax only with big-money clients like Erpenbeck Co.?

        Those are questions for investigators. I'm left with a question of trust.

        Bank officials assure that this is all Erpenbeck's fault, not the bank's. Peoples has changed its check depositing practices, officials say. It's a financially stable bank, able to cover its legal and financial challenges.

        Customers' funds are safe. The bank is not for sale.

        Why don't I feel comforted?

        E-mail damos@enquirer.com. Past columns at Enquirer.com/columns/amos.

       



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