Saturday, June 01, 2002

Builder's case is a priority, FBI says


Investigation has widened

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

        What began with the hint of financial chicanery by the Erpenbeck Co. has blossomed into a major investigation involving at least three federal agencies, dozens of witnesses and a growing stack of potentially incriminating documents.

        Criminal charges have not been filed. Nevertheless, federal authorities have turned the Erpenbeck case into a priority matter, exploring leads from Cincinnati to the Cayman Islands, a favorite haunt of former Erpenbeck Co. president A. William “Bill” Erpenbeck.

        “Our investigation is considered an important and high-priority case that directly involves agents from both the Cincinnati FBI division and the Louisville FBI division and other FBI offices in other parts of the country,” said Ed Boldt, spokesman for the FBI office in Cincinnati.

        At least five employees of Erpenbeck Co. and three former employees of Peoples Bank of Northern Kentucky are at the center of the investigation. The region's fourth-biggest home builder collapsed earlier this year, leaving lenders and suppliers with unpaid bills and home buyers with double-mortgaged homes. An Enquirer tabulation puts losses at about $75 million.

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.
        As often happens in white-collar crime investigations, the Erpenbeck case combines document reviews and interviews aimed at sniffing out money trails. While the FBI talks to suspects and witnesses, an estimated 15 agents of the Federal Deposit Insurance Corp. are performing the laborious task of reviewing bank loans for more than a dozen Erpenbeck developments in seven Tristate counties.

        “We're working with them,” Merwin Grayson, who took over as president of Peoples Bank after John Finnan was dismissed April 30, said about the FDIC investigators. “They have not issued their report yet, and it could be some time before they do.”

        Meanwhile, FBI agents are interviewing — and reinterviewing — Erpenbeck employees from top to bottom, including numerous sessions with Mr. Erpenbeck. The FBI has also spoken with current and former Peoples Bank employees and has a June 7 date with Mr. Finnan.

        “John Finnan is cooperating fully with the FBI and other investigative bodies involved, and he will continue to cooperate fully with the authorities,” said his lawyer, Richard Goldberg. One former Erpenbeck employee, speaking on the condition of anonymity, said FBI agents probed the possibility that real estate transaction documents were forged.

        “I only talked to them once,” the former employee said, “but I know people that have talked to them five times. There have been a lot of interviews. The feds are digging away.”

        A lawyer who represents another FBI interview subject confirmed that the agency is moving full speed ahead.

        “They're trying to identify everybody who participated ... and gather evidence to support that and then make some charging decisions,” said the lawyer, who asked not to be named.

        Although it hasn't filed criminal charges, the government has taken steps to lock up 24 houses and condominiums that might have been paid for with proceeds of bank fraud. They include the Northern Kentucky homes of Mr. Erpenbeck, Mr. Finnan and former Peoples Bank officer Marc Menne, as well as their condos in Fort Myers, Fla.

        Mr. Erpenbeck was widely known for lavishing parties, trips, cruises and other forms of extravagance on employees and friends — at his company's expense. Consequently, the FBI has obtained subpoenas for documents related to some of that spending, including a private plane from ASAP Aviation at Cincinnati's Lunken Field.

        Another source said late Friday that the U.S. Department of Labor is conducting an audit of the Peoples Bank's employee retirement plan. Agency spokeswoman Sue Hensley said she wasn't aware of the audit, but said the agency generally does not confirm or deny that audits are taking place.

       



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