One fraud scandal ago, Ben Schmidt mingled with Northern Kentucky's country club set, bought a $700,000 house in Crestview Hills and wintered in a waterfront condo in St. Petersburg, Fla.

        Mr. Schmidt still has the Florida condo and part of a small tourist attraction in Pigeon Forge, Tenn. But since the collapse of his Ben Mar Investments scheme in 1995, life for Mr. Schmidt just isn't the same. For extra spending money, he says he depends on an occasional $20 handout from his wife.

        “Everything I have is in my pocket,” he said in a July 2000 court deposition.

        Soon, Mr. Schmidt's claims of poverty could cost him his freedom as well. In September 2000, Mr. Schmidt was ordered to pay $2.9 million in restitution to Ben Mar victims. To date, he has paid nothing, and U.S. District Judge Sandra Beckwith is threatening to put him in prison.

        The price to stay out? Paying the $48,993 that's overdue by July 12.

        As things stand, lawyer Ed McTigue of Cincinnati — speaking on behalf of his client Mr. Schmidt — doesn't expect that to happen.

        “I don't think the chances of him being able to meet that deadline are very good,” said Mr. McTigue. “I really don't know where he's going to get the money.”

        Some 365 people lost $12.2 million in the Ben Mar scheme, which gambled on the movement of stock market indexes.

        Richard Nelson, Ben Mar's bankruptcy court-appointed trustee, said investors will recover only about 10 cents for every dollar they put into the company. Some had mortgaged their homes to invest in Ben Mar.

        Mr. Schmidt's problems are occurring just as Ben Mar is being supplanted in notoriety by the Erpenbeck Co. collapse, whose toll on banks, subcontractors and home buyers is hovering around $107 million. Some Northern Kentuckians would tie the two together.

        A. William “Bill” Erpenbeck, a prominent home builder who is under FBI suspicion for bank fraud, was allowed to withdraw $656,000 from Ben Mar before it crashed in 1995. And Mr. Schmidt is involved in the Pigeon Forge attraction, a simulated precious gem-panning operation called Pigeon River Mining, with Bill's father, Tony.

        Although the Ben Mar case has faded into history and Mr. Schmidt's former partner, Mark Gatch (the Mar in Ben Mar) has completed a 2 1/2-year prison term, the government isn't easing off Mr. Schmidt.

        “It's important because this is a person who at a certain time had substantial assets. We sued him because we believe he committed fraud, and he was ordered to compensate the victims,” said Alistaire Bambach, assistant regional enforcement director for the Securities and Exchange Commission in New York.

        “In order for the court's enforcement orders to have teeth, we have to follow through,” said Ms. Bambach, now the SEC's lead counsel on the Enron fraud investigation. “It's important that defendants don't just simply shirk their obligations.”

        Judge Beckwith ordered Mr. Schmidt in 2000 to pay restitution of $2,333 a month. Mr. Schmidt said he could afford only $200. When seven months went by and Mr. Schmidt hadn't paid anything, the SEC moved to hold him in contempt of court. The hearing was delayed until June 11 because the SEC's case files were destroyed in the World Trade Cen ter attack in September.

        The judge's feelings about Mr. Schmidt's ability to pay hadn't changed in 21 months. In holding him in contempt, she noted that he spent at least $161,000 between 1998 and 2002, mostly to pay lawyers' fees. Hearing of his minimal income from Pigeon River Mining, Judge Beckwith said he could have found a better-paying job.

        In his latest financial statement, Mr. Schmidt says he has a net worth of minus $250,000. In previous statements, he said his cred it was shot and that he had to sell a 1989 Mazda van to pay legal fees. A $70,000 inheritance from his mother was passed on to his two children.

        Mr. Schmidt asserts that he has always paid his bills, but says the $2.9 million is out of reach.

        “I don't think I'll ever make that much unless I win the lottery or something like that,” he said in the 2000 deposition.

        Mr. Schmidt also has to worry about a $100,000 debt to Mr. Nelson, the bankruptcy trustee. Mr. Nelson dropped his claims when Mr. Schmidt and his wife, Gwen, agreed to give him title to their $680,000 house on Legends Way, a block away from Bill Erpenbeck's house. But when Mr. Nelson took possession, he said it was stripped of appliances, fixtures, pipes, shrubs and even a toilet paper holder.”

        “It was more along the lines of vandalism,” Mr. Nelson said. “I ended up selling the house for $481,000 net of taxes. The court found them in contempt and ordered them to pay $100,000 in damages.”

        Mr. Schmidt's lawyer admitted his client removed some appliances and the chandelier, but denied the rest.

        “Someone else came to that house and trashed it and tore out the bushes and crown moldings,” Mr. McTigue said.

        The lawyer said he will probably ask Judge Beckwith to lower the $48,993 ordered paid by July 12. He fears that Mr. Schmidt could spend an indefinite term — perhaps several years — in prison. How long is up to the judge.

        “It almost sounds as if it's a debtor's prison that's being set up,” Mr. McTigue said. “Mr. Schmidt is nearly 70 years old. A year in prison is something he probably could not withstand, given his history of heart problems.”

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