Saturday, September 28, 2002
Flanked by numerous lawyers, Stan Chesley appeared in Boone County Circuit Court to finalize the agreement with Peoples Bank. |
(Tony Jones photo)
| ZOOM |
Payback fund made in Erpenbeck case
By James McNair, email@example.com
The Cincinnati Enquirer
BURLINGTON For 211 people with double mortgages on the homes they bought from the Erpenbeck Co., the nightmare is almost over.
Lawyers for the home buyers and Peoples Bank of Northern Kentucky said Friday they have signed an agreement calling for the bank to set aside $16.8 million to cover the unpaid first mortgages. If all conditions are met, the money would pay off loans that should have been paid by Erpenbeck as far back as January 2000.
Boone County Circuit Court Judge Jay Bamberger must approve the agreement. It also hinges on the sale of Peoples Bank's business operations, deposits and loans to the Bank of Kentucky, a $14 million deal awaiting the consent of Peoples shareholders and federal regulators.
Cincinnati lawyer Stan Chesley, who represented the 211 home buyers as a class, praised Peoples Bank and Bank of Kentucky for helping resolve a legal imbroglio that could have led to the loss of his clients' homes to foreclosure. The first mortgages should have been released immediately after closing, but Erpenbeck employees deposited the money into company accounts at Peoples.
This could have gone on two or three years, Mr. Chesley said after filing the agreement Friday with Judge Bamberger. Now the people are secured and the money has been earmarked and the people do not pay one dollar in attorneys' fees or costs.
Mr. Chesley said the Federal Deposit Insurance Corp. is expected to sign off on the Peoples-Bank of Kentucky deal in 30 to 60 days. He and a lawyer for Peoples, Beverly Storm of Covington, said the asset sale should be consummated by year-end, giving Peoples the bulk of the capital needed to create the $16.8 million escrow account.
The agreement was given to Judge Bamberger in the presence of about 40 lawyers representing banks, title companies and other creditors affected by Erpenbeck's collapse and insolvency. The judge set aside time on Nov. 15 to hear any objections to the agreement. He also issued rulings Friday against the dismissal of any parties from the massive lawsuit.
The April failure of Erpenbeck, Greater Cincinnati's third-biggest homebuilder in 2000, has left a trail of about $107 million in claims from homebuyers, banks, subcontractors and others. The FBI, IRS and U.S. Attorney's office launched a bank fraud investigation.
Meantime, banks that made loans to Erpenbeck are scrambling to secure their collateral real estate and recoup what they can of their original investment.
Although the 211 homebuyers would not incur any legal costs, that isn't to say the lawyers will not be paid. The agreement filed Friday calls for Peoples to pay the $2 million legal bill of Mr. Chesley and other lawyers. That provision is also subject to Judge Bamberger's approval.
Another 50 or so people who did not finance the purchase of their Erpenbeck homes instead paying with cash were assured a slower, more expensive trip through the legal system Sept. 20 when the judge declined to treat them as a class. They will have to pursue their claims individually.
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