By Patrick Crowley
The Cincinnati Enquirer

FRANKFORT - A squabble between a Northern Kentucky Republican state lawmakers and GOP leadership over a tax increase helped kill the "Erpenbeck bill."

The bill, designed to protect homeowners and banks from homebuilding scandals like the Erpenbeck debacle, was filed by Rep. Jon Draud, R-Crestview Hills. It sailed through the Kentucky House by a vote of 93-2 on Feb. 21.

Though one of the top leaders in the GOP-controlled Senate - President Pro Tem Dick Roeding, R-Lakeside Park - initially put his blessing on the bill, the measure is going to die without a vote in this year's General Assembly legislative session.

STORY ARCHIVE

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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.

"It's not going to happen," Roeding said Monday.

Roeding also said Senate GOP leadership had concerns that the Erpenbeck bill "went too far and did too much."

Roeding said Senate Republican leaders believe that the Erpenbeck Co. exploited the system and that legislation was not necessary.

"If everything would have been done the way it was supposed to (in property closings), nothing like this could have happened," Roeding said.

Crescent Springs lawyer and lobbyist Lawson Walker, who represents the Kentucky Land Title Association, said the provision requiring the licensing of title agents might be included in another Senate bill.

Reputation precedes him

Draud, who worked for more than five months last year drafting provisions of the bill, said Monday he believes his reputation as a maverick legislator who doesn't always toe the party line resulted in the Senate Republican leadership killing the bill.

Draud may have been punished for filing a bill earlier in the session to increase the state's cigarette tax, which at 3 cents a pack is the second lowest in the nation.

Roeding confirmed Monday that Draud's cigarette tax bill inflamed the Senate's Republican leadership, a group steadfastly against any tax increases.

Scandal inspired bill

The federal criminal probe into the Erpenbeck Co., a once high-flying Edgewood homebuilder that is now closed, inspired the bill.

Federal investigators, including the FBI and the U.S. Attorney's Office in Cincinnati, are probing allegations that Erpenbeck employees diverted more than $30 million in property closing checks to the Erpenbeck Co.'s accounts at the now defunct People's Bank of Northern Kentucky in Crestview Hills.

Former bank officials also are being investigated. Company president Bill Erpenbeck now lives in Fort Myers, Fla., and his Crestview Hills mansion goes on the auction block Saturday.

Because the Erpenbeck homebuyers' money was diverted and did not go to pay off construction loans, the purchasers of more than 200 houses built in Greater Cincinnati discovered liens on their homes.

Draud became involved because his district includes Edgewood and Crestview Hills.

`Trying to help'

Draud said Roeding assured him he would support the bill and get it passed in the Senate.

"At several public meetings, Sen. Roeding told me that he would get this bill through the Senate," Draud said. "That's why my frustration is higher with him. Because he was supposed to be working with me to get it done."

Draud said that after the bill passed the House, Roeding drafted his own version of the bill.

"Quite frankly I don't think it is very ethical to take other people's bills," Draud said.

Roeding said he did initially support the bill and drafted his own version because of Draud's reputation among Senate Republican leaders.

"From what he has done in the past over here, there is hardly a chance for him to pass a bill," Roeding said. "I was trying to help him, and I have not been able to convince him of that."

E-mail pcrowley@enquirer.com.