By James McNair
The Cincinnati Enquirer
Peoples Bank of Northern Kentucky, forced out of business in 2002 by the collapse of the Erpenbeck Co., received $5 million in insurance payments after its demise through a settlement with its carrier, the lawyer for the surviving bank holding company said Thursday.
Mark Arnzen, the Covington lawyer who represents PBNK Inc. - and sits on its board of directors - said the settlement was reached with the bank's insurance company, Fairfield-based Ohio Casualty. A payout was delayed, he said, because two of the bank's former directors - former president John Finnan and former vice president Marc Menne - are suspected of committing bank fraud along with homebuilder Bill Erpenbeck, who pleaded guilty to the crime in April.
The $5 million is now the subject of dispute in a shareholder lawsuit against Peoples Bank. In their Kenton County suit, the shareholders contend their stock in the privately held bank peaked in value at $38 a share in early 2002, only to plunge to what the bank estimates will be a liquidation price of $8 to $11.
In a motion filed this week, lawyer Brandon Voelker of Covington is asking the judge to set aside the $5 million for the shareholders. He said he is afraid the bank's law firms, Arnzen & Wentz and Greenebaum, Doll & McDonald, are gorging themselves at the expense of Peoples' shareholders.
"I would think that anything you got from the $5 million policy, you should inform the shareholders what it was and where it's gone," Voelker said. "A good chunk of the money went to Arnzen & Wentz and Greenebaum, Doll & McDonald in legal fees. The settlement should go to the shareholders."
Indeed it will, Arnzen said. "We've set aside the money ... so that we may pay it to the shareholders once we resolve this litigation," he said.
Voelker wasn't the only lawyer who sued Peoples on behalf of shareholders. Cincinnati lawyer Mike Brautigam filed an earlier suit. That, too, is pending.
Arnzen denied that lawyers are milking Peoples' demise.
"Obviously we're defending the case, but it's our desire to get back as much shareholder money as we can," Arnzen said. "It's not going to the directors. If we didn't have these ... shareholder suits, we'd be very close to wrapping this up."
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