Thursday, February 5, 2004

Erpenbeck jail time debated

Two sides many years apart on sentence

By James McNair
The Cincinnati Enquirer

With his sentencing for bank fraud eight weeks away, Bill Erpenbeck and the federal prosecutors who negotiated his guilty plea are about 30 years apart on what constitutes a suitable prison term for the former homebuilder.

Both sides have filed objections to the contents of a confidential pre-sentence report prepared for U.S. District Judge Susan Dlott by the U.S. Probation Office.

Dlott will hear the objections in court Friday, listen to testimony from Erpenbeck's victims Feb. 26, and then hand down a sentence March 29.

For now, federal prosecutors and Erpenbeck's lawyer, Glenn Whitaker, have widely divergent views of how Erpenbeck should be punished for defrauding homebuyers and banks in a $33.9 million check-diversion scheme that brought down both the Erpenbeck Co. and Peoples Bank of Northern Kentucky in 2002. The Erpenbeck Co. was one of Greater Cincinnati's biggest homebuilders.

In a 33-page court filing Tuesday, the government says Erpenbeck should receive a prison sentence of 324 to 405 months, or 27 to 34 years. Whitaker has told the court that an appropriate sentence would be zero to six months. On Jan. 23, he filed a document that said Erpenbeck would be better able to compensate his victims if he were placed on probation or house arrest.

Paul Fiorelli, a Xavier University law professor and director of the college's Center for Business Ethics and Social Responsibility, said it is a judge's job to interpret pre-sentence reports.

"The pre-sentence report will go from the probation officer to the judge," he said. "The judge will review it and make a decision about what the appropriate range and sentence will be."

In his Jan. 23 filing for Erpenbeck, Whitaker said the former Crestview Hills resident has paid an "enormous price" for his crime and is "deeply remorseful." Attached were letters from friends and family members asking Dlott to consider Erpenbeck's civic and charitable contributions and his role as father of three children whose mother died of cancer in 1990.

Assistant U.S. Attorney Kathleen Brinkman, in the government's filing Tuesday, said Erpenbeck is not entitled to a lower sentence for "family ties and responsibilities."

"Everything in the pre-sentence report suggests that the defendant's wife is capable, financially and otherwise, of caring for his children while he is incarcerated," Brinkman wrote.

The Erpenbecks live in Fort Myers, Fla. Erpenbeck's wife, Marcia, works as a real-estate agent and in December bought a $528,000 house on a street called New Castle.

Fiorelli, who served a two-year fellowship at the U.S. Sentencing Commission in 1998-99, said such things as philanthropy, public service and parenthood have no place in federal sentencing guidelines.

"That's exactly what the sentencing guidelines try to take out of the calculation," he said. "The old saying was: White-collar crime, white-collar time. But you take a look at the impact white-collar crime, especially in the Erpenbeck case, has had on victims and banks and you see it's a pretty serious offense. Congress recognized it as such."

The government's latest court filing sheds light on the objections raised - but not disclosed - by Erpenbeck.

It argues that the victims' losses should remain at $33.9 million for sentencing purposes, not a lower amount that excludes mortgage loan payoffs and the sale of collateralized real estate.

It also says the 260 homebuyers and their 32 lenders victimized by the fraud should remain "victims" for sentencing purposes, even though their interests are no longer threatened by mortgages from the construction loans that Erpenbeck did not pay off.


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