Saturday, February 7, 2004

The Erpenbeck affair at a glance

A property closing is held Jan. 28, 2000, on a house built by the Erpenbeck Co. in the Wetherington development in West Chester. A check for $181,298 that should have been transferred to Firstar Bank to pay off Erpenbeck's construction loan on the house is deposited instead into an Erpenbeck Co. account at Peoples Bank of Northern Kentucky.

Over the next two years, another 210 closing checks would be diverted into Erpenbeck's account at Peoples Bank and U.S. Bank. Buyers moved into their houses, only to discover when they tried to refinance, or obtain home-equity loans, that Erpenbeck's first construction mortgage had not been released, and therefore they did not have clear title to the property.

The practice led to a federal bank-fraud investigation, the demise of what was one of the area's leading homebuilding companies, and the sale of Peoples Bank of Northern Kentucky.

The scandal also triggered changes in the way property closings are conducted in the Tristate, and led more local residents to purchase owner's title insurance.

Former company president Bill Erpenbeck was the first to plead guilty and has cooperated with a multiagency federal investigation that has resulted in two more convictions. The government says he is the central figure in a fraud that hurt 260 homebuyers, 32 banks and an undetermined number of subcontractors and suppliers.

He faces a maximum prison term of more than 30 years and must pay restitution of $26.3 million on the bank fraud conviction. The terms of his plea also require him to forfeit his remaining assets and serve five years of supervised probation. His 9,000-square-foot house in Crestview Hills was sold at auction last year.

FBI sting snags Erpenbeck, dad
The Erpenbeck affair at a glance
Spiegel appointed to replace Dlott
Q&A: Obstruction of justice
Anatomy of the Erpenbeck sting
The FBI affidavit

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