Saturday, February 7, 2004

Anatomy of the Erpenbeck sting

Here's a summary of this week's events, according to an affidavit filed by FBI agent Kevin Gormley in U.S. District Court in Cincinnati, which culminated Friday in the arraignment of Bill and Tony Erpenbeck on federal charges of obstruction of justice.

Monday, 4:30 p.m.

Lori Erpenbeck, former accountant for the Erpenbeck Co., receives a phone call from her father, Tony. He asks to meet her, saying he wants to give her $500 for her birthday. They agree to meet at a bank on Dixie Highway in Northern Kentucky. According to Gormley's affidavit, the father asks his daughter what she plans to say at a pre-sentence hearing for her brother, Bill. In particular, the father wants to know if Lori plans to testify that "Bill thought about killing you." The brother was scheduled to be sentenced Friday on a single count of bank fraud stemming from the 2002 collapse of the Erpenbeck Co., which had been one of the largest home builders in Greater Cincinnati. At some point, Lori Erpenbeck, who also has pleaded guilty to a single count in connection with the company failure, tells her lawyer, Patrick Hanley, about the conversation and a subsequent phone call from her father.


Hanley contacts Gormley. The FBI agent speaks with Lori Erpenbeck, and she agrees to tape-record any further conversations she might have with her father about her testimony at the Friday hearing.

Later Tuesday

The daughter and father meet at an undisclosed location. She wears FBI-supplied recording and transmitting equipment, while Gormley and others listen in. She asks her father what her brother wants her to say in court. His answer: Her brother "would rather that you say you know who started this" fraud, Gormley says in his affidavit. She asks her father if Bill would make the mortgage payments on her house where she and her female companion live while she is in jail. "I will do this," her father replies.

Lori asks her father if Bill would meet with her and tell her what he wants her to say. Tony replies that he thought Bill would. He adds that Bill would have a problem talking on the phone with the two of them, because if you get in a car and take a ride while talking, "there ain't no microphones, no nothing." Tony Erpenbeck then tells Lori to "minimize everything that can hurt you or can hurt him," but instead "start burying" two Erpenbeck Co. employees - one of them deceased - for being behind the scheme.

Wednesday, 7:25 p.m.

Tony Erpenbeck meets his daughter at a White Castle restaurant in Richwood along Interstate 75. As they drive to the Courtyard by Marriott hotel in downtown Covington, FBI agents listen in. The father advises her to testify that the scheme started by mistake and that her brother took over the fraudulent activity. The goal, the father said, was to lower the sentences for both of his children.

Wednesday, 7:50 p.m.

When they arrive at the hotel, they get into Bill Erpenbeck's car. He drives to the hotel garage's top level, where the three talk for 45 minutes. Bill tells her to say the scheme started by accident, which is what he had told the FBI. When she protests that isn't true, he says, "It isn't about what's true, what's not true, what we think and don't think." When Lori says she had already talked to the FBI and federal prosecutors, she is told by Bill "all you gotta say is 'I said that because I was scared.' " He also tells her: "Lori, you ever say we had this conversation, to (federal prosecutor) Kathy Brinkman or whatever... it'll be ugly." Later in the meeting, Lori says she's not sure she can remember what she is being asked to say in court. "Meet me again tomorrow night," and we'll "write it down," he tells her.

Thursday evening

Lori Erpenbeck records a conversation with her brother and father in a car at a time and place not disclosed in the affidavit. However, a log at the Hamilton County Justice Center indicates that the arrests took place at an unspecified address on West Third Street in downtown Covington. Gormley and other FBI agents listen in; the conversation revolves around what she is to say about the scheme's start. Bill Erpenbeck writes the notes for his sister, the affidavit says. At the end of the conversation, about 9 p.m., the FBI arrests the father and son. Bill Erpenbeck was in possession of the notes he wrote for his sister, Gormley says in the affidavit.

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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