Thursday, February 12, 2004

Creditors move on Erpenbeck

By James McNair
The Cincinnati Enquirer

As Tony Erpenbeck begins his seventh day in a Cincinnati jail, three of his creditors want him declared bankrupt.

Last Thursday, the 69-year-old father of convicted swindler Bill Erpenbeck was arrested on FBI charges of tampering with a witness - Tony's daughter, Lori - who had been set to testify at a sentencing hearing for Bill. On Monday, his legal problems grew when he was forced into federal bankruptcy proceedings by three banks.

The so-called involuntary bankruptcy petition was filed by Provident Bank, First Bank of Northern Kentucky and the holding company for the defunct Peoples Bank of Northern Kentucky. It alleges that Tony Erpenbeck owes them a combined $3.3 million, all in the form of judgments returned in civil courts.

A former homebuilder, Tony Erpenbeck ventured into other businesses. One of them was Stor-It, a storage unit rental operation in Crescent Springs. Peoples Bank loaned him the money to build it, but when he defaulted on the note, the bank foreclosed, claiming he owed $2.48 million in principal and interest. Beverly Storm, a lawyer for the bank, said it sold the property for about $1 million.

First Bank, formerly known as First National Bank of Northern Kentucky, joined the bankruptcy petition with a $570,176 judgment against Erpenbeck for the Stor-It property. The third party, Provident Bank, holds a judgment of $264,959 on a promissory note.

Any unwinding of Tony Erpenbeck's assets and liabilities could be a thorny task.

While the creditors have failed to collect judgments obtained against him in court, a federal prosecutor said in court last Friday that Erpenbeck recently withdrew $186,000 from his individual retirement accounts and contributed $164,000 toward the down payment on Bill and Marcia Erpenbeck's new $528,000 home in Fort Myers, Fla. The prosecutor, Kathleen Brinkman, said Tony Erpenbeck was also paying the $1,700 monthly mortgage on the house, which is in the name of Bill's wife, Marcia.

Despite the judgments against him, having cash didn't seem to be a problem for Tony Erpenbeck before his arrest. When he was booked last Thursday, he was carrying $1,400. According to FBI documents filed last Friday, Tony Erpenbeck persuaded Lori Erpenbeck to meet him Feb. 2 by offering her $500 for her birthday. He also promised to make the house payments for Lori's companion after Lori went to prison for her own bank fraud conviction, the FBI said.

Yet when Tony and Bill were arrested on obstruction of justice charges, he said he couldn't afford a lawyer. He was appointed a federal public defender at taxpayer expense.

Storm said the bankruptcy filing was not triggered by last week's revelations that Tony Erpenbeck was apparently awash with cash.

"It had been in the works for some time," she said. "Provident had been trying to pursue information about what assets he had and Provident had information that he was concealing assets and was not being truthful. What was said in court confirmed what we already knew."

First Bank of Northern Kentucky wrote off its $570,176 debt from Tony Erpenbeck long ago. Jerome Kohlhepp, who joined the bank as chief executive during a government-mandated leadership change in 2002, said the money had been loaned for Erpenbeck's storage unit business and was secured by a third mortgage.

"We had a hard time even finding the man to serve him papers," Kohlhepp recalled. "When we couldn't get ahold of him and he was evading us, we put it (the loan) six feet under."

Tony Erpenbeck lives in Crestview Hills in a house valued by Kenton County at $530,000. The house is in the name of his wife, Phyllis. She told federal authorities that she would not put up the house or cash for Tony's bond should it be granted.


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