By James McNair
The Cincinnati Enquirer

For the victims of Bill Erpenbeck, a two-year wait for the former home builder's hour of judgment ends at 3 p.m. Thursday. A federal judge will announce how long the 43-year-old Northern Kentucky native must spend in a federal prison.

No one knows precisely how long or where he will be incarcerated. Federal prosecutors want to lock him up for 30 years - and experts on the federal prison system say it has no cushy outposts.

What is certain is that white-collar criminals such as Erpenbeck typically no longer draw short prison sentences, particularly for federal crimes. Sentencing rules have eliminated parole and require convicts to serve at least 85 percent of their terms.

And Erpenbeck's victims have made it clear they want him to serve as much time as possible.

"I hope you can sentence him to the maximum prison sentence for the damage he's done to so many innocent people like myself," Patricia Zalla told U.S. District Judge S. Arthur Spiegel at a court hearing for victims March 19. She said she invested all of her savings and took out a personal loan to buy a $200,000 Erpenbeck home, only to learn later that it was bogged down with unpaid construction loans and bills.

"What he did was intentional," Tim Cuthbert wrote in an e-mail to the Enquirer. He said the Erpenbeck Co. failed to honor its warranty for about $1,000 in repairs done to his house in the Claiborne subdivision in Independence. "He wasn't misled, coerced or manipulated into doing what he did. He made a conscious decision to defraud home buyers out of millions."

Thursday's sentencing will be a climax of sorts for Zalla, Cuthbert and the hundreds of home buyers, banks and subcontractors defrauded of $34 million in a massive check-kiting scheme. The Erpenbeck Co., once Greater Cincinnati's third-biggest home builder, collapsed in April 2002, and many of its customers are still footing construction costs and waiting to be free and clear of liens that aren't theirs.

Erpenbeck signed a plea agreement last April that pinned him with one count of bank fraud. The deal was agreeable to the U.S. Attorney's Office because not only did it spare the government a long and paper-intensive trial, but a bank fraud conviction comes with a stiff prison sentence of up to 30 years. It was agreeable to Erpenbeck because, as a first-time offender and a long-time community servant, he accepted his guilt and thought he had a fair chance of receiving a light sentence.

But as the sentencing approached, relations between federal prosecutors and Erpenbeck's lawyer, Glenn Whitaker, turned rancorous.

For one, Whitaker argued that Erpenbeck's sentence should be based on a net loss of $6.9 million, not the $33.9 million cited in the indictment. The difference, he said, is about $27 million in recoveries, mostly through bank foreclosures and resale of unsold homes and unfinished developments. Last week, Spiegel ruled that sentencing be based on a loss of $26 million, the amount of unpaid construction mortgages outstanding when Erpenbeck turned himself in.

The two sides also battled over which version of the federal sentencing guidelines - amended in 2001 - should apply to the Erpenbeck case. The feds want Spiegel to follow the tougher 2001 guidelines, Whitaker the earlier rulebook. Spiegel ruled that the 2001 guidelines apply.

The judge also declined to force the government to live up to its promise that it endorse a lowering of Erpenbeck's sentence for providing "substantial assistance" to federal authorities. Such a deal had been made, but prosecutors changed their mind after the FBI arrested Erpenbeck and his father, Tony Erpenbeck, on witness tampering charges Feb. 5.

The two men were accused of trying to sway the testimony of Bill's sister, Lori Erpenbeck, at an upcoming court hearing. Lori Erpenbeck, who admitted complicity in the fraud scheme and is herself awaiting sentencing, wore a wire for the FBI. In the taped conversations, the Erpenbeck men ask her to bear the brunt of the blame for the fraud. They were charged with obstruction and jailed without bond. They pleaded guilty to the crime Monday.

The incident prompted the U.S. Attorney's Office to drop its gloves. While the U.S. Probation Office recommended a sentence ranging between 210 and 262 months, or about 17 1/2 to 22 years, prosecutors are pushing for the maximum possible sentence, or 30 years, on the fraud conviction alone. He could receive up to 30 more years Thursday from the obstruction-of-justice case.

Whitaker is no longer asking for a specific sentence, only that the judge take into account the recovered money; Erpenbeck's cooperation; his civic contributions; and his role as a father, husband and, until early 2002, employer. He also suggested in a court filing that probation, house arrest or a halfway house would be suitable punishment.

Taste of what's ahead

For 55 days, Erpenbeck has experienced a slice of his life to come.

An inmate of the Hamilton County Justice Center since Feb. 5, the former home builder lives in a milieu of concrete and metal. The walls of his 13-by-7-foot cell are made of concrete block, painted beige. The door, desk and bathroom fixtures are molded from steel. A narrow window on the door offers a look at an equally bleak common area where, two weeks into Erpenbeck's stay, he was slugged in the face by a 20-year-old murder suspect in a tiff over TV rights.

Yet the county jail represents only a purgatorial stay for Erpenbeck.

"Being an inmate in a federal institution is depressing and humiliating," former junk-bond kingpin Michael Milken said. "The pain of separation from one's family cannot be adequately described."

He pleaded guilty to securities fraud more than a decade ago, before the sentencing rules were tightened, serving 22 months of an original 10-year sentence.

But white collar criminals now are serving much more time for federal crimes. For example, ImClone Systems CEO Samuel Waksal was sentenced in 2003 to seven years in a federal prison for illegal stock trading. Former Enron executive Andrew Fastow agreed to a plea bargain in January that calls for a 10-year prison sentence.

One Erpenbeck victim, Richard Lainhart, who bought a condominium in the Sherwood Lakes development in Boone County in 2001, wants Erpenbeck to receive a prison sentence that somehow fits his crime.

In testimony before Spiegel on March 19, Lainhart said he and his wife bought the home as an investment. Instead, he said the condo has required thousands of dollars in remedial work. An airline industry worker, Lainhart had to take another job in Atlanta but couldn't sell his condo because no one wanted it. He moved back to Northern Kentucky to rejoin his wife, but to a job that paid $700 a month less than what he had been making.

"I just hope that when it comes down to it, he gets what he deserves," Lainhart said.

E-mail jmcnair@enquirer.com