By James McNair
The Cincinnati Enquirer

More than two years after the shutdown of the Erpenbeck home-building empire and the conviction of three family members, federal prosecutors still haven't ruled out the possibility that other Erpenbecks were criminally involved in the bank fraud scheme.

The revelation was made by Assistant U.S. Attorney Kathleen Brinkman during a bond hearing Tuesday for family patriarch Tony Erpenbeck. Erpenbeck, who pleaded guilty to witness tampering in March, lost his case for release from the Grant County jail.

"There is an ongoing criminal investigation which includes in its scope one or more of the defendant's other children other than Bill and Lori Erpenbeck," Brinkman told Senior U.S. District Judge S. Arthur Spiegel.

All five of Tony Erpenbeck's children worked for the Erpenbeck Co. in some capacity before it went insolvent in April 2002. Bill was its president, Lori a manager in its accounting department. Jeff succeeded Bill as president in the company's final days, Gary handled land acquisition and Rick performed legal work through his Covington law firm.

Bill and Lori each pleaded guilty to one count of bank fraud in 2003. Bill compounded his problems in February by joining his father in their admitted attempt to dictate Lori's testimony at a sentencing hearing for Bill. Spiegel sentenced Bill to 30 years in prison while Tony faces 70 months. Sentencing for Lori, who continues to provide assistance to federal investigators, has not been scheduled.

The Erpenbeck Co. collapse left eight banks with $33 million in unpaid construction mortgages and threatened more than 200 home buyers with the loss of their homes to foreclosure. Although FBI agents have investigated all of the Erpenbecks' roles, Jeff, Gary and Rick have not been charged with any crimes. Their lawyers have maintained that their clients are not suspects and that they have fully cooperated with the investigation.

With guilty pleas from three Erpenbeck Co. defendants, the government has shifted its attention to other family members and to two top executives of the defunct Peoples Bank of Northern Kentucky. Peoples' loan exposure to the Erpenbeck Co. and the bank's practice of allowing Erpenbeck employees to divert checks made out to construction lenders at home-sale closings forced its board to sell its operations to The Bank of Kentucky in late 2002.

The U.S. attorney for Eastern Kentucky is handling the investigation of those former executives, John Finnan and Marc Menne. They have not been charged with crimes, but the government alleges in court filings that the two men were in "collusion" with Bill Erpenbeck.

Hyde Park lawyer Richard Goldberg said he has had "discussions" with federal prosecutors on behalf of Finnan, but he would not elaborate, nor would he say whether any plea bargain agreements were proposed.

"As far as the case moving quickly, it could be, but I wouldn't know what is going on with other aspects of the case."

Spiegel, who took over the case in February after U.S. District Judge Susan Dlott withdrew, asked Brinkman when the government's 26-month investigation would end.

"It's rapidly coming to a conclusion," Brinkman replied.

"In Kentucky and in Ohio?" the judge asked.

"Yes it is, sir," she said.

Tony Erpenbeck, 69, had asked to be freed on bond until he is sentenced. Spiegel denied the request but said he would move up the sentencing hearing to as early as next Tuesday.

E-mail jmcnair@enquirer.com. Enquirer reporter Patrick Crowley contributed to this report.