In Cincinnati, Ohio, The Cincinnati Enquirer
- Bill Erpenbeck’s 25-year prison sentence is fair considering the scope and cost of the fraud scheme he used to steal millions of dollars from banks and home buyers, a federal appeals court ruled today. If anything, the judges said, Erpenbeck is lucky he didn’t get an even longer sentence. The ruling by the U.S. 6th Circuit Court of Appeals rejected Erpenbeck’s argument that he was punished too harshly for orchestrating a fraud that left many home buyers with two mortgages and the threat of foreclosure. The home buyers eventually got their money back, but prosecutors estimate the fraud still cost eight banks $7.9 million. Judge Ronald Lee Gilman, who wrote the court’s opinion, said the sentence could have been longer because the total loss from the scheme was reduced when Erpenbeck’s bank agreed to cover some of the cost.
For the story, see Court: Erpenbeck sentence justified.
According to the appeals court ruling, by the time Erpenbeck turned himself in, his companies ("EDC") had illegally diverted a total of $33.9 million from sales to homebuyers in which existing liens from construction loans were not paid off at the title closings. After closing of title, Epenback's customers ended up with homes encumbered both by the exiting construction loan lien that wasn't paid off, in addition to their own mortgage loan used to finance their home purchases. The scheme eventually defrauded 8 federally insured construction lenders, 32 other federally insured financial institutions that provided mortgage loan financing for the individuals who bought EDC properties, and a total of 260 individuals who purchased EDC properties on which the construction liens were not removed.
In addition, after pleading guilty but prior to the sentencing hearing, Erpenback and his father attempted to get Erpenback's sister, Lori (the company's bookkeeper), to testify in a way that would possibly minimize Erpenback's prison sentence for the scam. After the first meeting, Lori ran to the Feds, who got her to wear a wire and go back for additional meetings with her brother and father. The FBI arrested Erpenbeck and his father after one of the subsequent meetings with Lori.
For the specific details of the scam, as reported in the court ruling, see United States v. Erpenback (pages 2 thru 4 of ruling).
Go here, Go here, and Go here for other stories illegal diversions of escrow funds. sneaky slick escrow agents gamma