Published November 20, 2014
It's the case of cold — or at least a cooler of — hard cash.
Federal prosecutors and a bankruptcy trustee are locked in a tug-of-war over $250,000 that belonged to a convicted con man and until three years ago remained buried in a cooler at a northern Kentucky golf course. Now, the question of who gets the money goes back to a federal judge to decide.
The U.S. 6th Circuit Court of Appeals ruled on Thursday that federal prosecutors didn't give proper notice of their intent to seize the money for restitution. The court sent the case back to U.S. District Judge Sandra Beckwith of Cincinnati to decide if victims of former home building magnate A. William Erpenbeck will get the money or his creditors.
Judge Jeffrey Sutton, who described the case as "befitting a John Grisham novel," wrote that prosecutors did not properly give a bankruptcy trustee, Michael L. Baker, notice of forfeiture proceedings, depriving him of an opportunity to lay claim to the cash.
The bizarre case stretches back almost 10 years in northern Kentucky and southern Ohio.
Erpenbeck, 51, is serving a 25-year prison sentence at the federal prison in Coleman, Fla. His projected release date is Nov. 14, 2025. Erpenbeck is former president of Edgewood, Ky.-based Erpenbeck Development Co., one of the largest housing developers in Cincinnati and northern Kentucky area. He pleaded guilty to bank fraud and conspiring to obstruct an official investigation in 2003 for a scheme that netted $34 million from banks and home buyers.
The FBI learned in 2009 that, before Erpenbeck went to prison, he gave a friend more than $250,000 in cash and asked him to hold the money until the prison sentence ended. The friend put the cash in a cooler and buried it near the green of the 366-yard par four third hole of the Summit Hills Country Club in Crestview Hills, Ky.
FBI agents dug up the cooler on Oct. 2, 2009 and federal prosecutors sought to seize the money for victim restitution.
A friend of Erpenbeck's who buried the cash, 49-year-old Steven Michael Skidmore, is serving a 16-month prison sentence for lying to the FBI about burying the money. He's due for release from a federal prison in Miami in July.
The government posted notice of the forfeiture online, but didn't tell the bankruptcy trustee in Erpenbeck's case about the proceedings. Because no one filed a petition claiming an interest in the cash, a federal judge gave the money to the United States.
Baker filed a motion in November 2010 to stop the forfeiture, saying the money belonged to the bankruptcy estate. Sutton found that prosecutors did post notice of the forfeiture online, but Baker didn't see it, "having apparently not occupied his free time by browsing www.forfeiture.gov — and thus never had a chance to assert his interest in a timely manner."
Federal prosecutors argued that, at the time Erpenbeck gave the money to his friend to bury, the cash didn't belong to him because the forfeiture applied retroactively to when the fraudulent scheme began. Because it wasn't Erpenbeck's money, it couldn't become part of the bankruptcy estate, prosecutors said.
"That might be true if the $250,000 represented the proceeds of Erpenbeck's fraud," Sutton wrote in a 12-page decision joined by judges Kenneth F. Ripple and David W. McKeague.
Instead, the government treated the money as a substitute for proceeds from the fraud, seizing it to repay victims in the case, Sutton wrote.
"As substitute property, the cash did not become subject to forfeiture until the tainted assets exceeded the government's grasp," Sutton wrote.
Sutton concluded that once Erpenbeck's creditors forced him into bankruptcy in July 2002, all of his property, regardless of who held it or where it was, became part of the bankruptcy estate.
"That would include the $250,000 buried near the third hole of Summit Hills Country Club," Sutton wrote.
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