CINCINNATI - Newly unsealed court documents provide the broadest explanation to date of the U.S. government's criminal case against Kenwood Towne Place developer Matt Daniels.
Two of the three people identified in the four-page document say the government's facts are wrong.
Federal prosecutors recently unsealed a plea agreement that was signed last November by Tina Schmidt, former chief financial officer for the failed office and retail project near Kenwood Towne Centre. As WCPO Digital has reported developers are trying to revive the project under a new name, Kenwood Collection. Civil litigation and criminal charges are still pending, four years after unpaid contractors walked off the Sycamore Township job site.
In exchange for her plea to a charge of conspiracy to commit bank fraud and her cooperation with federal investigators, Schmidt will receive a sentence of no more than 51 months.
A statement of facts attached to the agreement identifies Schmidt's co-conspirators as M.D., an individual who "negotiated and ultimately obtained" a bank loan for the Kenwood Towne Place, and A.T., a construction manager for the project.
Lead developer Matt Daniels was indicted last November on 25 counts of fraud, conspiracy and related charges. In 2011, Daniels, Schmidt and former Kenwood Towne Place Construction Manager Audie Tarpley were among five people accused of defrauding the Bank of America in a Hamilton County Common Pleas Court filing by the bank.
Daniels "did not engage in criminal activity," said his attorney, Ben Dusing. "The government's narrative … is exactly that. Mr. Daniels looks forward to his day in court, at which point that narrative will be tested."
The narrative says Schmidt submitted false information to the bank to secure loan draws from BofA.
"This initial paperwork fraudulently represented that KTP would use millions of dollars in initial loan proceeds to fund construction of the Kenwood Towne Place project," the document states. "In reality, at M.D.'s direction, Ms. Schmidt improperly diverted a portion of this money to pay for not only M.D.'s personal expenses (such as sizable credit card bills) but also the planned construction of M.D.'s yacht."
To keep loan draws coming, the statement of facts alleges that Schmidt submitted false information to the bank, assuring that contractors were being paid.
"To ensure that the paperwork appeared proper, M.D. convinced the project's construction manager, A.T., to sign false certifications, effectively indicating that KTP had timely paid all subcontractors from the previous loan draws; these certifications were ultimately submitted to the Bank of America. In taking all these steps, M.D., A.T. and Ms Schmidt recognized that, if they disclosed to whom they were actually dispersing money, Bank of America would recognize that KTP had not used the initial loan proceeds as represented and would cease funding subsequent draws."
Now a construction executive in Texas, Audie Tarpley said Friday that he's pretty sure the document refers to him as "A.T." But he denies signing false certifications.
"I never submitted one false document to anybody. Period," he said. "I never had any conversations with Matt about doing anything like that, or Tina, either one."
Daniels is scheduled for trial in September. Former federal prosecutor Ralph Kohnen said the unsealed documents are a clear indication of the facts that U.S. Attorneys think they can prove at trial. Kohnen represents Daniels' former business partner, Tim Baird, who was also accused of defrauding BofA in the bank's 2011 civil court filing.
No criminal charges have been filed against Baird or Tarpley.
"If I were Matt Daniels' attorney, the statement of facts associated with that plea agreement would scare the heck out of me," Kohnen said.