CINCINNATI - If you drive along I-71 in Sycamore Township, you can't miss the rusted steel and half-finished skeleton of Kenwood Towne Place.
It should be filled with tenants now, but work stopped on it four years ago without warning.
On Friday, federal prosecutors pointed the finger for that work stoppage at Matt Daniels, 48, Managing Director for Bear Creek Capital, LLC and Kenwood Town Place, LLC.
Daniels was accused of conspiracy and fraud against the Bank of America. Charges of bank, money and wire fraud plus money laundering were included in a 25-count federal indictment.
"The indictment alleges that Matt Daniels and others falsely represented that money was being used to develop Kenwood Towne Place, when the proceeds were actually being diverted to other uses, including his personal enrichment," said Ken Parker, Criminal Chief for the U.S. Attorney's Office of Southern Ohio.
The investigation was a joint effort involving the U.S. Attorney's Office, FBI, IRS and Hamilton County Sheriff's Office.
Ben Dusing, Daniels' attorney, said his client is innocent.
"Mr. Daniels disputes the charges and looks forward to his day in court," Dusing said.
Parker said Daniels received $100 million in Bank of America loans and and before the financial collapse laundered $2.8 million for himself and other business entities.
Assistant U.S. Attorney Brent Tabacchi said some of the money went for credit card payments and jewelry.
"You'll also note in the money laundering charge that there was a transfer of approximately $500,000 to a Merritt Boat Works, which is a yacht manufacturer," he said. "That money was intended for the construction of Kenwood Towne Place and was improperly diverted."
Dusing said Daniels denies those claims.
"Mr. Daniels disputes that he received those amounts or any amount," he said. "Frankly, he looks forward to challenging that allegation in court."
The work stoppage meant that dozens of subcontractors never received hundreds of thousands of dollars for work they performed.
"Even when the subcontractors stopped work on the project for lack of payment, Matt Daniels and his cohorts continued to make false statements and fraudulent representations to the lender in an effort to conceal and prevent the detection of their misdeeds," Parker said.
Darryl Williams, Special Agency in Charge of Criminal Investigations for the Cincinnati Field Office of the Internal Revenue Service, said IRS involvement involved tracing loan proceeds.
"This investigation cuts to the very core of the financial crisis that our nation faces," he said. "Locally, it stopped a steady stream of income for small local businesses and subcontractors who worked on this project."
Dusing, who was a federal prosecutor for five years, said Daniels understands what those firms and their employees are going through.
"No one wanted this and it's unfortunate that it happened," he said. "He is absolutely sympathetic to the subcontractors involved. He would feel the same way if he were in their circumstance. That doesn't mean he intended to commit a criminal act."
According to Dusing, the case is not cut and dried.
"Apparently, the government believes that funds were diverted, but we come to a different conclusion," he said. "It is difficult to show and often is not the case that someone committed fraud when it cannot be shown that they came out ahead."
Ed Hanko, Special Agent in Charge of the FBI's Cincinnati Office, said the indictment should sent a message to the community.
"If you lie, cheat and steal and it's in a manner that the federal government is involved, we are going to conduct an investigation, we are going to team up with partners and we are going to make sure that justice is done," he said.
In another development, Tina Schmidt, who was indicted in connection with the case in September, pled guilty Thursday to charges and will be sentenced in February.
Parker would not say if she was involved in providing evidence in the case against Daniels.
A Blue Ash firm, Phillips Edison & Company, has bought the unfinished tower and is developing plans to complete construction.
The Kenwood Towne Place case is similar on many fronts to the collapse of Bill Erpenbeck's home building company in Northern Kentucky. Hundreds of homeowners were impacted and dozens of subcontractors
weren't paid hundreds of thousands of dollars.
Erpenbeck is serving a lengthy prison sentence in Florida.
To read the full 17-page indictment, go to http://media2.wcpo.com/pdfs/Daniels.pdf .
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