Kenwood Towne Place: Prosecutors wrap up bank fraud case against developer Matt Daniels

Daniels feels "really good" about trial so far

CINCINNATI - During a mid-day pause in his bank fraud trial Monday, Kenwood Towne Place developer Matt Daniels told WCPO he felt “really good” about how the case was proceeding.

Daniels referred additional questions to his attorney, Ben Dusing, who was not immediately available for comment.

Those might be the only words Daniels ever publicly utters on the topic of Kenwood Towne Place. The co-founder of Bear Creek Capital LLC has repeatedly refused interviews and invoked the Fifth Amendment in civil proceedings involving the failed Kenwood Towne Place project.

On Monday afternoon, Dusing told U.S. District Judge Michael Barrett that the defense team has not decided whether Daniels will testify in his own defense.

“I cannot imagine that his lawyers will recommend to him that he take the stand,” said attorney David Kern, who has watched most of the trial and represented the Bank of America in a civil foreclosure case that sparked the FBI's investigation of the project.

“The real risk for the defense is that if he takes the stand, the government gets to press him hard on cross-examination,” said Kern, a partner in the Roetzel & Andress law firm downtown. “They have a lot of evidence. It’s going to be very difficult for him to explain it.”

Matt Daniels was a founding partner of Bear Creek Capital, which joined with several investors to build a $175 million office and retail complex at I-71 and Montgomery Road. The project ground to a halt in 2008 when unpaid contractors walked off the job and the Bank of America sued for foreclosure.

Ultimately, that led to indictments against Daniels, former Bear Creek Chief Financial Officer Tina Schmidt and Aubrey “Audie” Tarpley, the project’s construction manager. Schmidt testified against Daniels last week as part of a plea agreement with prosecutors. Tarpley’s testimony from a 2011 deposition was played for jurors Monday.

Kern said the case has largely followed the script outlined by attorneys in opening arguments Dec. 5 , with prosecutors trying to demonstrate that Daniels directed the activities of Bear Creek employees and Dusing trying to deflect that notion.

During last week's testimony, Kern said prosecutors delivered “fantastic evidence of bank fraud,” including sworn statements signed by Schmidt that provided false information on how loan proceeds would be used. On Friday, jurors heard from an IRS agent who followed the money trail in banking records, showing how loan proceeds were shifted to other Bear Creek projects and to Daniels himself.

Kern said jurors paid close attention to Schmidt, who related several examples in which she and Daniels decided how loan proceeds would be distributed. Kern said Schmidt “came across as someone who was testifying honestly,” but he added the government presented “precious few” documents that directly tie Daniels to fraud.

“Their evidence as to Matt Daniels is circumstantial,” he said. “The only link to Matt is the Tina Schmidt testimony about how he knew what was going on. The jury is going to have to believe her to convict him.”

Kern said Dusing has indicated that he will call at least three witnesses in Daniels’ defense, including Schmidt’s former assistant, James Thompson, and Herb Weiss, a Keating Muething & Klekamp partner who represented Daniels, Bear Creek, Kenwood Place LLC and Hank Schneider, a nursing home operator who invested in the project. Schneider is now suing Weiss for conflict of interest, a claim that Weiss’ attorney denied as “simply fiction.”

Kern expects Dusing to “hammer away at the lack of direct evidence that Matt was ordering false statements to the bank. Even Tina did not specifically say Matt Daniels instructed me to sign these requisition forms even though he knew they were false … it’s only a crime if he was in a conspiracy to lie to the bank.”

Based on how the case is proceeding, Kern thinks it could be in the jury’s hands by Thursday afternoon.

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