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Bank says Durham had no right to sell Duesenberg

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A legal brouhaha over the recent auction of a Duesenberg automobile by Tim Durham has taken a new twist, with Durham’s bank charging the financier didn’t have the right to sell the car in the first place.

The bank, New York-based Webster Business Credit Corp., said in newly filed court papers that the car serves as collateral for a $3.1 million loan to U.S. Rubber Reclaiming Inc., a Mississippi firm owned by Durham.

Webster said U.S. Rubber has defaulted on the loan. Loan documents specifically “prohibited the sale, auction or transfer of the antique automobile,” according to the filing this month in U.S. District Court in Fort Wayne.

A furor erupted soon after the car, a 1930 Duesenberg built for publishing scion William Randolph Hearst, fetched $2.9 million at a September auction at the Auburn Cord Duesenberg Automobile Museum in Auburn.

The winning bidder, James F. Scott of Charlottesville, Va., sued in December, charging Durham and other defendants committed fraud by manipulating the auction price.

The suit says the other bidder—Mark Hyman, owner of Hyman Limited Classic Cars in St. Louis—consulted throughout the auction with Michigan businessman Donald Lyons. Scott charged he later learned both men “were stakeholders and/or owners of the automobile.”

“By bidding up the price of the automobile to $2.9 million, without disclosing to the plaintiff that there were the owners or had a material financial interest in the proceeds of the sale, the sellers intentionally, artificially and surreptitiously inflated the price of the automobile,” the lawsuit charged.

Lyons—owner of home-products maker Lyons Industries Inc. as well as mayor of Dowagiac, Mich.—issued a statement late last month saying that prior to the auction he struck a deal to buy the same Duesenberg for $1 million.

Because the car already was slated to be part of the museum’s annual Labor Day auction, Lyons said he agreed to allow the sale to be finalized there—assuming he was the high bidder.

“Nobody expected that anyone would bid much more than $1 million,” Lyons said in his statement. “We thought we were being nice and doing a favor to the museum to agree to do it this way.”

The final auction price was $2.3 million higher than what Durham paid in 2003. After bidding concluded, Lyons and Hyman talked with Durham, who agreed to allow the two men to share in the proceeds of the sale, according to Lyons’ statement.

Scott said in his lawsuit that he never received title to the car, even though he paid the full $2.9 million.

Webster’s court filing says bank hold the title in its safe, and isn’t about to relinquish it.

Scott named Webster in his suit because of its security interest in the vehicle. In its response filed Jan. 4, Webster went on the offensive and filed a counterclaim. It says Scott now has the car but must return it to the bank.

The suit says Webster negotiated the collateral agreement with Diamond Investments, the Durham company that holds his automobile collection.

“Unbeknownst to WBCC, Diamond Investments and others attempted to convert the antique automobile by entering into a series of unauthorized transactions designed to hinder, delay and defraud WBCC and to avoid WBCC’s properly perfected security interest and lien,” the counterclaim says.

Ray Seach, an Indianapolis attorney representing Durham, said he could not comment until he files a response to Webster's allegations in court.

The Duesenberg lawsuit is the latest in a string of legal challenges confronting Durham, 47, who’s facing U.S. Department of Justice and Securities and Exchange Commission investigations over transactions he helped orchestrate at Akron, Ohio-based Fair Finance Co. and Dallas-based CLST holdings inc.

The U.S. Attorney’s Office in Indianapolis alleged in court papers in November that Durham operated Fair Finance as a Ponzi scheme, using the sale of new investment certificates to Ohio residents to repay prior purchasers.

He and other insiders have borrowed more than $168 million from Fair. The company, meanwhile, owes holders of investment certificates more than $200 million—a debt many purchasers fear the company can’t pay.

Other parts of Durham’s business empire also are financially strained. Muncie-based First Merchants Corp. filed a lawsuit in Fort Wayne in December charging that Sturgis, Mich.-based Classic Manufacturing Inc., a trailer-maker owned by Durham, defaulted on nearly $1 million in loans.


 

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  • Don't forget about National Lampoon
    Around 10/21 they filed with the SEC to deregister the shares. That means that they no longer have to file financial reports to the SEC. Most of the time they blame that it cost to much. Did anybody look into how Obsidian was taken private it is really an interesting read.
  • Video of Cochran redfaced at his Naples mansion estate sale
    http://www.indystar.com/apps/pbcs.dll/section?Category=videonetwork#/News/Durham+partner+sells+Florida+home%27s+furniture/51920173001/51729713001/61942692001
  • Crime
    I believe The bank was in another state wouldnâ??t it be a federal crime? The BMV has strict rules in place for dealers who donâ??t deliver titles to buyers that can include criminal charges requested by the AGâ??s office.
  • re
    Who's going to prosecute him? His BFF Carl Brizzi? Or Carl's right hand gal that is rumored to be accepting a job with another lawfirm representing Tim?

    Remember that movie," The Firm," where everyone is in on the crime except Tom Cruise? Welcome to Indy,
    • Conversion
      I believe it is clear cut criminal conversion if you sell a vehicle that a lienholder has a perfected lien on the title. But I suppose that is just a minor distraction compared to the massive fraud that was committed in Ohio.
    • When Will This End????
      How many innocent people is Tim Morrison going to allow to get screwed by Durham before he puts an end to this pariah????
    • re

      Loop Net has 107-117 N. East Street for sale for $1.25M. The rep says the building is empty except for storage for its "out of state owner who lives in California."

      But, Diamond Auto Sales, the dealership located at 117 N. East Street and owned by Tim Durham allegedly to avoid sales tax, begs differently. According to Indiana's DMV, Diamond Auto Sales is an active car lot, license # 407747 DIAMOND AUTO SALES 117 N EAST ST.

      Does anyone believe Tim really runs an active car lot at 117 N. East Street?

      LMAO!!!!
      • fitting
        Can you pray for a criminal: Based on this question, the Alter from Kelm (Rabbi Simcha Zissel Ziv, 1824 â?? 1898) confirms a fundamental truth about prayer. It is not who you are or what you have done that determines the impact of your prayers. The impact of your prayers is determined by the strength of your faith.

        The old hymn says, â??What a friend we have in Jesus, all our sins and griefs to bear. What a privilege to carry everything to Him in prayer. Have you trials & temptations? Is there trouble anywhere? You should never be discouraged. Take it to the Lord in prayer.â??

        If you're Tim or Jim et al reading this, know Jesus Christ! Thanksgiving and Christmas were not very fulfilling for you because you know in your heart that you have done wrong. But you can change that. You can make Jesus the Lord and Savior of your life.

        As we enter into the following months of your investigation with the reporters following your every move, remember the prayer of a prisoner. The prayer of a man in chains for his faith. And let his attitude of gratitude, praying to God as a first response rather than a last resort, and giving the glory to God be the motivation for your heart of thanks today. For whatever circumstance you are in there is something that you can be grateful for, God wants you to talk to Him, and God can be glorified.

      • Don Cloud is head of Indiana DMV in case anyone is interested
        like calling him would do any good....
      • Where is the sales tax Durham would have been "collecting?"
        As a dealer he would be required to collect and remit sales tax on any cars he has transferred title to.

        Somehow I doubt he did that.
      • stupid rich people
        How dumb would a person have to be to want to bid on a vehicle that may even possibly be associted with Durham?

        The word should be put out. It must be a small community of collectors. RM Auctions should be doing the diligence to assure its customers they will not be tainted by this.

        Certify these are not Durham associated vehilces or don't auction them.
      • Shallow Hal
        Of course other's knew what was going on,that goes without saying but Durham put food on the table for them and they were weak men Durham lined as many pockets as he could on the way up so he can recall favours on the way down
      • "Cars were Tim's, but not now."
        Stephanie from RM just admitted the cars WERE Tim's but he "recently sold them and the new buyer has decided to place them up for auction."

        Thankfully there is a very diligent Indianapolis FBI agent tracking Durham. Somehow I do not think he will find this newest revelation amusing at all.

        Question: If RM Auctions knowingly sells cars that they believe may have been fraudulently conveyed to other parties, what does that mean legally?
      • Just how many attorneys does Tim have?
        Ray Seach, isn't he partners with a very good securities attorney John Egloff?

        Is there a firm in town Durham hasn't hired? Am I right in saying he has hired Larry Mackey, Jim Voyles, Ray Seach, plus didn't he have Ice Miller handle those matters down in Mississippi a while back? He could be spending millions in retainers and millions more in fees....those poor Ohio elderly residents...
      • not Tim's
        Got a note from the auction company stating the autos in this upcoming auction are not owned by Tim. Still would tread carefully, escrow people!
      • more auctions?
        http://ipopa.blogspot.com/2010/01/is-durham-selling-off-assets.html
        • Cochran just leased his $1.2 Waterfront Geist home for $3,000 a month and has MOVED
          to another waterfront home. Guess whose.
        • very strange
          How could people spend this type of money without using an escrow service?
        • Autioneer
          How could the auctioneer sell the car without having someone show him free and clear title? I'm not defending Durham by any means. The guy's a slimeball. But the auctioneer, and the buyer for that matter, seem to have acted fairly recklessly to in turning the cash over without checking to make the title was clear.

          But there's no need to freeze Durham's assets, he promised Morrison he would take good care of them in the interim.
        • Nothing new here then
          Nothing new about Durham and the above statement,Durhams answer to this would be, but I did nothing wrong.
          I think Indy is going to have a very red faced Tim Morrison soon should he really be doing this job?
          Durham and Cochran have made him look like a muppet, with no regard for any kind of law other than their own

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