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Fair sues Shelbyville bank over sale of Durham Duesenberg

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Fair Finance Co.’s bankruptcy trustee sued Shelbyville’s SCB Bank this week, charging it refuses to turn over hundreds of thousands of dollars it raised by auctioning off one of Tim Durham’s most valuable automobiles, a 1929 Duesenberg.

The spat stems from a $580,000 loan SCB extended to Durham on Oct. 23, 2009—one day before IBJ ran an investigative story questioning whether the Indianapolis businessman had the financial wherewithal to repay tens of millions of dollars that he and his businesses had borrowed from Fair Finance.

A month later, the FBI raided Fair’s Akron, Ohio, headquarters and Durham’s office atop Chase Tower in downtown Indianapolis—part of a probe that led to his indictment in March on felony charges of orchestrating a Ponzi scheme that defrauded investors of hundreds of millions of dollars.

Fair Finance’s trustee, Cleveland attorney Brian Bash, is trying to scrape together money to return to the 5,000 Ohio residents who purchased more than $200 million in unsecured investment certificates from Fair. He’s recovered about $2.3 million so far.

The lawsuit says SCB extended the loan to Durham and to Durham's Diamond Investments, and in return Diamond gave the bank title to the Duesenberg.

“This loan allowed Durham to keep his fraudulent empire on life-support for several more months while the FBI and the public demanded answers on the misappropriated Fair Finance funds,” according to the suit.

The Fair Finance trustee said providing that collateral was improper because Diamond years earlier already had pledged the automobile to Fair to secure millions of dollars it borrowed from the finance business.

Durham last year turned over his collection of classic automobiles to the trustee, who sold them at auction. However, the Duesenberg wasn’t part of that sale because the title was missing.

Bash later learned SCB had the title and, in January, the bank auctioned the Duesenberg for $1.1 million. SCB used proceeds to pay off the $592,043 then owed on the $580,000 loan. SCB pocketed another $197,731 to cover its attorneys’ fees and costs and then applied the remainder—$316,139—to pay down the balance Durham owed the bank under a home equity line of credit.

The trustee alleges Fair is entitled to the $316,139, since the car had not served as collateral on the home equity loan. He also is objecting to the $197,731 the bank is claiming in fees and expenses, calling them “grossly excessive and unreasonable.”

The trustee said in the lawsuit that he opted to sue after his attorneys “made concerted efforts to reach a negotiated resolution to this dispute ... but the bank was unwilling to turn over a single cent of the proceeds from the sale of the Duesenberg.”

SCB—owned by Shelbyville-based Blue River Bancshares—has not yet filed a response to the suit. In a statement issued Wednesday afternoon, Blue River CEO Russell Breeden III said the bank's action to collect on Durham's loans were appropriate and in step with loan documents and the law.

"While the trustee’s conclusions may make for good headlines, they are abusive, unfair and untrue, and the bank categorically rejects them. The bank should not be made a victim twice over—the first time by Diamond and Durham, and again by the trustee’s actions."

Durham and fellow Indianapolis businessman Jim Cochran purchased Fair in 2002. The pair, along with Fair Chief Financial Officer Rick Snow, are facing 12 felony counts. All have denied wrongdoing.

More of IBJ's coverage of Tim Durham and Fair Finance can be found here.

 


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  • amen
    "While the trustee’s conclusions may make for good headlines, they are abusive, unfair and untrue, and the bank categorically rejects them. The bank should not be made a victim twice over—the first time by Diamond and Durham, and again by the trustee’s actions."

    Finally someone speaking out about the trustee and his methods.

    The saddest part is that I would bet they'll never distribute a penny to Durham's victims, instead keeping millions in fees.

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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