CLST Holdings Inc., a Dallas-based public firm of which embattled local businessman Tim Durham is chairman and a major
shareholder, announced Tuesday afternoon that it will cease trading on Feb. 26 and
The company—which was known as CellStar and distributed cell phones before selling off those operations three years ago—has struggled, and its shares trade for a mere 9 cents apiece. It’s not clear what, if any, money will be available to distribute to stockholders.
Durham won election to CLST’s board soon after the asset sales, in part by pledging to dissolve the company quickly and give shareholders remaining cash. But about a year ago, CLST reversed course and began buying consumer finance contracts, including millions of dollars from Fair Finance Co., an Akron, Ohio, firm that Durham leads and co-owns.
That insider transaction outraged CLST board member Manoj Rajegowda, who resigned in protest. A letter that Rajegowda's attorney sent the company said he "was not informed of this transaction and most strenuously objects to it."
The purchase also dragged CLST into the ongoing federal probe of Fair Finance. FBI agents on Nov. 24 raided Fair’s office, and the same day the U.S. Attorney’s Office filed court papers alleging Durham was operating it as a Ponzi scheme.
The following week, CLST acknowledged that the U.S. Securities and Exchange Commission was investigating financial dealings between it and Fair, and said the agency had subpoenaed a mountain of information.
Fair raised capital by selling investment certificates to Ohio residents. IBJ reported in October that Durham had used the business almost like a personal bank since buying it in 2002. The story said that he, his associates and related firms rang up more than $168 million in insider loans—debt that might imperil Fair’s ability to repay the Ohio investors, who are owed more than $200 million.
In Tuesday’s statement, CLST said, “The company’s plan of dissolution contemplates an orderly wind-down of its business and operations, the satisfaction of or provision for its liabilities, and the distribution of any net assets to stockholders. The timing of any distributions to stockholders cannot be determined.”
CLST, whose shares trade thinly on the "pink sheets," attracted several other Indianapolis investors in recent years, including Jim Cochran, co-owner of Fair Finance, and Carl Brizzi, Marion County’s prosecutor.