Bankruptcy and Fraud and Banking & Finance and Investing and Banking Regulations and Government & Economic Development and Tim Durham and Law

Trustee: Durham used Fair funds for gambling, donations

August 3, 2010

Indianapolis businessman Tim Durham used millions of dollars from Fair Finance Co. for gambling and to make contributions to Indiana politicians, according to a bankruptcy trustee overseeing the Akron, Ohio, firm’s liquidation.

Trustee Brian Bash said at a creditors meeting in Akron on Monday that he has identified about $54 million that Durham borrowed from the company.

Bash said that includes $2.8 million spent on gambling and at resorts, $3.3 million spent on interior decorating, $14 million spent on real estate and $1 million spent on contributions, many of them to Hoosier politicians, according to the Akron Beacon Journal.

The Durham loans represent the largest chunk of the more than $168 million in related-party loans issued by Fair. "It appears there was very little hope of repayment," Bash said of the money Durham borrowed from the firm.

Durham also loaned money from the company to friends and failing businesses, according to filings with securities regulators. The filings show that the lending spree began shortly after he and partner Jim Cochran bought the business in 2002 and continued into last fall.

Bash declined to estimate how much he might be able to recoup for Fair’s principal creditors—Ohio residents who purchased unsecured investment certificates with interest rates as high as 9.5 percent. The 5,000 investors, many of them elderly and with modest incomes, are owed more than $200 million.

Fair Finance shut down in late November, after FBI agents raided its offices and seized records. The same day, the Justice Department filed court papers alleging Durham was operating Fair as a Ponzi scheme, selling new investment certificates to pay off prior purchasers.

An FBI investigation continues. Durham has not been charged with a crime.

Durham, 47, has acknowledged owing lots of money to Fair, but denied defrauding investors. In court papers, his attorneys contend offering circulars provided to prospective purchasers of investment certificates outlined the risks, including that they carried no government guarantee.



 

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