E-mails filed in bankruptcy court this week show that Fair Finance Co. co-owner Jim Cochran spent money with such abandon that by 2008 he was living off credit cards and imploring CEO Tim Durham to more than double his salary to $1 million.
“The hits keep coming,” he lamented in a January 2009 message. “I have too many credit cards again and now living week to week paycheck to paycheck. ... I have been juggling my funds to make everyone happy.”
In a separate e-mail, he wrote he was behind on property taxes and “with four houses, I need to catch up on maintenance, pools, house caretakers, etc.” In another, he told Durham “I cannot make my mortgage payments. I am going to need another wire.”
Fair’s bankruptcy trustee alleges that Durham allowed Fair to pay Cochran’s personal expenses and that Cochran took what amounted to more than $10 million in unsecured loans from the business.
The e-mails were filed as exhibits to a lawsuit trustee Brian Bash filed this week alleging Durham looted Fair, draining huge sums for himself and business associates and masking that his other businesses had failed.
Durham and Cochran, another Indianapolis businessman, bought Akron, Ohio-based Fair in 2003. The trustee alleges that by 2005 at the latest, Fair was operating as a Ponzi scheme, relying on the sale of additional investment certificates to Ohio residents to pay off prior investors.
Fair owes more than 5,000 Ohio residents more than $200 million. In the suit, Bash alleges Durham looted the company at a “stupendous pace” and orchestrated a fraud of "shocking proportions.”
Durham has denied breaking the law. Dennis Concilla, an Ohio attorney representing Fair, told the Akron Beacon Journal that “we’ll demonstrate the trustee was wrong.” Because Fair was a private company, and not publicly traded, “they were entitled to use that money.”
An Indianapolis attorney representing Cochran could not be reached on Thursday.
Fair operated until November 2009, when the FBI raided its offices. The raid came about a month after an IBJ investigative story highlighted the insider loans and raised questions about whether the firm had the means to repay holders of investment certificates.
None of the exhibits suggest Durham or Cochran decided to rein in their spending as their debts increased and Fair's financial problems grew. In fact, in a September 2008 e-mail laying out his financial challenges, Cochran wrote, “ I have one more large purchase I am considering in the next few months."