Legal Issues and Banking & Finance and Carl Brizzi and Tim Durham and Law

Fair Finance investors object to Brizzi settlement

December 12, 2011

A group of Fair Finance Co. investors are objecting to a settlement the company’s bankruptcy trustee reached with former Marion County Prosecutor Carl Brizzi, arguing that the deal might extricate Brizzi from lawsuits they’ve filed against him.

Under the deal filed Nov. 21 in U.S. Bankruptcy Court in Akron, Ohio, Brizzi agreed to pay the trustee $195,881—by far the largest settlement with a politician who received campaign contributions from Fair Finance’s CEO, indicted Indianapolis financier Tim Durham.

But an attorney for the investors on Thursday filed an objection to the settlement, charging that Trustee Brian Bash’s proposed compromise with Brizzi, a former director of Fair Finance, could prevent them from “having their day in court.”

To recover their lost investments, the group has filed claims against Fair Finance and its affiliated entities, as well as various officers and directors, including Brizzi, for violations of Ohio securities laws.

The trustee since early 2010 has been trying to recover money for Fair Finance’s investors—Ohio residents who purchased unsecured certificates with interest rates as high as 9.5 percent. Bash alleges Durham “utterly looted” Akron-based Fair after buying it in 2002, stripping the business of the financial wherewithal to repay more than 5,000 investors who are owed more than $200 million.

The lawsuits the investors have filed against Brizzi are separate from the settlement agreement, a point their lawyer emphasizes in the objection in which the investors are referred to as the “Wayne County litigants.”

“The broad language in [Bash’s] proposed settlement agreement could be construed to release [Brizzi] from all claims, including the Wayne County litigants’ claims,” their lawyer wrote in the objection. “This would prevent the Wayne County litigants from having their day in court with respect to their claims against Brizzi for his role in the sale of the Fair Finance investment certificates and his role as a director of Fair Finance.”

The investors argue that Bash lacks the authority to release Brizzi from pending litigation and that doing so would be unfair because the proposed settlement does not require Brizzi to compensate any investors for his alleged liability as a director of Fair Finance.

Bash’s settlement with Brizzi calls for the Brizzi for Prosecutor Committee to repay all $170,881 donated by Durham, Fair Finance and affiliated companies.

In addition, Bash alleged that Fair Finance and Durham provided Brizzi with personal loans and financial assistance totaling $55,735 for trips and miscellaneous expenses. Brizzi disputed the amount, according to the settlement, but agreed to pay $25,000.

Brizzi didn’t seek re-election in 2010 following criticism over his ties to Durham, a friend who served as his 2006 campaign finance chairman. Brizzi now is in private law practice.

Durham and two business partners, James Cochran and Rick Snow, were arrested in March after being indicted on 12 felony counts, including conspiracy to commit wire and securities fraud. They deny wrongdoing.

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

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