Indianapolis financier Tim Durham was indicted on wire and securities fraud charges in March—the culmination of a federal probe that began in 2009.
Prosecutors say that after buying Akron, Ohio-based Fair Finance Co. in 2001, Durham and fellow Indianapolis businessman Jim Cochran raided its coffers to fund a lavish lifestyle as well as a host of money-losing businesses they controlled.
One example from the felony indictment: In early 2008, when Fair’s finances were dire, Durham pulled out $150,000 for a gambling spree.
Authorities say Durham and Cochran pulled money out with such abandon that they left Fair without the means to repay the Ohio investors who had purchased unsecured investment certificates. More than 5,200 investors are owed more than $230 million.
Also indicted was Rick Snow, who was Fair’s chief financial officer. He is accused of participating in the fraud, but unlike Durham and Cochran he isn’t accused of taking out millions of dollars in insider loans he lacked the means to repay.
Durham, Cochran and Snow deny wrongdoing.
Fair shut down following an FBI raid in November 2009. The raid occurred about a month after IBJ published a story highlighting the massive insider loans and questioning whether the company could repay investors.
Durham is on house arrest while he awaits his trial, which is scheduled for June 2012.
Fair Finance’s bankruptcy trustee, Brian Bash, for nearly two years has been trying to scrounge up assets to reduce investors’ losses. As part of that effort, he has reached settlements with seven Indiana politicians or campaign committees that received donations from Durham, who had been one of the biggest supporters of GOP candidates in the state.
In the largest deal to date, former Marion County Prosecutor Carl Brizzi and his campaign committee in November agreed to return nearly $200,000.
The trustee contends the political donations were fraudulent transfers because they were made when Durham and his companies were insolvent.•