The trustee in the Fair Finance bankruptcy case and his law firm have run up legal bills approaching $9 million, nearly double the recoveries they've achieved to date for investors victimized by convicted fraudster Tim Durham.
Cleveland-based Baker & Hostetler is seeking $7.7 million for work and expenses from Jan. 1, 2011, through Aug. 31, 2012, and the firm says it is owed another $1.04 million specifically for the work of trustee Brian Bash, a Baker & Hostetler partner, the Akron Beacon Journal reported.
Bash since early 2010 has been trying to recover funds for investors of Ohio-based Fair Finance, which was led by Indianapolis financier Durham until his business empire collapsed in late 2009.
Bash so far has recovered just $5 million, despite default judgments of $44 million. He has filed dozens of civil lawsuits seeking about $1 billion in total. More than 5,000 creditors, mostly elderly Ohio investors, are owed more than $200 million.
Since recoveries fall short of Baker & Hostetler's tab, the law firm said it is requesting an “interim payment of an amount the court deems appropriate in its discretion” with other amounts to be paid later, the Beacon Journal reported. The firm is billing at rates ranging from $150 per hour to $825 per hour.
Bankruptcy Judge Marilyn Shea-Stonum will consider the request next month in U.S. Bankruptcy Court in Akron.
Shea-Stonum has urged Bash to look into making an interim distribution of recovered funds to Fair investors. Earlier this year she rejected a proposal from Bash that his firm be compensated based on a percentage of recovery. Based on the proposal, the firm could have collected more than $32 million if it recovers $200 million.
The judge called the proposal "troubling."
A federal jury in Indianapolis in June returned a guilty verdict on all 12 federal felony fraud counts for Durham, on eight of 12 counts for Fair co-owner James Cochran, and five of 12 counts for Rick Snow, the company’s chief financial officer. The trio are set to be sentenced Nov. 30.
The government had accused the men of running Fair Finance as a Ponzi scheme that stole more than $200 million from 5,000 Ohio investors who purchased investment certificates from the consumer-loan company.
Bash has more than 120 lawsuits still pending that seek to recover investor funds.
Durham and Cochran bought Fair Finance from Donald Fair in 2002.
More IBJ coverage about Durham and Fair Finance can be found here.