Beleaguered local businessman Tim Durham and two other executives tied to bankrupt Fair Finance Co. are facing a federal indictment on felony charges of wire fraud, securities fraud and conspiracy to commit wire fraud and securities fraud.

The 23-page grand jury indictment, unsealed Wednesday, alleges that Durham and business partner James F. Cochran worked with former Fair Chief Financial Officer Rick D. Snow to devise and execute a scheme to defraud investors in the Akron, Ohio-based company.

The Securities and Exchange Commission also filed a separate complaint against the men in federal court alleging they orchestrated a $230 million fraud involving at least 5,200 investors.

Between February 2005 and November 2009, Durham and Cochran directed Fair to loan money to themselves and other insiders, the federal indictment says, "which caused a steady and substantial deterioration in Fair's financial condition." The three men then allegedly  deceived and defrauded investors through misleading statements about the company's finances.

Durham's Indianapolis-based Obsidian Enterprises and DC Investments—co-owned with Cochran—were the primary beneficiaries of the loans, according to the indictment. Those businesses in turn loaned money to a "variety of struggling businesses and start-up ventures," including a car magazine, restaurants, a surgery center, a race car team and a luxury bus leasing business. Many of those borrowers failed, the indictment says.

Durham, now 48, and Cochran, now 55, also "used a significant portion of the proceeds of these loans to maintain their lifestyles and to pay for personal expenses."

In November 2010, FBI agents raided Obsidian's offices in Indianapolis and Fair's Akron headquarters.

The previous month, IBJ ran an investigative story highlighting the related-party loans and questioning whether Ohio regulators had been derelict in repeatedly approving the sale of additional investment certificates.

The company filed for Chapter 7 bankruptcy protection in early 2010.

In a TV interview last year, Durham suggested Fair failed in November 2009 because it couldn’t withstand the bad publicity caused by a surprise FBI raid of its offices that month.

But e-mails filed in Fair’s Chapter 7 bankruptcy case last month strongly suggest company insiders knew years before Fair collapsed that it was in dire straits.

Fair’s bankruptcy trustee, Brian Bash, alleges Durham “utterly looted” the business through related-party loans to himself, business associates and Indianapolis-based Obsidian Enterprises Inc., his holding company for a collection of transportation and manufacturing firms.

Durham and Cochran bought the then-68-year-old business for $23 million in 2002, using almost entirely borrowed money.

They immediately began doling out related-party loans, adding to the debt load, while scaling back what had been Fair’s profit-making business—buying customer-finance contracts from fitness clubs, time-share developers and other firms that offered customers extended-payment plans.

Last month, Fair Finance Co.’s bankruptcy trustee filed a lawsuit alleging that Durham perpetrated fraud of “shocking proportions,” draining huge sums from the firm for years to mask that his business empire had collapsed.

Snow, 47, has been chief financial officer of Fair Finance since 2002, according to the SEC complaint. The Fishers resident was appointed CFO of Obsidian in 2003, and in 2009 was named interim CFO of National Lampoon, which Durham also controlled.

This story will be updated.