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Buyer of prized Durham Duesenberg alleges fraud

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Greg Andrews

A Virginia businessman is suing Tim Durham, alleging he and other defendants committed fraud by manipulating the September auction of one of the Indianapolis businessman’s prized vehicles, a 1930 Duesenberg built for publishing scion William Randolph Hearst.

The plaintiff, James F. Scott of Charlottesville, Va., agreed to buy the vintage car for $2.9 million—a price Car Collector magazine called “amazing, particularly in these notoriously difficult times.”

The publication noted the price was $2.3 million higher than when it last changed hands, in 2003. After auction bids reached $850,000, just two people—Scott and Mark Hyman of St. Louis—dueled all the way up to the final price.

“The transaction has no relationship at all to ‘value,’” a Car Collector reporter wrote. “It’s just the stubborn determination of two bidders to have what I want when I want it, and having the resources to back it up.”

But now Scott—who participated in the auction at the Auburn Cord Duesenberg Automobile Museum in Auburn by phone—is crying foul. He alleges Hyman, owner of Hyman Limited Classic Cars, made his bids in consultation with Donald Lyons of Dowagiac, Mich.—“each of whom were stakeholders and/or owners of the automobile.”

The suit, filed Dec. 10 in U.S. District Court in Fort Wayne, doesn’t spell out the financial relationship between the pair and Durham, who in recent years publicly touted the car as one of the jewels of his 70-plus vehicle collection.

Durham attended the sale, according to the suit, as did Hyman and Lyons, who sat next to each other. The failure to reveal that sellers reserved the right to bid was in direct violation of Indiana law, court papers say.

“By bidding up the price of the automobile to $2.9 million, without disclosing to the plaintiff that they were the owners of or had a material financial interest in the proceeds of the sale, the sellers intentionally, artificially and surreptitiously inflated the price for the automobile,” the lawsuit alleges.

Worse, the suit says, the sellers have failed to provide Scott title to the Duesenberg, even though he has paid. According to the lawsuit, the auction house disbursed the full $2.9 million to Hyman. He then returned $1.95 million, and that money was routed to Lyons, a wealthy car collector who serves as Dowagiac’s mayor. The suit seeks to rescind the sale and seeks triple damages—a sum approaching $10 million.

It’s not clear how Scott’s account of what transpired might differ from that of Durham and the other defendants. Durham did not respond to voice mail and e-mail messages. Hyman and Lyons, who also serves as chairman of Dowagiac-based Lyons Industries Inc., did not return calls. An attorney for Scott, president of Charlottesville-based Emax Oil Co., declined to comment.

The suit is the latest in a string of legal challenges confronting Durham, 47, who’s facing U.S. Department of Justice and Securities and Exchange Commission investigations over transactions he helped orchestrate at Akron, Ohio-based Fair Finance Co. and Dallas-based CLST Holdings Inc.

The U.S. Attorney’s Office in Indianapolis alleged in court papers last month that Durham operated Fair Finance as a Ponzi scheme, using the sale of new investment certificates to Ohio residents to repay prior purchasers.

He and other insiders have borrowed more than $168 million from Fair. The company, meanwhile, owes holders of investment certificates more than $200 million—a debt many purchasers fear the company can’t pay.

It isn’t clear whether the Duesenberg sale is connected to the mounting financial pressures Durham is facing, or whether he is also selling off other vehicles.

His collection has included Auburns, Packards, Jaguars and other cars. He’s housed many at his 30,000-square-foot Geist mansion, which includes a two-level garage.

But casting off cars might not generate an abundance of cash. In a New York Times story two years ago on how the wealthy pay for cars, Durham said he favors leases over outright purchases. He said the strategy allowed him to deploy the cash in investments and put off steep sales taxes.

Rather than pay $1.5 million for his Bugatti Veyron, for instance, he opted to put down $400,000 and make monthly payments approaching $20,000 for five years.•

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  • Another Follower
    This is proof that people have blinders on and will follow their group no matter what.

    The Museum didnt know about the 1 million deal prior to the auction. Mr Lyons didn't tell the truth.

    How you you be promised a car for a million at a public auction. Can you answer that? If that is true Mr. Scott was sucked in spending his millions for no reason.
    You have to be part of the city of dowagiac to fall for this line.
  • Lyons Did Stretch The Truth
    Mr Lyons stated in the paper that the museum knew about the $ 1,000,000 winning bid. That is not exactly true look here http://dowagiacinformer.com/Local-Politics.html
    Just because someone writes the paper and says he didn't do it doesn't make it the truth.
    If he said they knew, why didn't the museum director know about it.
  • Museum Director says he had no knowledge of fixed price for car auction
    Mayor Don Lyons press release to the Dowagiac Daily News (http://www.dowagiacnews.com/2009/12/28/mayor-lyons-responds-to-civil-suit/) didnâ??t offer any answers and added more questions.
    Mr. Lyons stated that he was to be able to purchase the auto at a fixed price of 1 million dollars. But they already made a commitment to the Duesenburg Museum. Why would a car be up for auction when the decision was already made to sell the car for 1 million dollars?
    Mr. Lyons stated that Tim Durham would sell him the car for 1 million if he was the winning bidder. If this was the case why didnâ??t Mr. Lyons keep bidding as long as it took to win the auction if he knew that he would get the car for 1 million?
    After bidding 2.8 million the Mayor stopped bidding. Why? He was promised the for 1 million if he was the winning bidder?
    â?? Lyons did pay Diamond Auto Sales the agreed-upon price. Why would Mr. Lyons pay the price he agreed to if he didnâ??t win the auction?
    If Mr. Lyons didnâ??t win the auction and still payed the agreed-upon price, where did the money come from that he received for the remaining proceeds? What is the remaining proceeds?
    Mr. Lyons stated that a representive from the museum knew about the fixed price. The Dowagiac Informer spoke with Jeff Turner Chairman of the Duesenburg Museum and he told us that the museum didnâ??t have any knowledge of the fixed price prior to the auction.
    We agree with Mayor Lyons, the story will be straightened out during the court process.
  • Don Lyons Didn't bid unfair
    Mayor Don Lyons said he was promised the car for ! million dollars before the auction even started.
    Read more here: http://www.dowagiacnews.com/2009/12/28/mayor-lyons-responds-to-civil-suit/
  • A public official being a shill
    Mayor Lyons using shills to make more money. How can this be? You are the leader and face of Dowagiac and now the city has a black eye.
    Make money no matter what you have to do, true sign of a real leader.
  • WOO HOO
    This story is the best Christmas present the residents of Dowagiac Michigan could ask for.
    We feel so sorry for the buyer and hope that he gets his title and the persons that caused him the trouble get what they deserve
    • Mr Porter
      You are obviously quite upset with Tim for how he treated you. How much did you personally loose in your dealings with him?
    • moving out
      Well it looks like obsidian are moving out of the chase tower next week, behind on the rent are we?
    • Drip feed
      Sorry I forgot about that one,
      Here's a new one for you.
      How do you know when Tim Durham tells lie's ?
      His lips move.

      • Durham did not know
        I read an article in an LA news paper last week where, Durham, and I quote said, I was in my shorts getting ready for christmas it was a real surprise when the FBI called I have done nothing wrong, what a complete plank!
        Anyway back in January of this year I phoned my friend and lawyer John Thomkins to ask his advise with regards to an interview I had to give with the FBI with regards to some of Durham's underhand dealings .
        John met with me in Harry and Iszzy's downtown, he brought another Lawyer with him called Pat and we had lunch , half way through our lunch meeting he informed me, he could not help me as Durham had already employed him,however the other lawyer Pat would help me and they work in the same office!! ,but as soon as I had had my meeting with the FBI would I mind comming back to his office for an informal chat as to what they had asked me with regards to Durham so they can see what direction the FBI are comming from .
        My reply was of course No or words to that effect !! conflict of interest and all
        But the truth is Durham knew this was comming way back at the beginning of the year
        In the time I had known Durham he has spent and this is only what I know of there will be loads more I don't know .
        Jamie farrells house repairs $300,000 EST
        Bentley drophead for his La house $250,000
        Entry to the Great American run 7 cars entered $70,000
        Paid for the fliming of the event $195,000
        Sponsored by the car collector mag $15,000
        Sponsored by lampoons $15,000
        Buying in to the GAR $300,000
        Bank rolling partly the GAR $300,000
        Having a UBB mustang built $46,000
        Having a camera system fitted in his house $400,000
        Having his home cinema re-fitted, with the first disaster, it cost him a million all in all.
        1908 Caddy $ price unknown
        Bugatti deposit he told me he ahd put down $750,000 but I read he had only put $400,000 down who knows and who cares?
        Trip to the bugatti factory in Italy with Shannon Franz long trip [First class of course ]to see his Ohio investors car being built, brought his $300,000 bugatti watch plus a load of stuff for Shannon cost $350 to $400,000 for the whole trip.He asked me to come along on that trip but I declined I did not not want to become another one of his freeloaders.
        Had his garage floors changed to marble both floors $100,000 est.
        Two new jet ski's $30,000
        New boat for the lake $100,000.
        Spent $150,000 for his private playboy mansion party paid for it with a check from my company Cannonball world events[have a copy of the check ]if anyone wants a copy of it .
        Trip to the Bahamas with Carl Brizzi and his wife, Carl's wife flew home the following day .Durham lost $50,000 in the casino alone on that trip.
        Total cost of trip $ 120,000to $150,000
        Bedroom extension in the geist mansion $80,000+
        July the 14th 2007 birthday party $250,000+
        The list goes on and on there is no way I could see Durham ever making this kind of money as everything he seemed to get his hands on lost money and I mean huge losses.
        So where did the money come from in the first place.
        It can't of come from profits from his company's but as I was told one night by one of his close friends don't rock anything to do with fair finance its his cash cow .
        Anyone want to know more email me or wait for the book !!



      • Pattern
        I smell yet another rat here, with the car auction, Did Durham not change the chassis number on a black SLK mercedes and get his assistant Shannon Franz to re-register it as a new speedster kit car from his flordia company a few years back?
        If he can do that and then give it to his son to drive around in, he is capable of scamming with the auction as of course the more money the car makes the more the auction earns .


      • don't forget the other Bugatti
        tim bought a $300,000 (US Dollars since the dollar was so weak when he bought it) Bugatti Parmigiani watch becuz he said no one except people like him could afford one he also had a diamond face Rolex that was really rare that cost like $400,000 and a bunch of other watches and he bought at least two girls very expensive watches
      • Hearst duesenberg
        I tracked back according to non-Durham sources as many Hearst Duesenbergs as possible with information I found on the internet. The one sold did appear to belong to Hearst but the story about Hearst/Davies is just a bunch of pumping, the car is just an unusually rare Duesenberg. Hearst bought multiple Duesenbergs according to my information so the one at the auction was not his only one, and he was with Marion Davies from 1915 until his death in 1951, and he lived lavishly so it would make sense he would drive only the best of the best, which in the 1930s was the Duesenberg until the company folded.

        The really rare Duesenberg to find would be the last one made of the parts scraped together when the factory had closed.

        Big difference by the way between Hearst living large and the way Durhan lives. Hearst actually ran real businesses that made real money and he actually went to work. His parties with Marion were during weekends only. He didn't have himself photographed in London bidding for cars. HIs father worked with true perservence until he finally made it, and Hearst as his son showed this same determination in all his matters. While he had his demons, he and Rockefeller and Morgan and other titans like him set the stage for business dreams for millions to follow. This is a far cry from someone who opened multiple offices in Amish and Mennonite towns to prey on people for their money delivered in the form of investment certificates that were perpetually reinvested so the principle never needed to be returned, money which was then used for a lavish lifestyle and non-sensical businesses such as a racing car team and local magazine, among others....businesses that by nature and odds almost always lose money, and houses and Hummers and assorted cars for friends, drivers, etc...an $8,000 Reindeer coat for an ex-Playmate who blew up because she really wanted Reindeer...a Frank Sinatra Grammy (who would buy one of those for thousands?).....Hearst lived large but at least 1) it was his money and 2) he had true taste.
      • My bet is on the 1935 one, not the one sold in Auburn

        Is anything Durham says the truth?

        Coachbult.com - Rollson Inc.
        Actress Marion Davies owned a traditionallyâ??styled 1935 Rollston-bodied Duesenberg Model J Panel Brougham. Another memorable customer whose name has been ...
        www.coachbuilt.com/bui/r/rollson/rollson.htm - Cached - Similar
      • Which Duesenberg belonged to Hearst?
        It's hard to tell which car really belonged to Hearst, the 1930 Duesenberg Model J, now subject of a lawsuit for fraud, or this car, sold by Tim's good friends at RM Auctions in August, 2009, which claims to be the Hearst Duesenberg...however, this car is a 1935.

        A good investigative reporter good find out or perhaps someone should alert the Ft Wayne attorney representing the alleged victim of the alleged shill bid:

        http://74.125.95.132/search?q=cache:yseGy0VvV8gJ:www.rmauctions.com/CarDetails.cfm%3FSaleCode%3DMO09%26CarID%3Dr286+william+randolph+hearst+duesenberg+sold+august+2009&cd=1&hl=en&ct=clnk&gl=us

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