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Defense rests in Durham trial without defendants testifying

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Defense attorneys in the federal fraud trial of Tim Durham, Jim Cochran and Rick Snow rested their cases Tuesday morning after calling just one witness and introducing a handful of exhibits.

The defense presentations lasted less than two hours and did not include testimony from Durham or his co-defendants. The U.S. Attorney's Office, in contrast, offered six days of testimony and thousands of pages of documents as it tried to convince jurors that the defendants ran Ohio-based Fair Finance as a Ponzi scheme, defrauding investors of more than $200 million.

Durham courthouse Tuesday 15colTim Durham, center, arrived for court Tuesday flanked by lawyer John Tompkins and son Tim Jr. (IBJ Photo/Cory Schouten)

Final arguments are scheduled for Tuesday afternoon in U.S. District Court, and the case is set to go to the jury Wednesday morning.

The defense lineup Tuesday: Durham attorney John Tompkins called an accountant who once performed a valuation analysis for a Durham company; Cochran attorney Bill Dazey submitted a collection of e-mails and documents including copies of Fair investment certificates owned by Cochran's mother and brother-in-law; and Snow attorney Jeffrey Baldwin simply rested without calling any witnesses or introducing any evidence.

Throughout the trial, Baldwin has presented his client, who served as Fair's chief financial officer, as an employee simply following orders from Durham and Cochran.

Dazey on Tuesday gave a brief opening statement, which he had deferred at the start of the trial. He introduced several documents into evidence, including investment certificates held by Cochran family members and e-mails between Durham and Cochran as they were purchasing Fair in 2002.

The idea was to show that Cochran didn't have any idea how badly Fair would end, Dazey said.

But he told jurors he had no plans to "insult your intelligence" by calling witnesses to read key passages in the documents, a reference to the prosecution's approach.

"The end of the story is a terrible loss and suffering for Fair Finance," Dazey said. "I'd ask you to consider the players here didn't know the end of the story as events took place."

The lone witness for the defense was Christopher Hitschfeld of Somerset CPAs, who in a previous position for locally based Goelzer Investment Management performed a valuation and fairness analysis of Durham's Obsidian Enterprises as the company went private in 2005.

Responding to questions from Tompkins, who called him as a witness, Hirschfeld described the valuation method he used. He said it's standard procedure to value companies based on a formula that discounts the value of their future cash flows.

On cross examination, Assistant U.S. Attorney Nicholas Surmacz entered Hirschfeld's report into evidence and hammered home just how inaccurate its projections turned out. The report had predicted a profitable turnaround that never materialized for several chronically underperforming Obsidian subsidiaries, including a rubber reclaiming business and a luxury coach bus operator.

Hitschfeld said he relied on information from the defendants in preparing his valuation and did not assess Fair Finance or the insider loans that prosecutors charge gutted the company. He added that the valuation had a short shelf life of not more than a few months and that Durham and his co-defendants should not have continued relying on it years later.

Defense attorneys have said the defendants made mistakes as they tried to save Fair during the 2008 global financial crisis but that ultimately they did nothing criminal.

The prosecution rested its case on Monday after taking testimony from victims of the alleged scheme, accountants and former employees and colleagues of Durham, Cochran and Snow. The government also introduced internal e-mails and played recordings of wiretapped phone calls between the defendants. The trial began June 11.

Durham, Cochran and Snow are facing 10 counts of wire fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud and securities fraud. If convicted, they face decades in prison and steep fines.

To catch up on IBJ's coverage of Fair Finance and Tim Durham, click here.

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  • Who is Mike D?
    I think Mike D might be one of Joan Servaas' kids. Is there a Michael Durham named in a suit from the trustee? I think there is.\ "Michael Durham, Durham’s stepson from his marriage to SerVaas. Bash accuses Michael Durham of accepting $49,712 in transfers from Tim Durham." http://www.ibj.com/more-fair-suits-target-durham-family-members/PARAMS/article/32639
  • Hmmm
    Not posting tonight? Guess that verdict hit you where it counts--good luck having to live within your means for a change. PS, Internet impersonation is a felony in all states mentioned here so keep it up, you got caught yesterday.
  • Hiya
    Wrong state--try the one next to where the scumbags are holed up--hint--thousands of victims including our family.
  • Hiya
    Wrong state--try the one next to where the scumbags are holed up--hint--thousands of victims including our family.
  • Texas dreaming
    How's Texas this morning?
    • Hiya
      How is Suisun City today? Did you and your brother report those monies you got on your tax returns? If so you might apply for a refund after the trustee is finished with the cases he filed against you.
    • Mikey Says
      You just provided no proof of any crime. Tim moving to LA doesn't mean anything. He loves LA. The reasons behind Cochran's personally choices during this case are personal, and provide nothing unless you know his situation with his family. And again, no proof of anything. And plenty of people live paycheck to paycheck, the size doesn't matter... AND AGAIN, no proof of any crime. In fact, you've mentioned no crime. You've simply talked about stuff you don't like about guys that made risky investments at a bad time. Talk about ethics, sure. A crime, you are standing on shaky legs, my friend. "Mike, Ever notice how instead of showing up with his financials Tim ran off and hid in LA? If Cochran was solvent and had saved personally why did he have to get a public defender? Why was it he suddenly couldn't pay his mortgage? WHO MAKES $500K a year and lives paycheck to paycheck? Better yet--go read the State of Ohio Securitites website--and enter FAIR FINANCE in the second box that says offering name when you get to final applet--takes about 30 seconds to load--wallah! $1.65 BILLION is what Tim and Jim offered in worthless investment certificates--they were only able to get a little over $400Msold of which $227M was diverted to their own interests and newfound lifestyles. Do the math--since when can a $20M finance company with full bank facilities payback hundreds of millions of investors? Do the math and get the facts before you start attacking the journalists who broke the story."
      • Geist Elite?
        I am an enlisted member of the armed forces. Far from your Geist and money is not what makes me elite.
      • Forgot the link
        in second box type FAIR FINANCE as two words. Enjoy. https://www.comapps.ohio.gov/secu/secu_apps/offering/offering.aspx
      • Re
        Mike, Ever notice how instead of showing up with his financials Tim ran off and hid in LA? If Cochran was solvent and had saved personally why did he have to get a public defender? Why was it he suddenly couldn't pay his mortgage? WHO MAKES $500K a year and lives paycheck to paycheck? Better yet--go read the State of Ohio Securitites website--and enter FAIR FINANCE in the second box that says offering name when you get to final applet--takes about 30 seconds to load--wallah! $1.65 BILLION is what Tim and Jim offered in worthless investment certificates--they were only able to get a little over $400Msold of which $227M was diverted to their own interests and newfound lifestyles. Do the math--since when can a $20M finance company with full bank facilities payback hundreds of millions of investors? Do the math and get the facts before you start attacking the journalists who broke the story.
        • Mike D
          Is Mike D another one of the loser "elite" from Geist who admires wants to defend this con man? Most likely!
          • Muckracking
            I have never seen such biased journalism in my life. Regardless of guilt, you have behaved like the second rate journalists that you are. Don't worry, you are not alone in Indianapolis. Like McCarthyism and the Salem trials, you have joined a hysterical movement, this time caused by a financial crisis, to persecute anyone with no chance of an unbiased trial; Primarily due to your one-sided journalism. Innocent till proven guilty. Look in your archives, hypocrites.
            • Cochroach!
              Didn't he allegedly have swiming parties down in Naples? You know, between beating his wife? Bentley convertible and Porsche Carrerra cabriolet (that's a convertible, folks) both of which were ....cough...leased? And allegedly charged to which investors? Yeah, he was doing some FACTORING business down there, he just didn't factor getting caught cuz he was too busy f*cing instead of factoring....what a total loser...
            • Rich jalin
              Why do u think u know so much about Cochran? You do know he's a married man?
            • Re
              Interesting comments tdoay. It's been my experience those who can't manage money nevr can--hence he lack of a single payment to Fair from Cochran or Durham for the purported loans. No savvy investor would do stupid impulsive things like buy another mansion down the same street unless he was spending someone elses money. Cochran knew at the end Durham had wired other monies out he was not aware of, read the transcripts--and then Tim sweettalked him. How many men do you know tell each other they "love you" ugh ugh ugh The commenter below is right, the jury should have been shown their checking account balances and credit ratings at hte inception of Fair. Read the trustee report, it shows it all. Fairfinancetrustee.com
            • But??
              Im not saying Cochran is innocent, just saying nobody knows what job he had prior to 2002. He was probably an executive making 250-300K per year in the 90's and maybe he accumulated money during this time too.....just saying.
              • Re
                I believe these are your proof sources: Cochran did not buy the Cambridge house on 13483 Marjac (house 1) until 12/20/2002--well into the third offering of $60M of certificates--at that point they had offered $180M of the worthless investment certificates http://www2.hamiltoncounty.in.gov/apps/reports/rptparcelinfo.asp?sparcelno=1315110009008000&stemp=&dSearch=houseno&dreport=parcelinfo&dReportName=Parcel%20Information On March 11, 2008 he bought a second, bigger house on the same street, 13400 Marjac, allegedly after a fight with his neighbor so he could show him up! He sure was worried about his investors, now wasn't he--he still owned the first house on Marjac! http://www2.hamiltoncounty.in.gov/apps/reports/rpttaxhistory.asp?parcelno=1315110009019000 Cochran bought 9197 Spanish Moss, Bonita Springs, Fl in March, 2005--during the period he was receving millions in Fair loans. Only problem is--he didn't pay Fair a penny back when he sold the house, did he? But, this $350K house wasn't nice enough....no he went from this to a $3.5 MILLION dollar house at 298 Naples--while having two mansions on the same street on Marjac over at Geist....do the math, and tell us again Cochran made it all through investments...what investments besides Brightpoint and Cellstar (timely investment considering Brightpoint turned around and bought them) did he make? 9197 Spanish Moss, Bonita Springs--value today about $300,000--I think he paid $350K odified Date: 3/30/2005 9:38:56 AM Record Date : 3/30/2005 9:38:56 AM Grantor: TOUSA HOMES INC ENGLE HOMES SOUTHWEST FLORIDA INC Grantee: COCHRAN JAMES COCHRAN SUSAN J Book Type: O Book / Page: 4645 / 1557 # of Pages: 1 Consideration: 443,227.00 Legal: L17,MARBELLA AT SPANISH WELLS http://www.leepa.org/Display/DisplayParcel.aspx?FolioID=10480761 From the above "second home" paid for during the Fair reign of terror to this: 298 Mooring Line, bought April 2007 for $3.5Million http://www.collierappraiser.com/ ***
                • re
                  are you talking about 8539 Clew Ct? No, I don't think he had milions in his name. Pull the purchase histories of Clew Ct and the house he had in Naples prior to 298 Mooring Line and then pull his checking account and brokerage and tax records and you'll find his monies all came from Fair. In fact if you look at the BCBG report on Henri Najem--his "loan" from Fair was for the purchase of Brightpoint! His only collateral? Brightpoint!!Shall I go on? That's whyt he prosecutors shoudl have shown all that. How come Cochrans attorney didn't show what you say? Because he can't! But, let's say this mistake allows jury to say the prosecutors didn't prove their case--that doesnt mean Cochran and Durham are innocent--and they can look forward, hopefully, to a state indictment from Ohio which will not be pleasant. Remember, the SEC case is still pending as well. It ain't over no matter what happens this week if they are not convicted--remember, not convicted does not mean innocent.
                  • Logical
                    But...there is the possibility that Cochran had executive level positions for all of his career before 2002 that allowed him to save up money and gain equity in homes so that he could have his 8M is real estate. A friend of mine used to live right across from his old house in cambridge and I'm pretty sure he had that house before fair.
                    • Question
                      Not sure why the prosecution did not include in opening statements and then later in exhibits Durham's lack of money at the beginning of Fair Finance--for example his personal brokerage and checking account statements so they could clearly demonstrate he has allegedly always been a liar and was not "RICH" like he claimed in the interviews....and the house in Naples that Cochran allegedly had his swinging parties and his leased Porsche and Bentley convertibles....and then asked the jury to do basic math--for example Cochran could never have made mortgage payments and lease payments on even a $500,000 salary when he had $8M in realestate and another $200K in cars....do the math, even $500K in salary does not cover that.... The other point the prosecutors clearly missed was to show the $1.65 BILLION Tim did in offerings--he would have helped himself to all of that if he could have sold that many certificates..... Not trying to quarterback, but this case could have been presented so much easier....the jury would clearly have been able to see that it was Fair money that financed it all...

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