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Durham gets 50 years for fraud scheme

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Tim Durham will likely spend the rest of his life behind bars after a federal judge on Friday sentenced the disgraced playboy and businessman to a 50-year prison term for defrauding Ohio investors of $250 million.

U.S. Judge Jane Magnus-Stinson said three words describe both Durham, 50, and the crimes he committed: "Deceit. Greed. Arrogance."

The prosecution had sought a sentence of 225 years, taking into account 5,122 victims and a loss amount of $250 million, to punish Durham for operating Akron, Ohio-based Fair Finance as a Ponzi scheme. The judge agreed with the loss calculations but gave Durham a shorter sentence that will allow him to serve time concurrently on some of his 12 convictions.

"This case was all about numbers that were puffed up to create appearances," Magnus-Stinson said before announcing the sentence. "I’m not going to play that game. Mr. Durham is 50 years old."

Later Friday, the judge sentenced Indianapolis businessman Jim Cochran, 57, who co-owned Fair Finance with Durham, to 25 years in prison. Fair Finance CFO Rick Snow, 49, got 10 years.

Before Magnus-Stinson handed down Durham's sentence, he stood and gave a brief statement in the courtroom.

“I feel terrible that they all lost money,” he said, his voice somber. “My family has lost all of its investments.”

Durham said he read many of the letters from victims and regrets that the company failed. He also spoke up in defense of his co-defendants. But he did not offer an apology.

“I’m not blind to how everybody has suffered,” Durham said. “I probably wasn’t as familiar with our investor base as I am now. I have regrets. I wish I would have tried harder to make some things clearer.”

Durham attorney John Tompkins said he plans to appeal the sentence within a 14-day limit.

“Anything that is likely to result in dying in prison can’t be described as a good result,” he said outside the courtroom. “But it clearly was better than a lot of what was available to (the judge).”

Unlike state prisoners, federal inmates must serve 85 percent of their sentences. Durham would have to live to 93 to survive his sentence.

The rulings follow a morning of legal arguments over sentencing and emotional testimony from four victims of the scheme, including a 42-year-old woman named Kristen Schroeder who called herself "one of the lucky victims" since she still has time to save up and recover.

But the last word came from Barbara Lukacik, a 74-year-old nun who lost her life savings of $125,000.

"What has happened is shameful," she said. "Yes, the economy was weak, but that didn’t give you the right to steal not only my money but all the victims of Fair Financial to use as you wish, for serious greed and pampering. And you say you haven’t hurt anyone; let’s be real. I honestly believe justice must be served because it’s the righteous thing to do."

As she wrapped up her testimony, Lukacik turned toward Durham and said, "Shame on you."

After the sentencing, Lukacik would not say whether she considered the 50-year sentence appropriate.

“I was never for hurting him," she said. "I forgive him. I was for justice to be served.”

She was disappointed he didn't seem sorry: “If he had said he was sorry, that would have meant something.”

U.S. Attorney Joseph Hogsett called Durham's 50-year sentence "a significant price that he deserves."

"There are no winners today," Hogsett said outside the courthouse after Durham heard his sentence. "What Tim Durham and his associates destroyed through self-indulgence was irreplaceable, and [the victims] may never be made whole." (For more of Hogsett's comments, see video below.)



In arguing for a maximum sentence for Durham, Assistant U.S. Attorney Winfield Ong quoted from Dante’s Inferno, noting that “fraudsters” like Durham are more dangerous to society than street thugs or drug dealers.

But Tompkins pleaded for leniency arguing a federal investigation into Fair Finance and negative media attention made it difficult to recover the company’s legitimate assets.

He bristled at comparisons to the Bernie Madoff’s Ponzi scheme, arguing that Fair held legitimate businesses that struggled in a bad economy.

The sentencing comes three years after FBI agents raided Fair Finance and Obsidian Enterprises, a Durham company located on the 48th floor of Chase Tower in Indianapolis.

A federal jury in June found Durham guilty on all 12 felony fraud charges stemming from the collapse of Fair. Durham co-owned the firm with Jim Cochran, who was convicted of eight of 12 felony charges. Rick Snow, the company’s chief financial officer, was convicted on five of 12 counts.

The government had recommended a 225-year prison sentence for Durham, 145 years for Cochran, and 85 years for Snow. All three men are expected to appeal.

For live updates from the Durham sentencing hearing, click here.

All of IBJ's coverage of Tim Durham and Fair Finance is here.

This story will be updated.

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  • Re
    Hiya Scottie, save your typing for the IRS. AGAIN.
  • IBJ named Durham's company 'fastest growing'
    Evidently even IBJ was deceived at about the same time as what you reference Ms. Nester. Their research and subsequent article named Obsidian as one of the "Fastest Growing Public Companies": http://business.highbeam.com/5280/article-1G1-91964203/fastestgrowing-indianapolisarea-public-companies
    • Don't forget
      What's that government agency that regulates people who lie to sell books and get hired? Is it the FTC? http://books.google.com/books?id=unWeYQiP1g8C&q=durham
    • Laikin
      The next IBJ investigation needs to be Brightpoint and Bob Laikin. It can't be coincidence that everyone else around him, including his brother, are in prison for stock fraud. And they all got their original funding from a "Timely" Brightpoint deal. And Tim obviously had insider info because his ego got the best of him and he was bragging about how rich hes gonna be before it was even announced. Greed
    • No Deal
      After Durham was convicted of multiple felony counts of Fraud, etc. it is doubtful that the Government will try to cut him any 'deal', period. The time for cutting a deal has long passed.
    • Seymour High School Wall of Fame:
      http://www2.scsc.k12.in.us/SHS_09-10/organizations/Renaissance/pdf/2006inductees.pdf
    • Email chain
      Is this the one u r talking about? TD states here he is borrowing from a number of people who are on the "loan" list: http://www.ibj.com/ext/resources/IBJ-Daily/DurhamEmails.pdf
    • But??
      But......durham was the CEO of carpenter back in the day, and Cochran I think was an executive as well. A friend of mine worked with both these guys back in 1994-1995 ish so that's how I know. Those jobs pay money that could have supported their lifestyles
      • Tim's financial standing before Fair
        I dont' know, I don't think Joan SerVaas would lie in her pleadings, would she? Me thinks the IRS would come and garnish any accounts he had, and the trustee reports show his credit rating was below 550 at the time he bought Fair PLUS I think he had a margin loan on Lampoon stock that was upside down on top of everything else so no, he did not have a bunch of money. http://caselaw.findlaw.com/in-court-of-appeals/1188884.html
        • Jobs
          I could be mistaking, but didn't durham and Cochran both have high level executive jobs prior to fair finance......cuz that could account for some of their money as well
          • Also
            As you know you cannot post links on these comments, but if you will google this string of words ... carl brizzi verizon diana vice ... you will see the SUPER series Diana Vice wrote on Carl Brizzi and Brightpoint and Cellstar as well as articles about Carl Brizzi going ballistic on his former radio show (Emmis pulled the broadcast off the internet) over the person they all blame for their woes, which is me (in addition to Greg, the government, the economy, the dog except Tim didn't have a dog did he, wait, oh I get it I was the hound dog or maybe that other five letter word that starts with B that refers to a female dog)...now then, not only have I never met Tim Durham--as Matthew Ogden testified Tim had told him I was his ex girlfriend out to get him--I have also never met or spoken to Carl Brizzi and am perplexed as to how he would know my name and why he would be so agitated to go into a tirade about me on the broadcast...and I honestly wonder who the prosecutor friend of Tim's was that allegedly called a DA in Oregon and had the impound a celebrity bus that Joe Dittie had rented from Tim's former competitor Larry Michael, claiming a "multi state sales tax investigation" was the reason that Oregon needed to impound that bus.... and I wonder if maybe the feds will ever finally charge raqueteering for any people I consider questionable that were hangers on to Tim..., I am still waiting to see what happens with John Bales trial and how it is that Carl Brizzi just timely guessed to go buy that building in Elkhart with no money down...and where he and his partner got the money for their share of those repairs, i never did see any coverage on that....... You know, I don't think I know very much but I am darn good at building profiles from behavioral history patterns and I know a lot of people a LOT smarter than me which would include Greg, Cory and Gary Welsh in that mix, but golly gee whiz not one of them or me could just suddenly guess to finesse a deal like that spectacular Elkhart deal just in time for the state of Indiana to ink a 10 year triple net lease at that same property....or to buy what was it, a million shares of Red Rock Pictures which is the other stock Dan Laikin was accused of illegally boilerrooming and was dropped in return for his guilty plea to boilerrooming Lampoon stock.....I certainly don't know anyone who would buy a piece of shi* stock like that in their portfolio except I do know of THREE people who did and two of them are in jail and one who didn't bother to show his face at the trial or sentencing is still practicing law....in Indianapolis....I applaud Joe Hogsett for taking a stand on Tim Durham and would hope he is going to indict and convict the rest of the losers here that have no remourse over willingly accepted monies that they now know did not grow on trees in Tim's backyard....
          • Reply
            1) Durham never made a killing on Brightpoint--that's what we all initially thought until we found out where his funds were really coming. I believe he made about $15-$20M and then allegedly divied that up among his "friends" which is what i believe he then later claimed were "loans" which, if my theory is right, would explain why his "friends" including Dan Laikin don't think they have loans and why none of these purported "loans" were ever perfected or recorded in public records; 2) Tim did not buy Cellstar--he bought up the stock in Cellstar just in time for Brightpoint to buy them. You might recall Carl Brizzi suddenly had a large position in Cellstar too, despite the fact he had just been sued for not paying his kids gymnastics bills up in Hamilton County. So did Henry Najem whose "loan" balance appeared to be around $10M or so though the trustee suing him can only go back four years which is why the amount he is being sued for is a lot less. You might remember Henry was arrested in Vegas for failure to pay markers, I believe that was in late 2008--so much for being a wealthy investor, huh--go pull all his debt lawsuits and his financial standing before he became "partners" with Tim in his purported "investment group." Ironic how those purchases of Cellstar were not filed with the SEC until many months after that filing was due and just before Brightpoint announced the "asset" purchase. The asset purchase price of Brightpoint was ALLEGEDLY reduced by a dollar amount similar to the amount of the "payable" owed to Verizon plus a bit more cash--"liabilities" stay with Cellstar since purchase was now an asset purchase--and suddenly, a year after this deal commenced and the statute of limitations had passed on the Verizon payable, all of a sudden instead of Cellstar following their shareholder approved plan of liquidation, suddenly those monies still parked at Cellstar were then then directed to the purchase of receivables! Receivables! For a cell phone distributor, which is what Cellstar was, and do you know those receivables, which were high interest rate since the credit ratings weren't exactly steller of the underlying debtors--those receivables were bought at basically face value when no institutional buyer ever pays even close to that! And wouldn't you know there were a bunch of amendments to those SEC filings that finally, in a nutshell, show Fair Finance being right square involved during the "liquidiation" of Cellstar that was never liquidated and instead allegedly left open to dump receivables to, bizarrely coincidental to the receivables balance owed to Fortress by Fair Finance, which suddenly allegedly reduced it's receivable balance to Fortress by around the same dollar amount of receivables that Fortress then sold to Cellstar....Fortress handling both transcactions, Tim Durham handling both transactions, what a coincidence....a great analogy to me is I hand you a $100 bil and then you take a second $100 bill out of your wallet to give back to my son....whose $100 bill came back to my family? But what do I know....I don't know Tim, I just read the filings.....and therein lies the real truth of how Tim was able to pull this off for so long, he knows that no one takes the time to read the filings, or didn't until Ohio finally had no choice due to Greg Andrews relentless coverage....and then it was like O M G.....
            • Serious
              My thought is that the wives/girlfriends should be right next to them. They enjoyed the luxuries that the stolen money bought. Did they really think their sweeties were that successful? Easier to close your eyes and ask no questions.
            • Especially given
              Not sure who you're referring to at Ingram Micro or who the "tippee" was, but Durham's moves in the market and the timimg of those moves weren't done without help from someone who knew what was happening on the inside. I remember seeing Durham at Brightpoint's annual meeting about the same time he made a killing on selling their stock. His arrogance was obvious. How did Durham know about Cell Star and why was it sold to him first and not directly to Brightpoint?
              • Especially given
                That the original tippee said they also traded in Ingram Micro, whose officer I think used to be on the board of Brightpoint, back in 2002 and 2003 when all this crap started. .......................................................................did you see the shareholder suit brought by Cohen and Malad, Irwin Cohen's brother Eli used to be best friends with the gal that opened her mouth in the first place, Irwin is quite familiar with all of this, this is hysterical, only in Indy!............................................................................ps, hey Irwin, why don't you go visit Timmy in prison and make a deal with him that if he finally tells all on the gang you'll share your finders fee from the SEC with all those poor victims, you know, since you are so interested in justice.......................oops, wait, can you really do that? There wouldn't be any conflicts along the way now would there? Just asking.................................................... A BrightPoint Inc. stockholder has filed suit against the company, charging that the $9 share price offered in its $840 million sale to California-based Ingram Micro Inc. is too low. Hilary Coyne brought the suit July 12 against Indianapolis-based BrightPoint and several of its officers in Marion Superior Court and is seeking class-action status on behalf of all BrightPoint shareholders. Coyne accuses the company and its officers of breaching their fiduciary duty to shareholders and is asking a judge to issue an injunction to prevent BrightPoint and Ingram from completing the deal. Damages should be awarded if a court judgment is not issued before the sale is complete, the lawsuit says. The deal is expected to close by the end of the year, the companies said when announcing it on July 2. BrightPoint, founded in Plainfield in 1989, provides logistics to sellers of wireless devices. It has more than 1,300 employees in the Indianapolis area and 4,000 worldwide. Santa Ana-based Ingram Micro is set to acquire all outstanding shares of BrightPoint’s common stock for $9 per share in cash. But Coyne argues in her suit that the price is “woefully inadequate” because it’s based on current company conditions that have depressed the price rather than its 52-week high of more than $12 per share. BrightPoint’s announcement in February that it had lost key customer Cricket Communications Inc. was "exaggerated in the market," the complaint argues, and sent the stock sliding to the $9 range.
                • Part 2
                  I have long felt the timing of Durham's investments in stocks and bonds was not attributable to his own market prowless. I believe he had help from "insiders" at these companies. It is ironic that Bob Laikin decided to fold up shop and sell his company for $9 a share while granting millions of dollars in severence pay for himself and four other officers.
                  • Good Sentence
                    I was hoping for 25 years for all three, but fifty for Durham was excellent.
                  • Sympathy for families?
                    yes, I have a lot of sympathies for the families of 5,600 Ohioans--and how about the embarrassment Tim brought to the Republican party, to the state of Indiana and to his own family who also does not think they need to pay any of those "loans" (cough cough) back......
                  • What's crazy?
                    Dear Really. Yes it's sad for the families but what's your point? That no one with a family should go to jail? Don't cry too much for them, Durham's unmarried and his kids are grown, and if Tim and Jim really cared about seeing grandkids they should have gotten honest jobs. Don't blame it on the court; that's absurd.
                    • Really, Really
                      Durham doesn't have a wife and his son is an adult. Cochran beat his wife for which his son beat the crap out of him so I doubt prison will damage that family dynamic too much. Snow will be out in 8.5 which may be soon enough to see his kids graduate from high school so that's not too bad considering. So, Really, why don't you talk about the real victims as opposed to the crooks.
                    • How about
                      when he put that keystroke logger on Jamies computer? And bought her that stupid reindeer?
                    • Crazy
                      The thing nobody is considering is how having these guys spend many years in jail is going to affect their families. The kids of these guys aren't gonna have a dad in their lives anymore.....what about their wives. Plus, with these prison sentances, these guys are gonna miss out on being grandparents,miss out on seeing their kids have their own families, exe....all because the court.
                      • To Mitza and Courtney:
                        Do you think it's normal for Tim to have sued John Doe 1 and John Doe 2, in two different jurisdictions, but then never serve them, only use the subpoena he got and renewed every six months that granted him access to their email accounts? When John Doe 1 and 2 are those who were turning in evidence against him? Do you think it's normal that your brother had a certain prosecutor buddy call the state of Oregon and lie that he was running a multi state sales tax investigation and order them to impound the bus of Larry Michael, whom he was in litigation with? Especially when your brother wasn't paying any sales tax? Yes, the government and Greg and Cory and Jon and Carrie and Dave Barras and Russ and the Seymour Tribune and the Beacon Journal in Akron and everyone else has it in for your poor brother. Ask your Dad, Courtney! Where is he?
                      • Video Says it All
                        This video from the CNBC program says it all http://www.youtube.com/watch?v=-krECxFB0_4
                      • Part 2
                        So, if you time the offerings around his shockingly timely trades in Brightpoint at the same time the Brightpoint bondholders were fleeing in horror; the "comeback" of Brightpoint was allegedly based on the bondholders going byebye and now how would Tim just guess this. And it's doubly interesting that he and his "investment group"--most of whom are literally bankruptcy and insolvent now-just happened to, along with Carl Brizzi, guess to buy millions of shares of Cellstar just before Brightpoint bought them- I find it extremely interesting that Laikin suddenly sold out Brightpoint shortly after Tim was taken into custody on June 20th--not implying anything, just stating it's extremely interesting, especially given he sold out so cheap, at $9/share when he had institutional shareholders that had just bought in at $12. Just saying~
                        • Re
                          Sorry about the typos below. open this link, in second box type in FAIR FINANCE (space in between fair and finance) and then in about 20 seconds page showing all his "offerings" will open up: https://www.comapps.ohio.gov/secu/secu_apps/offering/offering.aspx
                        • Durham commnets
                          Susan, you did a good job summarizing some of Tim Durham's corrupt practices and how he used some of the money he took from the Fair Fiannce Investors.
                          • Repentance before Forgiveness
                            John Calvin wrote, "Christ does not order us to grant forgiveness till the offender turn to us and give evidence of repentance." Given that moral yard stick, 55 years wasn't enough.
                          • Still Oblivious
                            Wow. His last chance to plead for leniency and what does he say - I "feel badly" that you lost money, but hey I LOST a lot of money too! Unbelievable! Was he buying worthless Fair CDs too?? He was selling them and blowing the proceeds! What money did he have to lose? Arrogant POS till the end. Cochran at least showed some remorse. Luckily, this will be the last anyone hears from Tim again, forever. Enjoy prison Tim
                          • okay Joe
                            Now when are you going to prosecute Carl Brizzi? And Shannon? And Gary? And Terry? How about Henry, he took how much money? A lot more than is what is in the trustee report, because that only goes back four years. I am not an attorney but it seems like raqueteering is met here.
                          • 11/1/87
                            At least no parole on those convicted after November 1, 1987.
                          • No Parole
                            No. There is no longer parole in the Federal system.
                            • Parole
                              Durham was given 50 years of which he must serve 42.5 before he is eligible for parole. I'm assuming he will get credit for time served which would make him eligible in the ballpark of 2052.
                            • Comment
                              the fact that Tim said his entire family lost their investment is probably lost on most people--he was able to operate on what's called an intrastate exemption, which means not one dime can be taken from an investor outside Ohio. Period. Tim has no family in Ohio. Period. Tim never put a penny of his own money into Fair Finance. Period. Textron provided the bulk of the purchase money and Don Fair provided the balance in a seller note. Tim then immediately figured out that Ohio had fallen asleep at the wheel and loaded up the offerings, increasing them pass a billion and a half in offerings--not $200M but $1.6BILLION in outstanding offerings WHILE BEING OVER EXTENDED ON LINES OF CREDIT FROM commercial lender. If you read the transcript you can clearly see the reason for the investment certificates previously was because of lack of commercial lending. Don Fair had no commercial lenders--he used the ivnestment certificate money, but not Tim! He did both, and the first thing he did was take a bunch of money and buy what? Brightpoint stock at the very time its bond holders were fleeing in anticipation of imminent bankruptcy. He never ran the business to do anything except use the money to fund his lifestyle and insanely prop up failing basic industries companies so he could look like a successful businessman--as did all his loser friends, none of whom showed up today--so much for being his "friends" who took the money as gifts, not as "loans' or they woudl have been making payments. Last, I cannot believe I am going to actually give Tim credit today but he sure kept his mouth shut about his buddies--it will be interesting to see if he does the same in prison. In the interim I hope the feds nail the rest of these losers.
                              • Eligible for Parole?
                                Will Durham be eligible for parole? When?

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                                1. It is nice and all that the developer grew up here and lives here, but do you think a company that builds and rehabs cottage-style homes has the chops to develop $150 Million of office, retail, and residential? I'm guessing they will quickly be over their skis and begging the city for even more help... This project should occur organically and be developed by those that can handle the size and scope of something like this as several other posters have mentioned.

                                2. It amazes me how people with apparently zero knowledge of free markets or capitalism feel the need to read and post on a business journal website. Perhaps the Daily Worker would suit your interests better. It's definitely more sympathetic to your pro government theft views. It's too bad the Star is so awful as I'm sure you would find a much better home there.

                                3. In other cities, expensive new construction projects are announced by real estate developers. In Carmel, they are announced by the local mayor. I am so, so glad I don't live in Carmel's taxbase--did you see that Carmel, a small Midwest suburb, has $500 million in debt?? That's unreal! The mayor thinks he's playing with Lego sets and Monopoly money here! Let these projects develop organically without government/taxpayer backing! Also, from a design standpoint, the whole town of Carmel looks comical. Grand, French-style buildings and promenades, sitting next to tire yards. Who do you guys think you are? Just my POV as a recent transplant to Indy.

                                4. GeorgeP, you mention "necessities". Where in the announcement did it say anything about basic essentials like groceries? None of the plans and "vision" have basic essentials listed and nothing has been built. Traffic WILL be a nightmare. There is no east/west road capacity. GeorgeP, you also post on www.carmelchatter.com and your posts have repeatedly been proven wrong. You seem to have a fair amount of inside knowledge. Do you work on the third floor of Carmel City Hal?

                                5. I don't know about the commuter buses...but it's a huge joke to see these IndyGo buses with just one or two passengers. Absolutely a disgusting waste of TAXPAYER money. Get some cojones and stop funding them. These (all of them) council members work for you. FIRE THEM!

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