IBJNews

Durham-backed firm to halt trading, dissolve

Back to TopCommentsE-mailPrintBookmark and Share

CLST Holdings Inc., a Dallas-based public firm of which embattled local businessman Tim Durham is chairman and a major shareholder, announced Tuesday afternoon that it will cease trading on Feb. 26 and dissolve.

The company—which was known as CellStar and distributed cell phones before selling off those operations three years ago—has struggled, and its shares trade for a mere 9 cents apiece. It’s not clear what, if any, money will be available to distribute to stockholders.

Durham won election to CLST’s board soon after the asset sales, in part by pledging to dissolve the company quickly and give shareholders remaining cash. But about a year ago, CLST reversed course and began buying consumer finance contracts, including millions of dollars from Fair Finance Co., an Akron, Ohio, firm that Durham leads and co-owns.

That insider transaction outraged CLST board member Manoj Rajegowda, who resigned in protest. A letter that Rajegowda's attorney sent the company said he "was not informed of this transaction and most strenuously objects to it."

The purchase also dragged CLST into the ongoing federal probe of Fair Finance. FBI agents on Nov. 24 raided Fair’s office, and the same day the U.S. Attorney’s Office filed court papers alleging Durham was operating it as a Ponzi scheme.

The following week, CLST acknowledged that the U.S. Securities and Exchange Commission was investigating financial dealings between it and Fair, and said the agency had subpoenaed a mountain of information.

Fair raised capital by selling investment certificates to Ohio residents. IBJ reported in October that Durham had used the business almost like a personal bank since buying it in 2002. The story said that he, his associates and related firms rang up more than $168 million in insider loans—debt that might imperil Fair’s ability to repay the Ohio investors, who are owed more than $200 million.

In Tuesday’s statement, CLST said, “The company’s plan of dissolution contemplates an orderly wind-down of its business and operations, the satisfaction of or provision for its liabilities, and the distribution of any net assets to stockholders. The timing of any distributions to stockholders cannot be determined.”

CLST, whose shares trade thinly on the "pink sheets," attracted several other Indianapolis investors in recent years, including Jim Cochran, co-owner of Fair Finance, and Carl Brizzi, Marion County’s prosecutor.



 

ADVERTISEMENT

  • NOL's
    Funny to think Durham would be interested in the NOL's. He would need profits for that!
  • the truth
    Long after the money had been spent on receivables from Fair Finance and related parties, Cellstar announced:

    "Contractual Obligations. Included in accounts payable at August 31, 2009, is approximately $14.2 million associated with liabilities which accrued in periods 2002 and earlier, and which has been in dispute since 2001. The Company now believes that the statute of limitations on this trade payable may have expired."

    www.fairfinanceinvestors.com
  • re
    this is what the friends and extended mooch groupies of Durhams can look forward to:

    http://www.bloomberg.com/apps/news?pid=20601127&sid=aLDECLs9aWCQ
  • spelling
    A lot of us really appreciate it.
  • Great Work Greg!!
    Thanks Greg for staying on top of this story.A lot us really appreciate it.
  • re
    The NOLs were not what Tim was interested in. You'll find out very soon when either Greg Andrews breaks the story or the feds announce charges.
  • Tax benefits?
    Just one persons thoughts: Maybe he wanted to use the NOL's for tax benefits. Does anybody out there know more about the benefits of using NOL's to offset tax's.
    • Hope the US Attorney is reading this
      if so, please put an immediate injunction against the CLST Bank Account, I believe the main account is at Texas Commerce Bank, to prevent any distributions of cash to Tim Durham.

      Don't give us any more of that "you believe he isn't going to dissipate assets!" Jeez Louise! When his partner is selling the potted plants that means they are desperate for cash. Don't let him rob this last $5M from CLST.

    Post a comment to this story

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
     
    Subscribe to IBJ
    ADVERTISEMENT