Fair Finance co-owner Cochran uses forceful defense

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Greg Andrews

Tim Durham is getting all the blame these days for the demise of Fair Finance Co., which owes mom- and-pop Ohio investors more than $200 million.

But at his side through this whole ugly mess was another Indianapolis businessman, Jim Cochran. The pair co-owned Akron, Ohio-based Fair. Durham was CEO and Cochran chairman.

It’s Durham who’s always been in the spotlight, in part because of his ostentatious lifestyle, replete with dozens of collector cars and one of the state’s grandest mansions. Cochran was comparatively low-key, though investigators in Fair’s bankruptcy say he also drained tens of millions of dollars from Fair, using some for personal expenses.

James Cochran Cochran

But in civil litigation accusing Fair insiders of fraud and conspiracy, Cochran is the outspoken one while Durham is cautious, invoking his Fifth Amendment right against self-incrimination while a criminal securities-fraud investigation continues. Durham, 48, says little beyond denying wrongdoing and asserting that the offering circulars provided to prospective investors outlined the risks.

Cochran, who’s ensnared in that same criminal investigation, lets it fly in response to allegations by Brian Bash, Fair’s bankruptcy trustee, that he and other insiders duped the investors, a largely blue-collar lot who purchased unsecured notes with interest rates as high as 9.5 percent.

Bash “utterly fails to identify even a single alleged misrepresentation made by Mr. Cochran,” Cochran’s attorneys said in a filing. Bash relies on “vague and conclusory allegations ... apparently adopting an alchemist’s strategy that repeating the word misrepresentation enough times will magically transform these allegations into a fraud claim.”

Bash counters in a court filing that he provided plenty of particulars to beat back Cochran’s motion to dismiss, especially given that the discovery process, which will unearth additional information, hasn’t begun.

Further, he said, “the transfers to Cochran numbered in the hundreds and totaled several hundred million dollars. There are hundreds of investors, all of whom were defrauded by Cochran and other defendants. Alleging the time, place and manner of each representation and transfer ... would be nearly impossible.”

The gist of the case, Bash said in the filing, is that Cochran “lied to investors about how their money would be invested and, instead, transferred this money to himself and other entities under his control.”

Until Durham and Cochran bought Fair in 2002, its main business had been purchasing finance contracts from retailers and other businesses that extended credit to their customers.

The pair stayed in that business, but also began using Fair like a personal bank. Records show they and other insiders recorded withdrawals as loans and now owe the bankrupt company more than $160 million. The records show money went to buy homes, art and cars and to support a range of businesses that failed.

Bash said in court filings that Fair generally didn’t even collect regular payments on the loans. And he cited internal e-mails in which employees of Durham’s and Cochran’s companies express alarm over the continued withdrawals at a time Fair was straining to meet its obligations to investors.

“Cash is sooo bad and I know I am killing you with this request!!! But—directly from the boss man—can you please wire today ... 46,000?” one e-mail read.

But attorneys for the 54-year-old Cochran scoff.

“After months of investigation and tens of thousands of dollars spent by the trustee for forensic accountants and lawyers, one would expect the trustee could identify at least one alleged fraudulent statement made by Mr. Cochran to ... investors,” a filing said. “Yet the trustee continues to fail to do so.”

Big loss for home loan bank

The Federal Home Loan Bank of Indianapolis reported a $12.9 million second-quarter loss after writing down the value of its mortgage securities in its investment portfolio by a whopping $62 million.

This isn’t the first time the home loan bank—whose primary business is to make advances to member banks, credit unions and insurance companies for home mortgages—has been singed by soured investments. In 2009, the bank recorded $60 million in losses on mortgage-backed securities (though it still mustered an overall profit of $121 million).

It isn’t the advances themselves that are haunting the institution, one of 12 U.S. home loan banks formed in 1932 to rescue the housing market following the Great Depression.

Those are fully collateralized by the members receiving them, shielding the bank from much of the risk. Instead, the losses stem from investments dragged down by the continuing weakness in the economy and housing market.•


  • ?
    something is noghtright in this picture I am shccked to bad is other friend got the best of him
  • Ponzi Rules
    Even with this indictment, they'll beat the rap somehow with all their money and connections. They'll laugh at all the chumps who gave them money as they sail away on their yachts.
    I don't see where the problem is proving cochran a fraud.I as an invester talked to him personally and he refused to give me any of my money.He is no man of the truth by no means.He will face the Lord soon enough.
  • 200 million
    These crooks are all the same. They always say there is no proof they did anything wrong! I believe there are 200 million things missing that proves they did something wrong.
    Show Us The Money!

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