Fair Finance investors still empty-handed as trustee plows on

Back to TopCommentsE-mailPrintBookmark and Share
Greg Andrews

The results achieved by the army of attorneys trying to recover money for Fair Finance Co.’s investors look outstanding on paper: They’ve secured judgments totaling more than $48 million in 35 cases, in addition to the millions they’ve already collected through settlements.

But even Brian Bash, the trustee spearheading the recovery efforts, acknowledges, “Getting a judgment is one thing; collecting is another.”

Three years into the scorched-earth legal assault on former Fair CEO Tim Durham, other company insiders and Durham’s friends and business associates, the 5,000 Ohio investors who lost more than $200 million when the Ponzi-scheme-fueled company collapsed have yet to receive a penny. And it remains unclear when they’ll receive their first distribution.

Bash, a partner with the Baker Hostetler law firm in Cleveland, is careful not to make promises. “I’ve got to tell you, it is still too early to predict what we can do.”

Challenges abound. Perhaps the biggest: Many of the defendants pursued by Bash and his team have few, if any, assets. And those that do have the wherewithal to fight litigation for years.

Then there’s the reality that the lawyers and other professionals spearheading the asset-collection effort aren’t cheap. The biggest payouts so far—totaling $4.4 million—have gone to Baker Hostetler. After distributions to professionals, the trustee is holding about $5.9 million in cash.

Every week that goes by exacts pain on the Ohio investors who purchased unsecured investment certificates from Fair touting interest rates as high as 9 percent. Many are middle-class retirees who were counting on their Fair investments to help carry them through their final years.

Victim-impact statements submitted in November, just before Indianapolis federal Judge Jane Magnus-Stinson sentenced Durham to 50 years in prison, tell heartbreaking tales of hardship. Typical were Raymond and Ira Trover, a Beach City, Ohio, couple in their late 70s, who wrote, “We shut off our appliances and sit in the dark to save money.”

Bash knows investors are impatient.

“We try to respond sympathetically,” he said. “We understand what everyone is going through.”

Ohio bankruptcy Judge Marilyn Shea-Stonum is as antsy as anyone. She has rejected potentially lucrative contingency-fee arrangements proposed by the attorneys, and has insisted that investors eventually should get at least half of anything tracked down.

After Baker Hostetler filed to collect $7.4 million in fees covering work from the beginning of 2011 through August 2012, Shea-Stonum approved the $3.1 million in 2011 fees but said she would decide later what to grant for 2012.

“Claimants in the case can very reasonably ask, will this case be administered solely for the professionals?” Shea-Stonum said in a November hearing.

Three pending lawsuits might offer the greatest hope for big recoveries. One, against Fair’s deep-pocketed lenders, charges they turned a blind eye as Durham looted Fair—wrongdoing the lenders were shielded from because they held liens on the only company assets with real value.

Another case, against Dan Laikin, a Durham friend who formerly was CEO of National Lampoon Inc., could reap more than $5 million from the sale of two southern California homes, one formerly owned by Cher.

The third case targets National Lampoon. Bash alleges that Durham—a major investor in the Los Angeles company who followed Laikin as its CEO—funneled more than $9 million in Fair funds to the company over a decade.

The biggest settlement was with former Fair owner Don Fair, who was accused of keeping quiet about Durham’s fraud so as not to jeopardize millions of dollars in delayed payouts under a 2002 sale agreement.

But even that $3.5 million settlement drew a skeptical reaction from Shea-Stonum, given that the trustee originally had sought $150 million. She finally approved the deal in March, four months after Bash proposed it.

Durham writes to magistrate

In late March, Durham, 50, then an inmate at the Federal Transfer Center in Oklahoma City, wrote to an Indianapolis magistrate judge asking that a civil suit against him be put on hold while he awaits the outcome of his criminal appeal pending in Chicago.

The civil suit, filed by the Securities and Exchange Commission, includes allegations similar to those in a criminal indictment unsealed in March 2011.

A successful appeal could derail many of the allegations in the SEC suit, Durham wrote optimistically.

“The basis for the wiretaps and search warrants will be contested, which may result in the suppression of virtually all the evidence in the criminal case, which I assume would be much the same evidence to be used in the SEC case,” he wrote.

Magistrate Judge Tim Baker denied the request as unnecessary. A stay issued two years ago remains in effect, he noted. The SEC has asked it remain in place for another 90 days while it seeks to reach a settlement with Durham.•


  • surprised?
    Mr. Bash's firm is not a non-profit. It takes a lot of labor to do what he has to pursue the lost money. Be sure he isn't going to to this work at a loss either! The investors knew they could lose everything because these were not FDIC investments. These were high risk. High risk does not include stealing but the investors were greedy too. 9%? Really? They didn't want to know how it happened. They didn't care until the investigation broke. They were greedy and stupid too! Very Greedy! Very Stupid. A CD in a local bank wouldn't bear 9% interest. But it's FDIC. Idiots!
  • let them out?
    Are you insane? The fed with its warrant power and accounts can't find all that is missing. Do you think Durham will work at Target to pay off what he owes? He will disappear with what he has hidden in one of his buried accounts. Durham will disappear. You know there is hidden money because his family is still not working and still has not been foreclosed on by the banks!
  • RICO
    these guys only skill was to steal from other's hard earned savings.
  • Let him out
    While I understand the severity of their actions as well as everyones eagerness to hold them responsible for thier lost funds, these gentlemen did know how to make money. Dispite thier poor decisions over the ownership of Fair they had made several wise investments which paid them greatly. This proves they do have the potential to rebuild so they can repay. I do not feel they should live the life of luxuary but given an opportunity could they find ways of repaying the debts? They are doing nothing now but being a burden on tax payers. Just a thought!!!!!

    Post a comment to this story

    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

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
    Subscribe to IBJ
    1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

    2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

    3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

    4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

    5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............