Feds go after Fair Finance CFO, despite murkier motive

Back to TopCommentsE-mailPrintBookmark and Share
Greg Andrews

It is easy to see how prosecutors would attempt to vilify Fair Finance Co. co-owners Tim Durham and Jim Cochran if their fraud case against the pair advances to trial.

Both burned through millions of dollars provided by mom-and-pop Ohio investors—in part to fund lavish lifestyles. One of the more egregious examples listed in the March 15 felony indictment: In early 2008, when Fair’s finances were dire, Durham pulled out $150,000 for gambling.

In contrast, Fair’s chief financial officer, Rick Snow, the third man indicted in what prosecutors call the largest corporate fraud in Indiana history, isn’t accused of tapping Fair for a bevy of loans, then failing to repay the money.

When Snow moved to Indianapolis years ago, he received a swing loan to buy his house, but promptly repaid the money when his prior residence sold, said Tom Farlow, his attorney.

Farlow said Snow didn’t receive other loans and is guilty of nothing.

“He was an employee of the company, he did his job, and he did it well and correctly,” he said.

Tim Morrison, first assistant U.S. attorney, would not comment on the case against Snow, a certified public accountant who served as Fair’s CFO from 2002 until the company shut down in November 2009.

“The evidence will come in when it comes in,” Morrison said.

If Snow wasn’t awash in loans, what motive would he have to help orchestrate a fraud? Perhaps to continue receiving rich compensation, suggested Joe Esmont, an attorney for the trustee in Fair Finance’s bankruptcy liquidation.

In 2008, Snow earned $202,039 for serving as Fair’s CFO and another $111,240 for serving as CFO of Fair’s parent company, Fair Holdings Inc. He also may have received compensation for serving as CFO of two other companies Durham led—Indianapolis-based Obsidian Enterprises Inc. and Los Angeles-based National Lampoon Inc.

Farlow said: “His income was commensurate with others in the industry serving in those roles. It was not out of line.”

The 23-page indictment alleges that Durham, 48, and Cochran, 55, worked with Snow, 47, to devise and execute a scheme to defraud investors in Akron, Ohio-based Fair.

Authorities say company executives doled out related-party loans with abandon, leaving Fair unable to repay Ohio residents who purchased unsecured investment certificates. More than 5,200 investors are owed more than $230 million.

When an accounting firm in 2005 insisted that the related party loans were not arm’s-length transactions and had insufficient collateral, Durham, Cochran and Snow fired the firm, the indictment alleges.

The indictment indicates company officials in November 2009 were desperately trying to win approval from the Ohio Division of Securities to sell additional investment certificates.

On Nov. 13, 11 days before FBI agents raided Fair’s offices, “Durham and Snow had a telephone conversation in which they planned to ‘wipe off’ millions of dollars in bad debts so that they would not have to explain or justify the debts to the Division of Securities,” the indictment says.

A grand jury indicted Durham, Cochran and Snow on 10 counts of wire fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud and securities fraud.

Each faces a maximum of 20 years in prison for each wire fraud count, 20 years in prison for the securities fraud count, and five years in prison for the conspiracy charge.

Big names behind Allison

The last Indiana company to launch an initial public offering—West Lafayette-based Endocyte Inc.—had to cut the offering price repeatedly to line up buyers.

Don’t expect a similarly bumpy experience for Speedway-based Allison Transmission Holdings Inc., which filed this month for a $750 million IPO.

Endocyte, which went public in February, suffered from not having a heavyweight underwriter, said David Menlow, president of IPOfinancial.com in Millburn, N.J. Handling the deal was Toronto’s RBC Capital Markets.

Allison couldn’t dream of more lustrous underwriters for its offering. They’re the biggest names on Wall Street: Merrill Lynch, Credit Suisse, Citi, Morgan Stanley, J.P. Morgan and Goldman Sachs.

Allison, which reported 2010 sales of $1.9 billion, has spent the past couple of years getting its financial house in order. It lost $300 million over two years before reporting a $29.6 million profit in 2010.

General Motors spun off Allison in 2007 to private-equity owners Carlyle Group and Onex. Allison expects that its two “sponsors” will continue to control a majority of voting rights after the IPO.•


  • Re
    I don't know, ask him yourself. He and his wife started KyLex holdings and a Fuzziwigs candy franchise with startup cost of approximately $340k. He has the one at Hamilton Town Center Mall in Noblesville.

  • very intersting....more please!
    didn't know anything about your comments concerning Snow and where he came from prior to Durham's Looting Crew....tell some more....it's very interesting!
  • Why is right
    Not sure why anyone does what they do these days but you can see from the trustee reports that Snow was complicit in several entities with Durham. Why? Perhaps compensation....does anyone remember if Snow was involved in the "investment groups" that timely bought CLST and Brightpoint? One thing that everyone has missed is Grant Thornton is where Snow came from and it was Grant Thornton as Cellstar's auditor that caught the money moved off balance sheet due Verizon that ultimately was directed to Fair that caused Tim's reign of looting to come to an end.

    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. why oh why does this state continue to elect these people....do you wonder how much was graft out of the 3.8 billion?

    2. i too think this is a great idea. I think the vision and need is there as well. But also agree with Wendy that there may be better location in our city to fulfill this vision and help grow the sports of hockey and figure skating in Indy. Also to help further develop other parts of the city that seem often forgotten. Any of the other 6 townships out side of the three northernmost could benefit greatly from a facility and a vision like this. For a vision that sounds philanthropic, the location is appears more about the money. Would really like to see it elsewhere, but still wish the development the best of luck, as we can always use more ice in the city. As for the Ice growth when they return, if schedules can be coordinated with the Fuel, what could be better than to have high level hockey available to go see every weekend of the season? Good luck with the development and the return of the Ice.

    3. How many parking spaces do they have at Ironworks? Will residents have reserved spaces or will they have to troll for a space among the people that are there at Ruth Chris & Sangiovese?

    4. You do not get speeding ticket first time you speed and this is not first time Mr.Page has speed. One act should not define a man and this one act won't. He got off with a slap on the wrist. I agree with judge no person was injured by his actions. The state was robbed of money by paying too much rent for a building and that money could have been used for social services. The Page family maybe "generous" with their money but for most part all of it is dirty money that he obtained for sources that are not on the upright. Page is the kind of lawyer that gives lawyers a bad name. He paid off this judge like he has many other tine and walked away. Does he still have his license. I believe so. Hire him to get you confiscated drug money back. He will. It will cost you.

    5. I remain amazed at the level of expertise of the average Internet Television Executive. Obviously they have all the answers and know the business inside and out.