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Feds say wiretaps show evidence of financial plot

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A federal judge in Indianapolis refused to throw out wiretap evidence in the $200 million fraud trial of a former Indiana businessman as the government outlined a case largely based on those recordings.

U.S. District Court Judge Jane Magnus-Stinson on Monday rejected arguments for the defense that the FBI had failed to show probable cause before obtaining permission for the wiretaps.

Transcripts of about a dozen of the wiretaps included in a brief filed Friday by the government show financier Tim Durham and his business partners discussing how to hide from investors that Fair Finance was running out of money in 2009, prosecutors said. Meanwhile the partners were raiding the company to finance their lavish lifestyles and unsuccessful businesses, prosecutors said.

Magnus-Stinson's rejection marked the second time in the past month that Durham's attorneys have come up short in getting the wiretap evidence thrown out.

In a phone conversation on Nov. 9, 2009, Durham and partner James F. Cochran agreed to close the Ohio offices of Fair Finance with no advance notice, using Veterans Day as an excuse. According to the government filing, they were really trying to conceal the fact that there wasn't enough money to pay customers when their investments came due.

"So we're going to buy a day," Cochran told Durham in a phone call, according to the transcripts. "And I told (a Fair Finance employee) ... make sure you don't tell customers in advance."

"Why?" Durham asked.

"He said 'cause they will run in on Tuesday," Cochran said.

"Oh yeah, good story," Durham said, according to the transcript.

In yet another recorded phone call, Durham recommended to another partner, Rick D. Snow, that they overwhelm an Ohio securities official with paperwork to get regulators to approve $250 million in investment certificates.

"My guess is the guy at the State of Ohio isn't a financial genius," Durham said, according to the transcript.

"Yeah, no, I think you're right," Snow said.

"And I think if we absorb, eh, you know, overwhelm him with stuff, that may be the better approach," Durham said. "What do you think?"

"Yeah, I don't know. I ..." Snow said.

"You know: lists and lists and lists of investments," Durham said, according to the transcript.

Durham's lawyer, John L. Tompkins, called the wiretap transcripts misleading in an interview with The Indianapolis Star on Monday. He said the FBI recorded more than 1,800 phone conversations but filed transcripts of only 19 conversations.

"We're confident that when people hear the full conversations, not just the government's excerpts of some of the conversations, it will be clear there is no conspiracy to commit any kind of fraud," Tompkins said.

"They know the filings that they make are going to be read by the press," Tompkins told The Associated Press on Tuesday. "And I think what they want to do is exactly what they did ... get four sentences ... on the front page of the newspaper."

Tompkins said he disagreed with the order rejecting the motion to suppress the wiretaps, but added, "I think the judge did a good, thorough job going through everything we presented."

Durham, Cochran and Snow, were indicted last year on 10 counts of wire fraud, one count of securities fraud and one count of conspiracy to commit wire and securities fraud. Their trial is scheduled for June 8.

Magnus-Stinson last month rejected Durham's request that she dismiss the charges against him because he said the wiretaps were illegal.

Attorneys for Cochran and Snow did not return phone calls seeking comment Tuesday.

All of IBJ's coverage of the Durham case can be found here.

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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