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Legal fees nearing $9M in Fair Finance bankruptcy

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The trustee in the Fair Finance bankruptcy case and his law firm have run up legal bills approaching $9 million, nearly double the recoveries they've achieved to date for investors victimized by convicted fraudster Tim Durham.

Cleveland-based Baker & Hostetler is seeking $7.7 million for work and expenses from Jan. 1, 2011, through Aug. 31, 2012, and the firm says it is owed another $1.04 million specifically for the work of trustee Brian Bash, a Baker & Hostetler partner, the Akron Beacon Journal reported.

Bash since early 2010 has been trying to recover funds for investors of Ohio-based Fair Finance, which was led by Indianapolis financier Durham until his business empire collapsed in late 2009.

Bash so far has recovered just $5 million, despite default judgments of $44 million. He has filed dozens of civil lawsuits seeking about $1 billion in total. More than 5,000 creditors, mostly elderly Ohio investors, are owed more than $200 million.

Since recoveries fall short of Baker & Hostetler's tab, the law firm said it is requesting an “interim payment of an amount the court deems appropriate in its discretion” with other amounts to be paid later, the Beacon Journal reported. The firm is billing at rates ranging from $150 per hour to $825 per hour.

Bankruptcy Judge Marilyn Shea-Stonum will consider the request next month in U.S. Bankruptcy Court in Akron.

Shea-Stonum has urged Bash to look into making an interim distribution of recovered funds to Fair investors. Earlier this year she rejected a proposal from Bash that his firm be compensated based on a percentage of recovery. Based on the proposal, the firm could have collected more than $32 million if it recovers $200 million.

The judge called the proposal "troubling."

A federal jury in Indianapolis in June returned a guilty verdict on all 12 federal felony fraud counts for Durham, on eight of 12 counts for Fair co-owner James Cochran, and five of 12 counts for Rick Snow, the company’s chief financial officer. The trio are set to be sentenced Nov. 30.

The government had accused the men of running Fair Finance as a Ponzi scheme that stole more than $200 million from 5,000 Ohio investors who purchased investment certificates from the consumer-loan company.

Bash has more than 120 lawsuits still pending that seek to recover investor funds.

Durham and Cochran bought Fair Finance from Donald Fair in 2002.

More IBJ coverage about Durham and Fair Finance can be found here.

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  • Justice?
    Much of the law & legal system has been created to make $$ for lawyers and give a cushy job to pols who have become judges.
  • Laughing All the Way to the Bank
    You know, the only people who come out ahead in a bankruptcy are the attorney's and every one of them are laughing on their way to the bank!
  • Glad to see this article has the keyword "fraud"
    A rate of $825 an hour, huh? That seems completely unethical. The majority of Americans don't bring that much home in a whole week. What a shameful example of lawyering. I truly hope the bankruptcy judge slaps them down for this.
  • Wow
    This case just seems to attract more con men all the time...
  • Bash
    BttB90....you are right but short on the real description of these vultures. Since I am a civil guy, I won't use words like gutless, unethical and oh yeah..%#%*W*$*

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