Ohio securities regulators have asked for a mountain of additional information from Tim Durham’s Fair Finance Co. that they say they would have to evaluate before deciding whether to allow the company to resume the sale of investment certificates.

In a sharply worded letter sent to the company’s attorney late Thursday, the Ohio Department of Commerce’s Division of Securities called the hundreds of pages of paperwork the company submitted Nov. 24 “incomplete and inadequate.”

Fair provided the documents just hours before FBI agents that afternoon executed search warrants and seized Fair-related records at Durham’s Indianapolis office and at Fair’s headquarters in Akron, Ohio.

The company’s prior registration, granted in July 2008, expired that same afternoon, forcing it to suspend sales of investment certificates. Fair on Oct. 29 first sought the new registration, which would allow it to sell $250 million in additional investment certificates, but the Division of Securities responded that “the offering is impossible to review without further documentation.”

In a late October investigative story, IBJ questioned whether Fair, which purchases customer-finance contracts from retailers and other firms, had the financial wherewithal to repay the more than $200 million it owes purchasers of existing investment certificates. The company sold the certificates—which range from six months to two years and carry interest rates substantially higher than CDs—only to Ohio residents.

The IBJ story reported that, since Durham bought Fair Finance from Donald Fair in 2002, he had used it almost like a personal bank to fund a range of business interests, some of them unsuccessful. The story noted that he and related parties owed Fair more than $168 million.

Many of the concerns raised in Thursday’s six-page letter, written by the division’s Mark Heuerman, involve the processes the company used to approve, document and assess the risks associated with related-party loans.

For example, Heuerman wrote, “The Chief Executive Officer, Tim Durham, appears to have unfettered discretion to amend a loan to Fair and related parties without involvement or approval by other parties, officers, directors or employees of the affected entities party to the loan.”

Other issues raised by Heuerman:

— “In many instances, [Fair] amended loans to increase the amount available despite a deteriorating financial condition, and without performing additional due diligence.”

— Fair “may engage in high-risk loans where substantial uncertainty exists as to the ability of the borrower to repay principal.”

Heuerman also noted that consolidated financials for Fair and its parent, Fair Holdings Inc., showed only $5.3 million in net worth, compared with liabilities of $238 million. He noted that Fair’s “computations narrowly define debt,” and that a broader definition would yield even less favorable figures.

In addition, Heuerman noted that under the Ohio Securities Act, his office may deny registration for offerings in cases where the issuer does not require repayment of related-party loans within six months.

The proposed offering includes no such stipulation but does attempt to address concerns about the size of the loans, which have ballooned in recent years. Fair said related parties “will begin making regular interest payments as the economy continues to improve and the underlying businesses return to normal operating levels.”

Ronald Kaffen, a securities attorney representing Fair, was not immediately available for comment this morning.

Fair has not reopened since the afternoon of the FBI raids, but John Tompkins, an attorney for Durham, said earlier this week that the business hoped to do so on Monday.

The U.S. Attorney’s Office said in court papers late last month that it suspects Fair was operating as a Ponzi scheme, relying on the inflow of funds from new investors to pay off the old ones.

The Securities and Exchange Commission also is investigating. It recently subpoenaed documents form CLST Holdings Inc., a Texas firm where Durham serves as chairman. CLST, which had been a cell-phone distributor before selling off those operations in recent years, purchased customer-finance contracts from Fair early this year, a time when the Akron firm was strained for cash. A CLST director quit the board to protest the deal.

The Division of Securities has asked Fair to provide the new round of documents by Dec. 11.