Prosecutors: Durham, accomplices deserve life sentences

Back to TopCommentsE-mailPrintBookmark and Share

Portraying convicted Ponzi schemer Tim Durham as one of "the greediest, most selfish and remorseless of criminals," federal prosecutors re-emphasized Monday that they think the former Indianapolis businessman should spend the rest of his life in prison.

And they stressed that Durham's two convicted accomplices deserve the same fate.

Durham, set to be sentenced Friday on fraud charges related to the collapse of Fair Finance Co., asked in a Monday court filing that he be given a five-year sentence that would include three years in prison followed by two years of home confinement. The requested punishment was far more lenient than the 225-year sentence recommended by prosecutors in an Oct. 31 presentencing report.

A grand jury in March 2011 indicted Durham, business associate James Cochran and former Fair Finance Chief Financial Officer Rick Snow on charges of wire fraud, securities fraud and conspiracy to commit wire and securities fraud.

In June, jurors convicted Durham on all charges, Cochran on eight of 12 felony charges, and Snow on five of 12 charges.

Prosecutors said in Monday's filing that  they considered their felonies to be "as serious as any financial fraud crime ever committed."

Though Durham's two associates weren’t convicted on all counts, prosecutors said sentencing recommendations of 145 years in prison for Cochran and 85 years for Snow are warranted.

“Even taking into account Durham’s incredible greed and disdain for investors, he could not have committed this crime by himself,” U.S. Department of Justice attorney Henry P. Van Dyck said in court documents. “Cochran and Snow were his right and left hand, each playing a role that was absolutely essential to the success of the scheme.”

Prosecutors say that after Durham and Cochran bought Fair Finance in 2002, they raided its coffers to fund their lavish lifestyles and to cover losses at failing businesses they owned.

The huge withdrawals—which were recorded as loans but were not repaid—left Fair without the means to repay 5,000 Ohio residents who purchased more than $200 million of the company’s unsecured investment certificates, according to the grand jury indictment.

The presentencing report asking that Durham be sentenced to 225 years in prison also calls for him to pay $209 million in restitution.

In lobbying for the stiff sentences, prosecutors argue in their court filings that at least $208 million in investor money had been squandered, while only about $6 million has been collected from Fair’s debtors, with almost no prospect for more recoveries.

But in the Monday filing asking for the five-year sentence, Durham attorney John Tompkins called the 225-year recommendation “absurd” and said the presentencing report “is heavily influenced by an erroneous loss calculation under the advisory guidelines.”

“There is no need to incapacitate Mr. Durham beyond [five years] to prevent him from committing further crimes, given his extraordinarily low risk of recidivism, or to deter others from similar conduct,” the filing said.

Prosecutors, though, countered by arguing that Durham fails to "show a hint of remorse for his misconduct, only the same arrogant, narcissistic behavior that led to it."

And they maintain that a lengthy prison sentence indeed will deter other executives from committing similar crimes.

Judges have final say on sentences but typically rely on presentencing reports, which are prepared by federal probation employees.

“Any sentence other than life imprisonment would incentivize others to commit the financial crimes, and the aggravating factors surrounding their conduct justifies the strongest possible deterrent message—the maximum sentence,” Van Dyck wrote.

Unlike the five-year sentence Durham’s lawyer recommends, attorneys for Cochran and Snow do not state in court filings what an appropriate prison term might be for their clients. They only argue that the recommended sentences are too lengthy and not appropriate given their limited roles in the scheme.

Snow’s attorney, Jeffrey A. Baldwin, argued in a filing that his client is remorseful for his involvement and, unlike Durham and Cochran, did not profit from the fraud beyond the salary he earned from his CFO’s job.

“He cannot be said to have been motivated to participate in the scheme for financial gain, unlike Durham and Cochran,” Baldwin wrote. “His very limited participation appears to have been motivated by following directions of his superior and prolonging the life of Fair Finance.”

Prosecutors don't buy that argument. They say Snow was more than “Durham’s pawn” and worked with him to create fraudulent and misleading financial statements that concealed the true nature of the fraud to investors and the state of Ohio.

Because Snow was an accountant steeped in the nuances of both Fair Finance and Durham’s finances, he perhaps knew better than anyone how terrible Fair’s financial condition truly was, according to court documents.

Prosecutors, however, reserved some of their harshest criticism for Cochran, maintaining that his “what’s-in-it-for-me” attitude consumed much of his relationship with Durham.

“While he was talking investors into keeping their money at Fair as it was collapsing, he was simultaneously whining to Durham and Elizabeth McClure, a bookkeeper, that he needed more money to meet his exorbitant personal expenses,” Van Dyck wrote.

Further, “Cochran’s self-pitying complaint about whether he could buy McDonald’s for his kids after taking $10 million in loans and racking up $50,000 per month in expenses is reflective of why he should receive a lengthy sentence as any single piece of evidence in this case.”

Durham and Cochran bought Akron, Ohio-based Fair Finance in a 2002 leveraged buyout. According to court documents, Durham drained tens of millions from the company by making loans to himself and failing businesses he owned. Millions also went to Durham’s mansions, a yacht, part ownership of an airplane and extravagant trips.

But Tompkins said Monday that Durham never intentionally defrauded the investors, and that actual losses they suffered were brought on by the recession as much as Durham’s actions.

For all of IBJ's coverage of Fair Finance and Durham, click here.


  • Do The Math
    I have seen a shoplifter get a 10 year sentence for pilfering a $25 item. Extracting $200 Million Dollars from investors and spending that enormous sum on rich and famous lifestyles should cry out for a much stiffer sentence. Just do the math. The judge knows the entire country, if not the world, will be looking on.
  • Injustice
    Life in prison is a bit extreme when a child rapist only gets 15 years. Both are terrible crimes but something is definately screwed up in the justice system when money is more valuable than a childs life.
  • Laughing!
    Can't believe I didn't get charged! America is GREAT!!! Time to treat Scottyboy to a beer and find us some new friends to buy 5,000 copies of the next worthless book so we can reannoint him as a best selling author!
  • 2 Years Behind a Garbage Truck
    If they only get two years home confinment, then they should at least get those two years working behind a garbage truck--especially in the heat of the summer so they can experience the lives of the real people they stole from. Nothing will make a person more humble.

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. It is nice and all that the developer grew up here and lives here, but do you think a company that builds and rehabs cottage-style homes has the chops to develop $150 Million of office, retail, and residential? I'm guessing they will quickly be over their skis and begging the city for even more help... This project should occur organically and be developed by those that can handle the size and scope of something like this as several other posters have mentioned.

  2. It amazes me how people with apparently zero knowledge of free markets or capitalism feel the need to read and post on a business journal website. Perhaps the Daily Worker would suit your interests better. It's definitely more sympathetic to your pro government theft views. It's too bad the Star is so awful as I'm sure you would find a much better home there.

  3. In other cities, expensive new construction projects are announced by real estate developers. In Carmel, they are announced by the local mayor. I am so, so glad I don't live in Carmel's taxbase--did you see that Carmel, a small Midwest suburb, has $500 million in debt?? That's unreal! The mayor thinks he's playing with Lego sets and Monopoly money here! Let these projects develop organically without government/taxpayer backing! Also, from a design standpoint, the whole town of Carmel looks comical. Grand, French-style buildings and promenades, sitting next to tire yards. Who do you guys think you are? Just my POV as a recent transplant to Indy.

  4. GeorgeP, you mention "necessities". Where in the announcement did it say anything about basic essentials like groceries? None of the plans and "vision" have basic essentials listed and nothing has been built. Traffic WILL be a nightmare. There is no east/west road capacity. GeorgeP, you also post on www.carmelchatter.com and your posts have repeatedly been proven wrong. You seem to have a fair amount of inside knowledge. Do you work on the third floor of Carmel City Hal?

  5. I don't know about the commuter buses...but it's a huge joke to see these IndyGo buses with just one or two passengers. Absolutely a disgusting waste of TAXPAYER money. Get some cojones and stop funding them. These (all of them) council members work for you. FIRE THEM!