Attorneys for Tim Durham’s Fair Finance Co. on Wednesday filed court papers saying they don’t object to putting the Akron, Ohio-based company under the control of a receiver.
Attorneys representing Ohio investors in a class-action lawsuit had sought the receivership last week, a move aimed at ensuring money doesn’t disappear while federal securities fraud investigations continue.
In Wednesday’s filing, attorneys with the Indianapolis office of Taft Stettinius & Hollister representing Fair and its parent—a holding company owned by Durham and fellow Indianapolis businessman Jim Cochran—denied any fraud occurred but said putting both firms into receivership nonetheless made sense.
“It is in the best interests of Fair, [its investors] and other creditors that some order and structure replace the wild speculation and reckless accusations that have permeated the environment since Fair’s offices were raided in late November,” Wednesday’s filing said.
Fair has been shut down since the FBI raided its offices Nov. 24. The raid came a month after IBJ reported that Durham and Cochran had used Fair almost like a personal bank since buying it in 2002. The story said the pair, their associates and related firms rung up more than $168 million in insider loans—debt that might imperil Fair’s ability to repay Ohio investors who purchased more than $200 million of the company's investment certificates.
The motion seeking receivership was filed in an Ohio court by David P. Meyer & Associates, a Columbus law firm that filed a class action lawsuit on behalf of investors in December.
On Monday, Ohio bankruptcy attorney David Mucklow filed an involuntary Chapter 7 bankruptcy against Fair, a different strategy aimed at marshaling the company’s assets. Fair’s attorneys have not responded to that filing, though they would be unlikely to favor putting assets under the control of two different courts.
Wednesday’s six-page filing takes aim at the FBI, the news media and Internet message posters, alleging they unfairly damaged Fair’s reputation and knocking it out of business.
“Until … FBI agents stormed Fair’s home office in Akron and seized the computers and business records that it must have in order to operate, Fair had never missed a scheduled interest payment to any of its investment certificate holders. If not for the FBI’s surprise raid and the seizure of the tools Fair needs to do business, the company would likely be making timely payments to its certificate holders today,” the filing said.
“For the past 11 weeks since its offices were raided, Fair, its officers and its affiliates have been subjected to withering—and false—attacks from the media, from Internet commentators, from politicians, and from understandably confused and upset certificate holders.”
Attorney David Meyer of David P. Meyer & Associates could not be reached for comment Thursday morning.