In the 1990s, no one in Indianapolis flaunted his wealth more than Steve Hilbert, who was riding high as CEO of Conseco Inc. This decade, that distinction goes to Tim Durham, who lives in a 30,000-square-foot Geist mansion and has declared he wants to be as rich as Warren Buffett.
In a CNBC special last year titled "Untold Wealth: The Rise of the Super Rich," Durham said he owned about 70 cars and once spent $22,000 on an auto repair.
But a recent spate of lawsuits, filed by a who's who of Indianapolis businessmen, exposes cracks in his veneer of opulence.
Investors in Obsidian Enterprises, Durham's Indianapolis-based leveraged buyout firm, charge in five Hamilton County lawsuits filed in January that he defaulted on promissory notes and now owes them a total of more than $208,000.
Court records show he signed the agreements in June 2008 and made the first required payments Sept. 30 but missed the payments scheduled for Dec. 31. Another payment was scheduled for March 31.
• Robert Kaspar, managing principal of the wealth-management firm Windsor Group and chairman of the Indianapolis Symphony Orchestra board;
• Larry Greenwalt and Tom Sponsel, principals of the CPA firm Greenwalt Sponsel & Co.;
• Michael K. Miles of Miles Capital Advisors LLC;
• Brian Williams of the venture capital firm Hopewell Ventures;
• Williams' father, Jerry Williams, who is of counsel to the law firm Taft Stettinius & Hollister and is a former executive of the auto auction firm Adesa.
Durham, 46, did not return phone calls. The plaintiffs either declined to comment or did not return calls.
Michael Alerding, attorney for all the plaintiffs, said, "I am not at liberty to discuss anything more, but we do expect this to be resolved amicably."
The plaintiffs are initial investors in Obsidian, which launched with high hopes in 2000 but has had a bumpy run. The firm—which owns manufacturers of recreational trailers and firms that lease luxury buses and reclaim butyl rubber—was a public company from 2001 to 2006, a span in which the company piled up tens of millions of dollars in losses and the stock fell from $12 to $1.85.
Durham signed the promissory notes as part of agreements intended to sever ties between the investors and the company.
Durham would seem to have plenty of financial cushion to weather setbacks. Early this decade, he made a bold bet on Brightpoint Inc. stock when it appeared the wireless-phone distributor was on the verge of financial collapse—a move he figures yielded a profit of more than $30 million when the company sprang back.
He also has had other business successes. In the 1990s, he served as a top executive of Carpenter Industries, the Indiana-based maker of school buses then owned by his mentor, Indianapolis businessman Beurt SerVaas. Durham used to be married to SerVaas' daughter Joan.
But it can't be easy running a leveraged buyout firm during the worst economic crisis since the Great Depression.
Making matters worse: Another of his high-profile investments has tanked of late. Shares of Los Angeles-based National Lampoon now fetch a mere 15 cents apiece. Durham has been serving as CEO of the entertainment company since December, when a grand jury indicted the former top executive, Dan Laikin, on charges he participated in a scheme to manipulate the company's stock.
Vontoo raises $2 million
Voice-messaging startup Vontoo Inc. has overcome brutal financing markets to raise $2 million, giving the northeastside company the firepower to double its employment this year, from 25 to 50.
Chairman Bob Compton said the company raised the money over about 2-1/2 months—longer than he thought it would take.
"This is the worst financing environment I have seen in my life, and maybe the worst financing environment ever for startups," Compton said.
The company provides permission-based voice messages—a concept similar to the permission-based e-mail services offered by locally based Exact Target Inc., where Compton also is chairman.
One of the new investors is Gregg Throgmartin, HHGregg Inc.'s senior vice president of sales, who signed on after the electronics-and-appliance chain used Vontoo for marketing and had a good experience.
Vontoo now has raised about $5 million since its founding four years ago. The lead investor this time around was EDF Ventures of Ann Arbor, Mich. About 15 wealthy individuals also put in money; most had invested previously.
Compton said Vontoo is poised to do well during the recession because voice messages are a more cost-effective way for cash-strapped companies to reach prospects than direct mail.