Durham’s appeal hangs on tossing damaging wiretaps

Attorneys for Tim Durham and his two co-defendants argue in a new brief that their criminal convictions last year turned on wiretapped conversations the jury never should have heard.

The attorneys on Sept. 9 filed a 92-page brief at the U.S. Court of Appeals in Chicago seeking to overturn convictions that led to a 50-year prison sentence for Durham, the Indianapolis businessman prosecutors say was the mastermind behind a $200 million Ponzi scheme at Akron, Ohio-based Fair Finance Co.

Joining in the appeal at the U.S. Court of Appeals in Chicago were Fair co-owner Jim Cochran, who received a 25-year sentence, and Fair Chief Financial Officer Rick Snow, who received 10 years.

Attorneys for the trio cast their clients’ convictions on a total of 25 felony counts and the severity of their sentences as the result of a string of legal missteps, including bungled jury instructions, a flawed sentencing process, and giving investigators the right to conduct wiretaps without first demonstrating that “ordinary investigative techniques failed or were unlikely to succeed.”

The attorneys also fault Judge Jane Magnus-Stinson for not calling a mistrial when prosecutors during closing statements took “unfair advantage” of an inadvertent misstatement by Cochran’s public defender, William Hazey.

Hazey, who is not involved in the appeal, said in court he believed a “scheme to defraud” had occurred, something he later said he had not meant. The appeals brief argues that prosecutors twisted that “obvious misstatement” into a “critical concession.”

“To a jury starved for something it could understand, the prosecutor’s endorsement of Dazey’s misstatement must have seemed a comprehensible proposition with which it could too easily agree,” attorneys for the defendants said in their brief.

Durham Durham

“It gave the jury the mistaken impression that a defendant—one of only three people who really knew what had happened between Snow, Durham and Cochran—had admitted the core element of the case for all three.”

But most of the brief focuses on the wiretaps, which captured Durham and Cochran in a panicked quest to keep Fair Finance afloat and raise more money from investors in the weeks before the FBI raided its offices in November 2009.

More than 5,000 Ohio residents purchased unsecured investment certificates from Fair touting interest rates as high as 9 percent. Prosecutors say Durham used that money to finance a lavish lifestyle and to prop up other failing businesses he owned.

On the wiretaps, Durham discussed recasting Fair’s financial statements in ways that might sway Ohio securities regulators to give the green light to sell additional certificates. One approach, Durham said, would make $28 million in bad loans “just vanish.”

“Given the central role of this erroneously admitted evidence to the government’s case at trial, the defendants’ convictions must be vacated and the case remanded for a new trial,” according to the brief.

Durham has a heavyweight attorney in his corner, James Mutchnik of the elite Chicago law firm Kirkland & Ellis. In a surprise move, Mutchnik last year agreed to represent the now-destitute businessman pro bono. Representing Cochran is Michele Jacobs of Biskupic & Jacobs in Mequon, Wis. Snow, who’s represented by Jeffrey Baldwin of Voyles Zahn & Paul, is the only defendant using the attorney who represented him at trial.

Regardless of the legal firepower, winning a reversal from the Court of Appeals would be a tall order, said Bob Hammerle, an Indianapolis criminal defense attorney not involved in the case. He said that’s especially true given that Judge Stinson is well-regarded, and that a seasoned team, led by Assistant U.S. Attorney Winfield Ong, handled the prosecution.

“You knew they were going to argue everything they can,” Hammerle said of the attorneys for Durham, Cochran and Snow. “But that is a very high peak they are trying to climb.”

Ong declined to comment on the defendants’ brief. He and fellow prosecutors are scheduled to file their response next month.

Durham, Cochran and Snow will remain in prison while the appeal plays out. Durham, 51, is at the federal penitentiary in McCreary, Ky. Cochran, 57, is in Greenville, Ill., and Snow, 49, is in Pekin, Ill.•

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}