Thursday, December 17, 2009

Media Want Durham Search Warrants Unsealed

I heard late this afternoon that the Indianapolis Star and the Akron Beacon-Journal have gone to court asking the government to unseal the search warrants issued on Tim Durham's Obsidian Enterprises and Fair Finance last month. Will update you when I learn more.

UPDATE: I've obtained a copy of the filing the Indianapolis Star and Akron Beacon-Journal filed in U.S. Magistrate Sarah Evans Barker's court in the Southern District of Indiana today. The suit highlights the fact that it's only been five months "after notorious investment scam artist Bernie Madoff was sentenced to 150 years in prison," and "hundreds of elderly investors in Akron, Ohio, are worried that they, too, might have fallen victim to a Ponzi scheme." The investigation of Tim Durham is "déjà vu all over again" to them according to the complaint. "For them, transparency in the investigation is the only salve, a transparency that has so far been elusive due to the government’s failure to file executed search warrants, failure to file affidavits in support of search warrants and failure to file other supporting documentation in connection with the search of Mr. Durham’s Indianapolis office at Chase Tower and his Akron, Ohio, offices of Fair Finance," it reads.

The newspapers' complaint accuses U.S. Attorney Tim Morrison's office of violating federal rules of criminal procedure. "Federal officials have told reporters for both Newspapers that search warrants were executed for the offices," the complaint says. "However, in violation of the Federal Rules of Crim.P. 41(i) and S.D. Ind. L.R. 5.3(c), they filed nothing," the complaint continues. "U.S. Attorney Timothy M. Morrison confirmed to Beacon Journal reporter Jim Mackinnon that Search Warrant Documents exist and are “sealed.” "He unlawfully declined to disclose the location of the court documents . . . " The complaint says that Morrison intends to keep the search warrant document sealed until charges or filed, or indefinitely if charges are never filed.

The complaint says that news stories about the Durham investigation have generated more public interest in Akron, Ohio than any story in recent memory, including at least twelve investors, and the Star has experienced considerable public interest as well. The complaint points out the intense interest in Indianapolis because of the nearly $1 million Durham and his businesses have contributed to local politicians. "His wealth, power and influence have caused Indiana citizens to question the integrity of their political leaders," the complaint reads. "Transparency in the investigation into Mr. Durham’s financial affairs can only serve to enhance the public’s faith in its government." "The sealing of such documents only serves to undermine the integrity of the judicial process and enhance the perception that Mr. Durham’s political connections will save him."

The complaint alleges that investors in Fair Finance will be potentially harmed if the search warrants are not opened to the public and only Durham benefits from keeping them sealed. "The innocent investors, some of whom may take legal action on their own to recover funds, have a right to the search warrant information that outweighs any right by Mr. Durham or others to keep his alleged misdeeds private," it says. "If the government believed that disclosure of the search warrant information would jeopardize an on-going investigation, it should have offered evidence of such disclosure publicly," the complaint states. "Given that it filed and withdrew a complaint to seize Mr. Durham’s property all within seven days, and that there is no current criminal or civil action pending, it is highly unlikely that the government would be able to meet its burden." "Indeed, absent any action by the government, Search Warrant Documents must be released to provide information to the innocent investors who now must undertake recovery on their own." "Keeping such information private only serves to protect Mr. Durham, if indeed wrongdoing occurred, and the government, if indeed it failed in its oversight duties."

The complaint notes that investors have been forced to sit by and wait since November 24 when Fair Finance's eight offices in Ohio closed, denying them access to their invested funds. "The release of any court documentation that sheds light on the whereabouts of hundreds of millions of dollars of investors’ money would be advantageous to those third parties, rather than harmful to them," the complaint reads.

The most important point made in the complaint is the government's alleged violation of the federal rules of criminal procedure. "First, all search warrant papers must be filed pursuant to Fed. Rule Criminal P. 41(i), as mentioned above. And in the highly rare, but not unprecedented, cases where the government is able to show that sealing is necessary to achieve a compelling governmental interest and that sealing is narrowly tailored to serve that interest, there must be a cover sheet publicly filed to document the sealed records, pursuant to S.D. Ind. L.R. 5.3(c)." "All court documents filed under seal must be publicly docketed, and those filed under seal must be documented so that anyone opposed to sealing may seek judicial review. ," the complaint continues. Local court rules also requires the government to include a cover sheet with a caption, the name of the document, the contact information of the person filing the document and a motion filed requesting that the document remain under seal. None of these requirements were met by U.S. Attorney Tim Morrison's Office according to the complaint.

The complaint concludes, "The overriding public interest in recovering millions of dollars in investments for thousands of investors, as well as the overriding public interest in the integrity of the political system in which one influential person may have destroyed thousands of retirement dreams, require that all documents issued in connection with Fair Finance and Timothy S. Durham be public." "No criminal or civil case is active." "The public has a right to know what the government searched for and what it found." "Withholding that information violates the Newspapers’ common law right to access judicial records, as well as their First Amendment rights." "For all these reasons, the Newspapers respectfully urge this Court to unseal any and all Search Warrant Documents issued in this case, and to order the government to file such records as required by Fed. Rule Crim. P. 41(i)."

Here's a story by Jim Mackinnon in the Akron-Beacon Journal about the lawsuit. Still nothing from the Star.


Paul K. Ogden said...

I believe those subpoenas are sealed as a matter of law while an action is pending.

This came up in a case I had where the AG's office published in a court filing what she represented as a federal grand jury subpoena in a case I had. I remember looking up the law - I believe disclosing such a subpoena is a felony.

Leesa said...


This is a great article that differentiates disclosing grand jury testimony from the actual subpoena.

Corruption in Indianapolis said...

I also heard today that IMPD was hit wednesday with a Federal Lawsuit from a former officer..should be interesting .corrupt IMPD plus a corrupt prosecutor!!! Welcome to indy Mr. Straub!!

Advance Indiana said...

See my update. The newspaper has a good point. There is no captioned matter on file with the Court that can be accessed by the public that included a request by the government that the search warrants be sealed, explaining the need to keep them sealed.

Advance Indiana said...

I just realized that I scooped the Star on its own lawsuit. Unreal.

Paul K. Ogden said...

Thanks, Leeesa. I'll took a look at the link. It's an area that's not completely clear to me.

Paul K. Ogden said...


It's really strange that the Indystar wouldn't report on its own filing

Craig said...

Face it, Gary welsh is becoming the Scoop King!


Why did Abdul totally miss this story?

Good work Gary and thanks!

I know said...

The papers might not want the names associated with Mr. Durham revealed if things get unsealed.

The Good Old Boys and friends and family plan really do not want anything unsealed.

The Federal Courthouse on Pennsylvania St is not big enough to hold them all!