Tuesday, January 05, 2010

Another Day Another Lawsuit Against Durham

Civil lawsuits continue to be the only resort for innocent investors defrauded by Ponzi scheme operator Tim Durham. An Ohio lawyer and his wife are the latest victims to file suit against Durham-owned Fair Finance. Harry and Kathleen Tipping say they purchased certificates of investment in Fair Finance in February, 2008 but never received any interest payments on their investments. The couple demanded repayment of their investment on November 30, 2009 after Fair Finance's offices closed as a result of a raid on the business by the FBI. The company's offices have yet to reopen.

The sad part of this story is that this problem could have been uncovered years ago if the FBI, the SEC and Ohio regulators had been doing their jobs. Whistle blowers alerted some of these government agencies more than three years ago about alleged securities law violations by Durham and his associates. A whistle blower complained to an FBI agent about the lack of action against Durham in an e-mail more than three years ago. The agent responded to the whistle blower, "You are too much a pessimist." "We have a grand jury date set for January in sdny (Southern District of New York)." "We are moving forward and it will happen one way or another." "I can't always tell you everything I would like to because we can not disclose information about ongoing investigations." "Please hang in there." "You have been more than helpful and hope you will continue to be so."

So like it was with Bernie Madhoff, the FBI and the SEC have both sat on damning evidence against Durham for years, allowing unsuspecting investors to be defrauded of hundreds of millions of dollars. The news media has to sue the government to pry out information about why Interim U.S. Attorney Tim Morrison abruptly dropped efforts to seize assets held by Durham and his businesses. The garage on East Street in Indianapolis, once filled with millions of dollars worth of collector cars, now sits empty and the building listed for sale. We now learn that the prize car in Durham's car collection was used to defraud a Virginia businessman at Kruse's auction in Auburn Labor Day weekend. Almost all of Durham's business associates have pricey homes listed for sale. Am I cynical? You bet I am. If you want to be a big-time crook or a dishonest politician, Indianapolis is the place to operate. There are literally no prosecutors who will stand in your way as long as you pay off the right people. At least in Chicago there is some hope that a prosecutor will eventually catch up to the crooked politicians and their powerful insider friends. The prosecutors in Indianapolis only care about prosecuting the little people who don't really matter to them in the scheme of things.

UPDATE: Ohio U.S. Rep. John Boccieri (D) has renewed his call to U.S. Attorney Tim Morrison to freeze Durham's assets. "It has been nearly a month since Fair Finance offices were closed and your office filed court papers alleging that Durham committed fraud and seeking forfeiture of Mr. Durham's property," Boccieri wrote in a letter to Morrison. "However, since that time, customers of Fair Finance in Ohio have not received any information as to when these offices might re-open and enable Ohioans to redeem their investments in Fair Finance," he continued. "I am deeply concerned that Mr. Durham's famously extravagant spending habits were at the expense of hard working Ohioans and that is why I have called for Mr. Durham's assets to be frozen," Boccieri wrote. "... In light of recent civil suits and the lack of any pending action to freeze Mr. Durham's assets, I believe that action must be taken by your office to protect the investments of Ohio consumers."

UPDATE II: The Star's John Russell is reporting late this afternoon that Judge Sarah Evans Barker has ruled against the newspapers' efforts to unseal documents in the federal case involving Tim Durham's businesses, Obsidian and Fair Finance. Judge Barker states in her decision that no search warrants existed in the civil forfeiture action that U.S. Attorney Tim Morrison voluntarily dismissed days after the FBI conducted a raid on the Indianapolis offices of Obsidian Enterprises and the Akron, Ohio offices of Fair Finance. “The docket of this civil litigation discloses that no search warrants were ever issued in this cause,” wrote Judge Sarah Evans Barker. Attorneys for the newspapers dispute Judge Barker's claim that no search warrants exist. It would seem preposterous that FBI agents would enter the offices and haul away truckloads of documents and computers if a search warrant had never been issued. Judge Barker's ruling hints that the search warrant was issued pursuant to a criminal matter unrelated to the forfeiture action. No criminal matter is identified in the Court's online case system.

6 comments:

Citizen Kane said...

What a great deal - Make laws to permit legal theft and then don't enforce or ignore laws to permit old-fashioned, garden variety theft.

Of course, legal theft is hidden behind positive sounding terms like public-private partnership, win-win situation and economic development, etc.

Paul K. Ogden said...

Gary, Baker's ruling confirms my suspicions that the search warrants were federal criminal grand jury subpoenas. My undrstanding of those types of subpoenas are that they are not public, at least not right awya.

Nobody said...

Do you know the name of the FBI agent who dismissed the whistleblower's claim nearly three years ago?

Also, I am looking for specifics into the names others in the SEC along with Ohio regulators who were informed of this issue and did nothing to investigate any further.

Erich said...

A hundred people picketing Morrison's office would probably get some reaction.

I don't understand why the Democratic party is not making something out of this.

M.D. said...

The US attorney never comes out, holds a press conference, and makes a big announcement about dismissing a case. Not unless they made a big mistake, or are otherwise seriously concerned about the outcomes of having filed that case.

Think about it. How often have you seen that happen?

Marycatherine Barton said...

We should be disappointed in the SEC, and in the FBI, for their failures re Durham and his companies. I must say that I am also disappointed that Judge Barker refused to order that those records requested by the newspapers, be disclosed to them. The laws protecting investors and the public from unscrupulous ultra-greedy 'businessmen' are already lax enough.