Tuesday, August 03, 2010

Durham Spent Fair's Money On Gambling and Political Donations Among Other Things

The IBJ's Greg Andrews picks up on an Ohio news report on what the bankruptcy trustee for Fair Finance has learned about where the money went at a recent creditors meeting. Tim Durham, the company's owner, spent the money he borrowed from it on gambling, political donations, loans to friends, real estate and interior decorating for his palatial home on Geist. Andrews reports:

Trustee Brian Bash said at a creditors meeting in Akron on Monday that he has identified about $54 million that Durham borrowed from the company.

Bash said that includes $2.8 million spent on gambling and at resorts, $3.3 million spent on interior decorating, $14 million spent on real estate and $1 million spent on contributions, many of them to Hoosier politicians, according to the Akron Beacon Journal.

Durham also loaned money from the company to friends and failing businesses, according to filings with securities regulators. The filings show that the lending spree began shortly after he and partner Jim Cochran bought the business in 2002 and continued into last fall.

Bash declined to estimate how much he might be able to recoup for Fair’s principal creditors—Ohio residents who purchased unsecured investment certificates with interest rates as high as 9.5 percent. The 5,000 investors, many of them elderly and with modest incomes, are owed more than $200 million.

Fair Finance shut down in late November, after FBI agents raided its offices and seized records. The same day, the Justice Department filed court papers alleging Durham was operating Fair as a Ponzi scheme, selling new investment certificates to pay off prior purchasers.

An FBI investigation continues. Durham has not been charged with a crime.

Durham, 47, has acknowledged owing lots of money to Fair, but denied defrauding investors. In court papers, his attorneys contend offering circulars provided to prospective purchasers of investment certificates outlined the risks, including that they carried no government guarantee.

It is the fault of government regulators and federal law enforcement officials that the investors in Fair Finance lost so much money in the company. Both were warned years ago by a whistle blower of Durham's alleged Ponzi scheme and securities law violations but did nothing to stop him. While the government has acted swiftly in other cases of this nature against the perpetrator, it has moved remarkably slow in taking action against Durham. It makes you wonder if some people are a little afraid of what will be unearthed if Durham is brought to justice.


Marycatherine Barton said...

Thank you for pointing the finger directly at government regulators and law enforcement officials. Now, Tim Durham deserves to be left alone in a room with the angry men he robbed, cheated, defrauded.

Unknown said...

Yes, I heard the whistleblower never quit, went to agency after agency, employee after employee, year after year until someone finally listened, at the same time Greg Andrews did listen and ran his investigation simultaneously.

It is outrageous that Durham could grease the wheels of justice to pretend he is the world's richest guy. Amen to the first cop who puts handcuffs on him.