A 24-Hour News 8 investigation has found an FBI raid on a Minneapolis internet company has close ties to the federal investigation of Indianapolis businessman Tim Durham.It looks like the government's case of the elaborate Ponzi scheme run using funds invested in Ohio-based Fair Finance Company owned by Durham may be starting to come together. As the dominoes start to fall, who knows how many prominent business people will get ensnared before it's all over.
Sources tell 24-Hour News 8 that the Minneapolis raid on a company called Phonebillit, Inc was conducted this week by agents from the FBI's Indianapolis office.
Those same sources tell 24-Hour News 8 Phonebillit is accused of what's known as cramming. Cramming happens when a company adds a charge to your phone bill for a service you didn't order, agree to or use.
Our investigation found that two of those connected to Phonebillit have close ties to local businessman Tim Durham. One is Cindy Landeen, the other is Indianapolis attorney Neil Lucas.
According to documents from the Ohio Department of Securities, Landeen was given a $284,000 loan by Fair Finance, Durham's Akron, Ohio investment company that is now in bankruptcy. Those same documents show that Lucas received $145,000 in loans from Fair Finance. Neither loan has been paid back.
A Securities and Exchange Commission filing from 2006 shows Lucas was also a part of the investment group put together by Tim Durham to buy Cellstar Corporation, a company that distributed cellular phones, shortly before it was bought by Indianapolis based Brightpoint.
Tim Durham's business partner Dan Laikin, now in prison for a stock scheme involving National Lampoon is the brother of Brightpoint CEO, Robert Laikin.
So far, the FBI investigation into Durham's dealings has not resulted in any criminal charges against Durham. But more than 5,000 Fair Finance investors lost more than $200 million. More information on the FBI raid and its ties to Durham is expected later today.
UPDATE: The IBJ's Cory Schouten has more on the information the FBI is seeking from consumers about a number of companies with Durham ties:
The FBI is asking land-line phone customers across the country to check their bills for phantom charges from more than 20 companies with links to embattled financier Tim Durham.Schouten's story notes the registered agent for MyIProducts was switched from Durham to Thomas Collignon. He is an Indianapolis attorney who was formerly Marion Co. Prosecutor Carl Brizzi's law partner before Brizzi became prosecutor. Brizzi is, of course, very close to Durham and had agreed to serve on Fair Finance's board of directors a short time before the IBJ's Greg Andrews ran an investigative story questioning the number of insider loans Fair Finance had made to Durham-owned companies. Brizzi resigned from the board after Andrews' investigative report was published by the IBJ. A short time later, the FBI raided Fair Finance's offices in Ohio and Durham's offices for his Obsidian Enterprises on the top floor of the Chase Tower in downtown Indianapolis. Fair Finance's doors never reopened following the FBI raid and the company was forced into involuntary bankruptcy. No criminal charges have been brought to date as the bankruptcy trustee has set about the tedious task of marshaling assets in an effort to recover as much of the more than $200 million small Ohio investors lost in Fair Finance after the company failed to redeem certificates of investment they purchased from the company that offered high rates of interest.
The request follows a Tuesday FBI raid on Minnesota-based Alternate Billing Corp., which adds charges to customer phone bills on behalf of the companies, purportedly with permission from consumers.
The companies are suspected of cramming, which happens when firms add extra charges to a person's phone bill without authorization. The charges are generally small and easy to overlook since they appear to be one of several fees actually related to the phone service.
Durham has direct ties to several of the companies the FBI names, records show. Among them: eProtectID, Streaming Flix, Durham Technology, MyIProducts, and NeedTheInfo. Most list their home base as the former Chase Tower headquarters of Obsidian Enterprises, a Durham-led buyout firm.
Other companies the FBI names have indirect ties to Durham, as does Alternate Billing, whose president, Cynthia Landeen, received a $284,000 loan from Akron, Ohio-based Fair Finance Co., a Durham-owned firm that collapsed last year.
Records show Fair Finance also made a loan of $365,000 to ABC Corp., a name Alternate Billing has used to describe itself.
Another company involved in the billing is VolCoff LLC, which has ties to Neil Lucas, an Indianapolis attorney who has represented Durham on numerous matters and received at least $145,000 in loans from Fair Finance.
The Durham-led National Lampoon Inc. also is listed as a client of Alternate Billing on the company's website.
Another firm named by the FBI—MyIProducts—listed Durham as its registered agent with the Indiana Secretary of State until June, when it switched the listing to Indianapolis attorney Thomas Collignon.
UPDATE II: WISH-TV's David Barras has more on how a lawsuit to be filed in Ohio next week by the bankruptcy trustee will name a lot of people and businesses that benefited from the Ponzi scheme Durham operated through Fair Finance. The bankruptcy trustee emphasizes the matters in the lawsuit are strictly a civl matter, but they have been shared with federal investigators attempting to unravel what Tim Durham himself has described as "complicated."
It may be only a week or two now, until a lawsuit is filed in an Ohio court that will give details, background and name names in the Timothy Durham Fair Finance bankruptcy case, 24-Hour News 8 has learned.
Kelly Burgan, the attorney for the trustee handling the Fair Finance bankruptcy told 24-Hour News 8 anchor David Barras, that the filing will make public what has been found in the nearly year-long investigation.
“I want to say in the vicinity of 100 — give or take — entities that were owned or controlled by Timothy Durham and many of those entities received money directly or indirectly from Fair Finance company," Burgan said.
Fair Finance is the Akron, Ohio company that Indianapolis businessman Tim Durham is believed to have used to finance his businesses and a lavish personal lifestyle. More than 5,000 investors lost $218 million in Fair Finance investments. The bankruptcy trustee is trying to get that money back.
Burgan told 24-Hour News 8 that the lawsuit will lay out the story of what happened at Fair Finance.
"I think the public will be able to get a sense of what we now know and a sense of what occurred and why we are making the allegations that would be made," she said.
The expected lawsuit is civil and has nothing to do with the criminal investigation. But Burgan said the trustee's office is sharing information it uncovers with federal and state authorities.
Durham hasn’t been charged in the case.