Exhibits attached to the 49-page complaint the bankruptcy trustee for Fair Finance has filed against affiliated companies owned and controlled by Tim Durham in an effort to recoup some of the more than $200 million out of which the Indianapolis businessman defrauded small investors in Ohio gives us a bird's eye view into the life of a Ponzi scheme operator.
A little more than a year before the FBI raided the offices of Fair Finance and Obsidian Enterprises, Durham and his business partner Jim Cochran had an e-mail exchange in which Cochran was making the case that he should be pulling down compensation of $1 million a year to help pay for all of his homes. Durham responds, "[Y]ou get 8475 a week and I borrow and repay continuously against assets on my line of credit which is collateralized . . so my cash flow is really debt flows in and out . . . the problem is . . . the flows don't match." "The problem you have now is I am guessing that your assets don't cover your loans from Fair . . . so if we ever get audited by the state, I would suppose your collateralization may be way short. Durham then asks Cochran what he is trying to do with an increase in compensation. "If it is mortgage payment problems, then maybe we have DCI buy your excess homes and make those payments. Just thinking about different strategies."
Cochran had explained in the e-mail exchange with Durham that his loans "aren't much compared to what has happened in the past and outstanding loans to outsiders." To be clear, a loan to an "outsider" to Cochran is a loan to an insider to you and me. Cochran was lamenting his loans on three separate homes, including $1 million for a home in Naples, Florida, $700,000 for his Indianapolis home and $39,000 for a home in Bonita Springs, Florida. About a year later shortly before the FBI raided their offices, Cochran complains how the cost of an extra house payment has finally caught up with him. "The extra house payment has finally caught up with me," Cochran wrote to Durham. "I have to clear a bank checking account overdraft of $10,123 plus additional expense of $9,360.00 . . . I am leaving for Florida and checked with Bank . . . I cannot make my mortgage payments . . . I am going to need another wire." Durham doesn't want Cochran to sweat it. "I think we are getting a wire in and going to wire you today." He later tells Cochran, "We sold a trailer and got the funds in." He added in reference to the sale of new certificate of investments to the Ohio investors who were being duped, "Inv certs suck Friday. I hope this turns soon."
If not to add insult to injury on Cochran complaining about managing payments on three homes, he tells Durham in the midst of his cash flow problems about a new country club membership. "I cut a deal with Grey Oaks Country Club to pay the initiation fee of $175,000 over 4 years with no interest." "I have paid $132,000 and $43,000 . . . is due October 15, 2008." "This is full equity and I am assigning the full Equity Amount to FHI" (referring to the holding company for Fair Finance). How generous of him to assign the equity interest in his country club membership to Fair's holding company. Cochran adds, I am short for IRS check . . . going to need $22,000." Gotcha.
At times, Durham had to have his assistant plead with folks on the payroll to stop using the company's credit cards for personal expenses. In an e-mail to Michael Rypel, a public relations guy for the business, Durham's assistant Shannon Frantz admonished him not to "use the gold corp. amex for personal use." Frantz identified a number of charges the company planned to bill back to him, including travel expenses to Miami, Florida, such as airfare, hotel charges to the W Hotel in South Beach and the Rok Bar in Miami. According to the trustees' complaint, it was common for money to be used to pay for the top executives personal expenses, including mortgages, country club memberships, housekeepers, yard work for their private homes, etc. Cochran, for his part, received at least $10 million in insider loans from the company before it closed its doors according to the trustee. Every passing day that goes by that criminal charges are not filed against these people is a miscarriage of justice of a monumental proportion.
3 comments:
The public trust is broken. Justice isn't blind, because Tim Durham had close personal friends all the way up to the governor's office obviously looking out for his interests. His best buddy, Carl Brizzi, was also good friends with Attorney General Greg Zoeller. I'm told that there's even a conflict-of-interest at the federal level as well as the SEC. Looks like Tim had all his bases covered. There is one thing that money can't buy Tim, though, and that's respect. I have no respect for a guy who can loot the savings of hard working Amish folks without feeling one ounce of guilt, and I'm losing any respect I may have had for all those politicians who aided and abetted along the way.
It's not just those poor investors in Ohio who have been defrauded, Diana. All Americans have been looted by the political insiders that have deliberately bankrupted this country to enrich themselves. The party is now over and our country will fall much harder than the Roman Empire.
Great comments by both of you. Jim Mackinnon wrote an article today in the Beacon Journal about how broke Jim Cochran (cockroach) was as he begged for more investment certificate money to be wired to him as he bemoaned getting a tax bill on his multiple mansions, the payments for which were paid by the stolen money.
In the interim go loot at the email from Terry Whitesell as he states he wants to hide income so he can get Medicare. Unbelievable.
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