Friday, July 29, 2011

Businessweek Takes In Depth Look At The Madoff Of The Midwest

Illustration by Mike Marsicano
It was always Tim Durham's goal to make the cover of every major business magazine in America. This featured story in the latest edition of Bloomberg's Businessweek by Annie Lowery is not exactly the kind of attention he fancied for himself though. A byline for the story describes Durham "in an epic midlife crisis may have crafted a Ponzi scheme even more complicated than [Bernie] Madoff's." Lowery's story has a great opening:

In the summer of 2007, Timothy S. Durham decided to throw himself a party for his 45th birthday. The CEO of a leveraged buyout shop in Indianapolis, Durham claimed to have made millions. He had also developed a penchant for the young, fun, and nubile, partying in Los Angeles and Miami and on his yacht in the Caribbean. In L.A., he owned National Lampoon, or what was left of it, and had been going to parties at the Playboy Mansion.
At the time, Durham told Daniel S. Comiskey, an Indianapolis Monthly reporter, he just wanted to bring “a little of that ‘magic’ to Indianapolis.” That magic meant 30 glamour models, flown in from Los Angeles, picked up at the airport in exotic cars from Durham’s collection, put up in a hotel, and paid standard modeling day rates, according to model Megan Hauserman. “He said it was a Playboy-themed party, so we should wear what we would typically wear to the mansion,” she says. The standard uniform there is lingerie and heels.
More than 1,000 people showed up at his 30,000-square-foot mansion in Fortville, an exurb of Indianapolis. Members of the Indianapolis Colts arrived, as did Kato Kaelin. Durham dressed like Hugh Hefner, in a plush robe. When he went to blow out the candles, his cake was frosted with his likeness in the center of a million-dollar bill.
Later, as reported in the Indianapolis Star, Durham posted photographs of the party to his Myspace page, including one of him getting a lap dance and two of the models kissing, nude. He dubbed it his “Fantasy Pajama and Lingerie Party.”
Durham had long attracted attention in Indianapolis, and not just for his parties. He was also one of the state’s biggest backers of Republican politicians. “Tim Durham was somebody who came out of nowhere in the late ’90s and kind of declared himself a very rich guy,” says Greg Andrews, managing editor of the Indianapolis Business Journal, who has covered Durham extensively. “He established himself as a player by being a tremendously large donor to candidates.” Those included Governor Mitch Daniels. Durham gave $105,000 to his 2004 campaign, making Durham the governor’s second-biggest individual donor that cycle. Over the years, he made some $800,000 in political donations, according to public records. The perceived gap between Durham’s private behavior and his support for conservative candidates led Matthew Tully, a columnist for the Indianapolis Star, to chastise Durham for his conspicuously libertine lifestyle. The column went viral, likely because of its link to those Myspace photos.
Durham was unfazed by the public admonishment. He kept throwing huge parties—though he set his Myspace page to private—and giving generously to the Indiana GOP. “That article ran about my R-rated Myspace page, and somehow I still get a lot of politicians wanting my money,” he told Indianapolis Monthly. “Apparently they didn’t see it. I’m going to give it to them as they come through the door now. ‘Didn’t you see this? I’m not someone you want to be associated with! I’m not a good influence!’ ” And he repeatedly boasted that Obsidian Enterprises, his leveraged buyout firm, had upped its profits massively in the last few years.
The party ended at 2 p.m. on Nov. 24, 2009. Uniformed FBI agents raided the offices of Obsidian, which were in the penthouse of the tallest building in Indianapolis, and the offices of its subsidiary, Fair Finance, in Akron. Agents hauled boxes of records and computer hard drives to idling trucks.
Check it out. It's well worth the read.


Indianapolis Observer said...

And, yep, it quotes our very own Gary R. Welsh!

(It's also a good read just to see who's mentioned by name: Brizzi, Daniels, SerVaas, Mellencamp....)

Marycatherine Barton said...

Doesn't realizing that Tim Durham is known as a Hoosier, just make you want to gag?

Gary R. Welsh said...

Yeah, It's a perfect demonstration of just how shallow of character many of our politicians are when it comes to choosing friends. As long as you seem to have a deep pocket to finance their campaigns, they could care less where you're getting the money. Notice that as soon as Tim Durham fell Ersal Ozdemir's prominence among these same politicians rose significantly. Are they asking the right questions about him that they should have been asking about Durham? Do they really know much about him and his background before immigrating from Turkey? Do they care? Or as long as he is forking over larger campaign contributions than just about anyone else in the business community, will they will gladly cozy up to him and reward his business with our tax dollars?

Michael Hegg said...

I'll never forget his being in the return room, the night of the '07 Municipal election at the Murat. The then-county chair of the MC GOP party almost chased me, a candidate representing their party away in favor of this guy. Shortly after the election, he hosted a nice party in one of his office buildings, complete with elephant cookies. I knew right then that I was better off not having won.

Yeah, it sucked to lose, but I think it's a lot better to have lost and never held an office I didnt want but felt compelled to run for, than be in the shoes of a lot of incumbents, the morning after this election cycle.

Gary R. Welsh said...

Yeah, Michael, I remember when I caught a bunch of flack for criticizing the council Republicans for hosting their caucus to elect their leadership in Durham's offices atop the Chase Tower and accepting his free food, drink and favors. Why would I object to them meeting at the offices of such a respected business leader in the community who contributed so much to the party they asked. Now they pretend they never had much to do with him at all.

Michael Hegg said...

"Now they pretend they never had much to do with him at all."

They pretend about a lot of things they and I campaigned for, and never followed through on, such as accountability and transparency. Their track record on those two qualities is abysmal, with one notable exception, Mrs. Scales. Personally, I liked the then-candidates I ran with, but this critique is professionally oriented.

The voters will decide soon if the GOP and Democratic incumbents will retain their seats. I just don't see any issues they can credibly use to defend their positions.

It would be nice if any one of them could tell their political patrons "Hey thanks for your support during the campaign, now I am going to act and legislate according to my own creed" instead of feeding the troughs of the donors with sweetheart deals, but that's utopian thinking. Too bad!