"The government had a good week," said Crawford, who watched part of the trial. "That's my assessment. They have put this case together skillfully."
Prosecutors presented analyses from forensic accountants that show money from Fair Finance being used to help pay for an expensive Playboy party, Durham's classic cars and trips to luxury resorts and casinos.
Fair Finance's former owner, Donald Fair, testified that Durham and Cochran changed Fair Finance's business model after they took over the company in 2002. Instead of purchasing other companies' accounts receivables, or money that customers owed those companies, Fair Finance used investors' money to make loans to Durham, Cochran and their other businesses, Fair said.
Recorded calls played during the trial captured Durham and Cochran talking about excuses to give investors about why they couldn't cash in on their investments and why their interest checks stopped. The excuses, which included computer glitches and clerical errors, weren't true, one employee testified. Durham and Cochran were trying to keep as much money in Fair Finance as possible to keep it afloat.
And investors testified about losing their life savings.
All that will be difficult for the defense attorneys to overcome, Crawford said.
"The good guys and bad guys have been spelled out pretty well," he said. "You set up a scenario like that, and you have a jury that's prone to convict."Particularly damaging to the defense were recorded conversations of Cochran's explanation to investors why they shouldn't take seriously a story written in the months prior to the FBI raid on the trio's offices by the IBJ's Greg Andrews that discussed the significant amount of Fair Finance's investor's money that had been used for related loans to Durham-owned businesses. Cochran told investors that the IBJ's owner, Mickey Maurer, had invested and lost millions of dollars speculating on Obsidian Enterprises' stock during a period of time when it was publicly-traded and the stock soared from $1.80 a share to $12 in the course of one month.
Cochran told the investor that a couple of Wall Street brokers contacted Durham to find out what was going on, and Cochran said he gave them his honest assessment that the stock was overvalued. "So lo and behold, you know, the next couple of days the stock dropped to a dollar fifty. You know Mickey Maurer never recovered any of the millions he put in," Cochran told the investor. He then goes on to suggest that Maurer had Andrews to write the negative story about Durham to get even with him. Cochran described the IBJ's reporting as "libelous" and "yellow journalism." When asked by the investor whether they planned to sue the publication for defamation, Cochran responded: "Well, um, our attorney, is looking at a lot of different things and this guy just loves controversy so we are um not able to talk to you about that right now." Cochran went on to tell the investor that it probably wouldn't be a good idea to sue Maurer because it would give him the opportunity "to raise thing thing up."
Presumably, Cochran's claim about Maurer investing and losing millions in Obsidian is untrue. The IBJ did not mention the exchange in its coverage of the trial, and the newspaper's past reporting has never mentioned any investments Maurer made in any of Durham's businesses. Judge Jane Magnus-Stinson sided with defense lawyers' arguments in keeping the text of the IBJ story in question out of evidence, although the article's content is discussed frequently in the e-mails and recorded phone conversations the government introduced as evidence.
UPDATE: A daily updated story during last week's coverage that I missed included a passage where IBJ reporter Cory Schouten discussed Cochran's claims and mentions that Maurer denied purchasing Obsidian stock:
Cochran said the story was payback from IBJ co-owner Mickey Maurer, who Cochran claimed had lost millions of dollars on an investment in Obsidian Enterprises before Durham took the company private.
Maurer said he never purchased any Obsidian stock.