Thursday, June 14, 2012

Ponzi Schemer Allen Stanford Sentenced To 110 Years As Durham's Trial Continues

Accused Ponzi schemer Tim Durham and his business associates have much to fear as their federal trial continues in Indianapolis on charges of bilking small Ohio investors out of more than $200 million they deposited with Fair Finance Company, which Durham and his business partner, James Cochran, purchased in 2001. A federal judge in Houston, Texas showed no mercy to convicted Ponzi schemer Allen Stanford in handing him a 110-year sentence today. The prosecutor in Stanford's case told Judge David Hitner that “230 years will not get anyone their money back but on sleepless nights they will know that he got the maximum.” Stanford has shown little remorse for his crimes.  “If I live the rest of my life in prison …. I will always be at peace with the way I conducted myself in business,” Stanford was quoted as saying.  

Meanwhile, prosecutors continue to present damning evidence of Durham and his business associates' guilt. The IBJ's Cory Schouten describes e-mails Durham and Cochran exchanged in the months prior to the FBI raid on their offices that led to criminal charges against the men as the two begin quarreling like a feuding couple on the brink of a marriage break-up as their spending spree caught up with them and they were no longer able to pay their bills.
By 2009, Fair co-owners Durham and Cochran had fallen behind on mortgages for their mansions, overdrawn their bank accounts, and missed payments on income and property taxes, their own e-mails show.
Credit card companies including American Express slashed their available credit lines, prompting Cochran to complain in one e-mail he couldn't even afford a hotel when he visited Fair Finance headquarters in Akron, Ohio. His credit score had fallen to 510, he wrote.
Durham responded that his was probably lower. "I don't even want to look," he wrote on Sept. 8, 2009.
In another message, Cochran complained about having to sell his Corvette and live on only $10,000 for a period of 25 days.
"I don't have cash to go to McDonald's for my kids," he wrote . . .

During a brief respite in Fair's ongoing cash-flow crisis, Cochran confronted Durham about his lavish spending and failure to heed the "signs of a poor economy."

In a July 14, 2009, e-mail, he questioned Durham's decisions to spend $12,000 for two nights in a condo for New Year's Eve and for throwing lavish parties in Las Vegas and on a rented yacht.

"These costs are ultimately paid by Fair upstream of funds .. .assigned to Obsidian [Enterprises, Durham's buyout fund] and never paid back," Cochran wrote. "With the reprieve of funds this week, you should work on clearing the garage of cars, because these funds won't last and we'll be back to the strugglin position."

Cochran suggested the companies start a round of layoffs and asked Durham to consult him on every bill that got paid. He also asked for $104,000 to pay property taxes, $71,000 for unpaid income taxes and $193,000 for hurricane windows for a home in Naples, Fla.

Durham agreed they needed to cut back, and said he had "flushed in" about $5 million over the previous 18 months by selling two antique Duesenberg cars and other assets he had bought with his own cash but later "secured to defaulted Fair money."

"So if I spent 4K on a weekend boat trip or got comped on a vegas trip, then I don't feel bad about it," Durham wrote.
The IBJ has provided a link to the entire exchange of often profanity-laced e-mails between Durham and Cochran that prosecutors presented as evidence in the case, which can be viewed by clicking here.

Schouten discusses in a separate article attempts by prosecutors to offer into evidence an excellent investigative piece his colleague, Greg Andrews, had written raising questions about the soundness of the manner in which Durham and Cochran were running Fair Finance just months prior to the FBI raiding their offices. As Schouten explains, Judge Magnus-Stinson sided with Durham's attorney in denying the admission of the article for now:
"It is a critical article by a journalist," Tompkins argued. "We don't know the sources."
Later, during a break, Tompkins told a reporter he had never seen a prosecutor attempt to introduce a newspaper article into evidence.
Assistant U.S. Attorney Winfield Ong told Judge Jane Magnus-Stinson that the jury should be able to see the article for context, without relying on the facts contained within.
A chunk of the prosecution's evidence in the case centers around the reaction to the story by the defendants, both in e-mails and on phone calls the government recorded under an authorization it requested shortly after the article appeared.
"It's been discussed at length here, and by at least two witnesses, and extensively on the wiretaps," Ong said of the IBJ story. "It would be puzzling at best for the jury not to have it."
Magnus-Stinson sided with the defense and did not admit the story into evidence, but noted Rule 403 provides for a sliding scale, allowing her the option to change her mind as the case proceeds.
It's interesting that Tompkins, who has handled many criminal cases, told a reporter that he had never seen a prosecutor attempt to introduce a newspaper article into evidence. Well, he must have missed what happened in the Charlie White case where the prosecutors and judge practically threw the law books in the trash while conducting his trial in Hamilton County. The judge in White's case allowed the prosecution to introduce as evidence a story written by the Star's Carrie Ritchie that attributed comments to White that he said misrepresented what he told to the reporter, some of which weren't even written as direct quotes. Ritchie sat in the courtroom covering White's trial and was not compelled to testify about the statements she attributed to White in the story. The only way White could rebut the newspaper story was to take the witness stand in his own defense, which his defense lawyer, Carl Brizzi, chose not to do. White is appealing his convictions, and if the rule of law means anything, the trial court should be slapped down hard and the convictions thrown out because of multiple errors committed during his trial. Criminal charges were tendered to jurors that as a matter of law should have been dismissed by the trial court judge. The jurors were also given instructions that contradicted the law. Judge Magnus-Stinson is obviously more mindful of the rules of evidence. I'm not sure why prosecutors even want to offer the IBJ story as evidence given the recorded phone conversations and e-mails they have been able to put into evidence that more than supports their case in which Cochrun and Durham discuss the contents of the story.

No comments: