Why Can't The Fair Finance Trustee Get These Kind Of Results?

The small Illinois city of Dixon was shaken to the foundation when it learned that its long-time comptroller had embezzled $54 million from the city over a two-decade period. The 60-year old Rita Crundwell was sentenced in February to 19 years in federal prison after she entered a guilty plea to a single count of wire fraud and admitting to money laundering. A lawsuit the city filed against its accounting firms and Fifth Third Bank has resulted in a whopping settlement of $40 million.

According to the Chicago Tribune, CliftonLarsonAllen has agreed to repay $35.15 million to the city for its failure to uncover the theft of funds during its audits of the city's books over the years. A local accounting firm, Janis Card Associates, has agreed to pay the city $1 million, while Fifth Third Bank, which handled the wire transfers made by Crundwell, will repay the city $3.85 million. An earlier auction of Crundwell's property netted $4.78 million. That's far more than city officials expected to recover when they began this process. “The only thing I asked of our attorney is don’t leave any money on the table and I don’t think he left any money on the table,” Mayor Jim Burke said Wednesday in a telephone interview.

In sharp contrast, the bankruptcy trustee charged with recovering more than $200 million investors in Ohio lost in convicted Ponzi schemer Tim Durham's Fair Finance Company has only managed to recover a little over $6 million after three years on the job, most of which will be pocketed by the trustee for expenses and fees from administering the bankruptcy estate. The Fair Finance Trustee settled a claim against Fair Finance's former accounting firm, Somerset CPAs, for only $500,000. The trustee settled a claim against another accounting firm, BGBC Partners, for only $100,000. Default judgments the trustee has obtained against Durham and his business partner, James Cochran, totaling about $145 million are unlikely to net any recovery for the defrauded investors. The trustee settled up with other business partners of Durham who were bought out prior to the collapse of Fair Finance for only $400,000. The largest recovery to date came from Donald Fair, the innocent seller who took no part in the fraud. He agreed to repay $3.55 million to the trustee to settle a claim filed against him from the nearly $20 million he received from Durham for the sale of the company to him back in 2002.