Showing posts with label fraud. Show all posts
Showing posts with label fraud. Show all posts

Thursday, May 13, 2010

Bankruptcy Trustee Wants Durham's Cars And Artwork

The Ohio Beacon-Journal is reporting online today that the bankruptcy trustee in the Fair Finance matter is eyeing millions of dollars worth of cars and artwork purchased by Tim Durham-related companies using funds provided by the bankrupt company. The news story reports:

There are three Bentleys, an antique Duesenberg, Mercedes and Jaguar cars, even a Lamborghini. The possible value is in the millions — same thing for the art, primarily paintings purchased by Fair Finance co-owner Timothy Durham, said the trustee, Cleveland attorney Brian Bash.
Bash tells the newspaper he is also looking into the sale of more than a million dollars worth of antiques and exotic cars by a Durham-owned company in Indiana. ''These are pretty fancy cars,'' Bash said. Most of the vehicles are in storage, while the Duesenberg and three Bentleys were among vehicles sold recently in Indiana, he said. The vehicles were not ''on the books'' of Fair Finance, he said  Bash also says law firms retained by Durham were paid over $908,000. A status report by the bankruptcy identified those expenditures as a dissipation of assets belonging to Fair Finance. Bash is also looking at $5 million held in equity accounts by two different firms according to the report. Bash says FBI investigators are continuing to scan the many documents it seized in raids of Durham's businesses last November. Here's some very telling information. Fair Finance lists only about $20 million in secured creditors while unsecured creditors are owed more than $220 million. The biggest secured creditor is a subsidiary of Fair Finance. Yeah, those poor investors are screwed big time.

Saturday, December 19, 2009

More Fraud Allegations Against Tim Durham

He's been accused by the federal government of running a Ponzi scheme with his Ohio-based Fair Finance Company. The SEC is investigating him for securities violations regarding his acquisition and control of CLST Holdings. Now, Tim Durham is accused of pumping the price of a 1930 Duesenberg built for the publishing scion William Randolph Hearst that he sold at an auction in Auburn, Indiana in September for $2.9 million according to a report by the IBJ's Greg Andrews. He explains these latest allegations against Durham:

A Virginia businessman is suing Tim Durham, alleging he and other defendants committed fraud by manipulating the September auction of one of the Indianapolis businessman’s prized vehicles, a 1930 Duesenberg built for publishing scion William Randolph Hearst.

The plaintiff, James F. Scott of Charlottesville, Va., agreed to buy the vintage car for $2.9 million—a price Car Collector magazine called “amazing, particularly in these notoriously difficult times.”

The publication noted the price was $2.3 million higher than when it last changed hands, in 2003. After auction bids reached $850,000, just two people—Scott and Mark Hyman of St. Louis—dueled all the way up to the final price.

“The transaction has no relationship at all to ‘value,’” a Car Collector reporter wrote. “It’s just the stubborn determination of two bidders to have what I want when I want it, and having the resources to back it up.”

But now Scott—who participated in the auction at the Auburn Cord Duesenberg Automobile Museum in Auburn by phone—is crying foul. He alleges Hyman, owner of Hyman Limited Classic Cars, made his bids in consultation with Donald Lyons of Dowagiac, Mich.—“each of whom were stakeholders and/or owners of the automobile.”

As Andrews notes, the federal lawsuit filed in Fort Wayne does not detail the alleged financial relationship between Durham and the other bidder, Mark Hyman, who competed with Scott to purchase the classic car; however, he notes Durham attended the auction and sat with Hyman. "Worse, the suit says, the sellers have failed to provide Scott title to the Duesenberg, even though he has paid," Andrews writes. "According to the lawsuit, the auction house disbursed the full $2.9 million to Hyman," Andrews continues. "He then returned $1.95 million, and that money was routed to Lyons, a wealthy car collector who serves as Dowagiac’s mayor." "The suit seeks to rescind the sale and seeks triple damages—a sum approaching $10 million."

Dowagiac Mayor Donald Lyons becomes the latest politician tripped up in the scandals surrounding Tim Durham. The three-term mayor was re-elected to a fourth term last month.

Bankruptcy Trustee Accuses Councilor Bateman Of Taking Over One Million Dollars From Foundation

WRTV's Jack Rinehart first broke the story more than a year ago about how City-County Councilor Paul Bateman and other may have bilked a local non-profit organization, the Russell Foundation, out of more than one million dollars. Marion Co. Prosecutor Carl Brizzi declined to investigate, saying he had referred the matter to local U.S. Attorney Tim Morrison's office, where the investigation has languished since. A federal banruptcy trustee, however, is taking action to recover $1.3 million missing from the group from Bateman and others according to the Star's Jon Murray. As part of the alleged scam, Bateman and others are accused of cheating Dr. Arthur Sumrall out of $1.7 million, his entire life's savings. Murray writes:
Court filings contend that Paul Bateman, a Northeastside Democrat, was among at least eight people connected with The Russell Foundation who used its money on personal expenses, leading the economic development group into bankruptcy by May 2008.
Bateman, who has denied any financial abuse, is accused of misspending the largest amount. The others, including the foundation's founder, the Rev. Michael Russell, allegedly misspent a combined $600,000, according to complaints filed in U.S. Bankruptcy Court in Indianapolis in recent months.

Bateman, Russell and Manuel Gonzalez, a Carmel business consultant, were named in search warrants served in July 2008 by Marion County grand jury investigators.
Russell sparked the investigation by reporting the missing money to the prosecutor's investigation unit after the bankruptcy was filed, according to his lawyer.

No criminal charges have been filed, but the recent bankruptcy filings mark the first public attempt to assign financial responsibility for the foundation's decline.
So what did Bateman and his alleged co-conspirators do with the money? The bankruptcy trustee offers us a hint:

Court filings show Russell's group spent money on dress clothes and other perks for its volunteers. It purchased more than a dozen vehicles, including a stable of 2007 Dodge Caliber compacts, a 2007 Cadillac Escalade and several pickup trucks.
Another expense: $29,634.45 in dental costs for Russell, which he addressed in a response to the court last week, denying any misuse.

You can find earlier posts on the Russell Foundation here, here and here.