Saturday, January 22, 2011

Sale Of Durham Collector Cars Raises $2.2 Million For Fair Finance Trustee

A sale of Tim Durham's expensive car collection for the benefit of the investors bankruptcy trustee of the now-bankrupt Fair Finance Company in Phoenix yesterday raised $2.2 million, including $1.125 million for a 1929 Duesenberg once driven by Elvis Presley in one of his movies. Despite the sale of more than 20 cars owned by Durham by RM Auctions yielding more than was expected, none of the money is likely to wind up in the hands of investors. Instead, it will be used to repay creditors with outstanding liens on the cars, auction fees and the costs of administering the bankruptcy estate. The Akron Beacon-Journal reports:

Car nut Tim Durham's 1929 Duesenberg, once driven by Elvis Presley in a movie, sold for $1,125,000.

Durham's 1929 Auburn Speedster went for a cool $250,000.

Then there was a 1987 Fiat sports car that went for just $3,250 and a '52 Chevy for $9,000.

But once the gavel banging ended, more than 20 collectible and antique cars that once belonged to the co-owner of bankrupt Fair Finance Co. sold for more than $2.2 million as part of a two-day auction that ended Friday in Phoenix, Ariz.

The estate of Akron-based Fair Finance could end up with a bit more than $1 million of that total once the checks clear and auction-related expenses are paid. A bank holds a $1 million lien on the Duesenberg, meaning it gets paid first with anything left over going to Fair Finance.

Overall, the sale of Durham's cars — seized last year by the FBI and given over to the Fair Finance trustee — brought in more money than the initial estimated values provided by auctioneer RM Auctions.

Still, creditors, largely made up of an estimated 5,300 holders of Fair Finance investment certificates, should not expect to receive a distribution from the sale of the cars, said Kelly Burgan, legal counsel to trustee Brian Bash. The money likely will be used to fund the case, including reimbursing the professionals who have been working on the bankruptcy since Fair Finance was forced into filing Chapter 7 in February 2010.

''No professionals have submitted fee applications. No administrative costs have been paid,'' Burgan said.

A million dollars in car-auction proceeds, if distributed, would not amount to much for the Ohio residents and organizations who paid more than $200 million for Fair Finance's uninsured investment certificates, Burgan said. By way of example, someone who had bought $100,000 in investment certificates would get at most $500, she said.

Under federal bankruptcy proceedings, professionals such as lawyers working on the case are the first in line to be paid, followed by secured creditors and then unsecured creditors. Fair Finance investment-certificate holders are considered unsecured creditors.
Investors only hope is if the multiple lawsuits the bankruptcy trustee plans to file is successful in recovering the assets looted by Durham for the benefit of himself and his friends during the period he owned the company after buying it from Donald Fair in 2002. Note the U.S. Attorney's Office initially filed a forfeiture action against Durham in federal district court in Indianapolis, which it dropped less than a week after filing it. Investors who lost more than $200 million had to initiate the involuntary bankruptcy proceeding on their own against Fair Finance, which is the only reason any action has taken place to date. The federal government basically has told the investors to go to hell, a marked contrast with the swift action federal prosecutors in other jurisdictions have taken to recover assets from persons bilked as the result of Ponzi scheme operators like Florida's Scott Rothstein and New York's Bernard Madoff. Assets of both Rothstein and Madoff were quickly seized by federal prosecutors and both men were quickly jailed. Durham remains a free man living the life of a Hollywood celebrity in a palatial home which rents for more than $20,000 a month.

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