Tuesday, January 28, 2014

More On Barnes & Thornburg Repays Fair Finance Trustee $35,000

A new motion filed by the bankruptcy trustee for Fair Finance asking the bankruptcy court to approve a settlement with the law firm of Barnes & Thornburg based upon the repayment of $35,000 in legal fees it performed for convicted Ponzi schemer Tim Durham and his businesses indicates that the firm performed substantial legal services for Durham and his businesses in the weeks and months following an FBI raid on his business offices. According to the new filing, the firm received payments totaling $325,000 from Diamond Investment, LLC ($50,000), Fair Holdings, Inc. ($100,000) and Tim Durham ($175,000) between December, 2009 and March, 2010. Documents produced to the trustee, according to the firm, showed that the firm wrote off $470,000 in billed work it performed in the following areas:
  • restructuring transactions;
  • insurance issues;
  • SEC investigation;
  • securities claims; and
  • the federal criminal investigation following the FBI raid.
It's that last item that has caused me the greatest concern. Without ever filing an appearance on Durham's behalf, acting U.S. Attorney Tim Morrison was convinced by Durham's attorneys, presumably Barnes & Thornburg's Larry Mackey (OKC bombing prosecutor of Timothy McVeigh), to dismiss a civil forfeiture action the U.S. Attorney's office filed against Durham and various assets he held immediately following the FBI raid, an action federal prosecutors took against Jeane Palfrey, the so-called D.C. Madam who had provided high-priced prostitutes to the nation's most powerful political leaders in Washington. Unable to financially defend herself against an unusually aggressive federal prosecution for doing nothing more than running a house of prostitution, Palfrey was found dead from an apparent suicide by hanging after she had threatened to go public with the list of her clients, which included Deputy Secretary of State and former Eli Lilly CEO Randall Tobias from Indianapolis.

The dismissal of the civil forfeiture action by the U.S. Attorney's Office in Indianapolis hamstrung efforts to recover more than $200 million that Durham and his business associate had defrauded out of small investors in Ohio. Lawyers for the defrauded investors had no choice but to file for an involuntary bankruptcy proceeding against Fair Finance. To date, the bankruptcy trustee, Brian Bash, has recovered barely enough funds to cover the multi-million dollar legal tab that he has billed to the bankruptcy estate. Investors have also been left in the dark about what sort of financial hanky panky may have taken place on behalf of Durham's CIA masters in the ensuing months before the trustee began work on their behalf to help recover their lost investments. When President Barack Obama named his choice to head up the local U.S. Attorney's Office, he named Joe Hogsett, whose law firm had also performed legal work for Durham's criminal defense. Critics point out that Hogsett's office ignored the corrupt relationship and influence Durham exercised over some of Indiana's most powerful elected officials during the time he was accessing the defrauded investor's funds for such purposes.

The bankruptcy trustee's motion indicates that Barnes & Thornburg had previously returned the $100,000 paid to it from Fair Holdings because it performed no work on behalf of that business entity, as well as a $35,000 payment made by Durham to the firm in March, 2010, which it agreed had been paid in error and had immediately refunded it. The trustee agreed that the law firm had provided legitimate legal services in excess of what it had actually been paid, except for the $50,000 the law firm received from Diamond Investments, $35,000 of which the firm agreed to repay to settle the claims the bankruptcy trustee potentially had against the firm. The trustee argued that the law firm had provided no services for the $50,000 transfer from Diamond Investments, a contention disputed by the law firm. Tim Morrison should be holding his head in shame the balance of his life for what he did to hinder those poor, helpless investors in Ohio from recovering their lost investments. If he has a defensible explanation for his actions, he's welcome to share them with the readers of this blog.

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