More On Guyer's Ties To Convicted Ponzi Schemer Tim Durham

The Manning clan with Carl Brizzi and Tim Durham in the Bahamas after the 2007 Super Bowl in Miami

UPDATED: Birds of a feather certainly flock together in Indianapolis. We told you yesterday that Dr. Dale Guyer, whose clinic is at the center of the HGH doping allegations made in an Al Jazeera documentary that aired this past weekend and may involve a client of Guyer's clinic, Peyton Manning, had been a past business partner with convicted Ponzi schemer Tim Durham. The Indianapolis Star elaborates more on Guyer's ties to Durham in a new online story today.

Guyer received about a million dollars in loans from Durham which he failed to repay prior to Fair Finance Company's collapse that resulted in the loss of more than $220 million for thousands of Ohio investors. Those loans came either directly from Durham or one of the companies he controlled that bilked Fair Finance and were made to Guyer's Advance Medical Center, P.C. according to The Star. Guyer is now attempting to repay those loans to the bankruptcy trustee overseeing efforts to collect money on behalf of the defrauded investors of Fair Finance. As Advance Indiana told you yesterday, another business controlled by Durham and Guyer, Guyer Durham, LLC. received $268,990 in fraudulent transfers according to a judgment obtained by the bankruptcy trustee. The IBJ is reporting that the Fair Finance bankruptcy trustee settled $400,000 in claims against Dr. Guyer for just $30,000 earlier this year because of his struggling financial situation.

This is a very sordid bunch of characters involved here. Durham, of course, had bought and paid for our former corrupt Marion Co. Prosecutor Carl Brizzi, whom our Mayor-elect Joe Hogsett allowed to skate on multiple crimes he committed while in office while he was serving as federal prosecutor for the Southern District of Indiana. In addition to having briefly served on Fair Finance's board of directors prior to its collapse, Brizzi was business partners with Indianapolis attorney Paul Page, who pleaded guilty to a real estate fraud charge in connection with property the two owned together in Elkhart that was awarded a lucrative lease on a building used by the state's Department of Child Services. Brizzi is also business partners with Peyton Manning in the Harry & Izzy's restaurant franchise based in Indianapolis.

Brizzi and Page were at the center of another cover up of a local sports doping probe. Page represented Joseph Mobarecki, a local fitness gym manager, whom Indianapolis police arrested for illegally dealing anabolic steroids. At the time of Mobarecki's arrest, he was found to possess more than $100,000 of the drugs he was illegally dispensing, along with $17,000 in cash. Police sources were infuriated when Brizzi blocked a larger probe after entering into a sweetheart plea agreement with Mobarecki, which allowed him to get back $10,000 of the cash police seized after he pleaded guilty to just one felony offense. Mobarecki served just two days in jail and paid a $365 fine. Police working on the case believed Mobarecki was selling the steroids to a number of prominent professional athletes, as well as college and high school athletes. Hogsett stunned many in law enforcement when he ended a federal probe of Brizzi's corruption as Marion Co. Prosecutor in the face of overwhelming evidence against him. Hogsett incredibly claimed there was a lack of evidence to indict Brizzi.

Brizzi's predecessor was not much better than him when it came to cover ups. Who can forget Scott Newman's handling of Jim Irsay's prescription drug fraud problem. Irsay has battled an addiction to prescription drugs for the past couple of decades. WTHR's Roger Harvey had a blockbuster investigative report on Irsay's addiction in 2002, which included reports Irsay had been treated for drug overdoses at area hospitals on several occasions. No charges were ever brought against Irsay, although several health care professionals were sanctioned for their role in the affair. Our local powers that be decided the mess had to be quashed out of fear Irsay was in danger of NFL officials taking the Colts franchise away from him. Harvey left his job at WTHR-TV and became a PR person for the same law firm where Hogsett has been a partner. Not surprisingly, one of his firm's clients was the Indianapolis Colts. Irsay was again arrested last year for operating a vehicle while intoxicated and found to be in possession of quite a stash of prescription drugs. He got off with another slap on the wrist. We later learned that a woman associated with him had died of a drug overdose shortly before his arrest.

Fortress Credit Corp. Agrees To Pay $35 Million To Settle Fair Finance Claims

Fortress Credit Corp. was one of the companies that loaned money to convicted Ponzi schemer Tim Durham to acquire the Ohio-based factoring company, Fair Finance, back in 2002. After years of litigation by the bankruptcy trustee for Fair Finance, Fortress has agreed to a settlement payment of $35 million according to a new filing with the bankruptcy court yesterday. This is the by far the largest recovery by the bankruptcy trustee to date. Expenses related to the administration of the bankruptcy estate have largely consumed the paltry sums collected from other adverse parties. Multi-million dollar judgments against Durham and his partner, James Cochran, are unlikely to recover a dime for the investors. This is the first hope the several thousand Ohio residents have had of recovering at least a fraction of what they invested and lost in Fair Finance. Their losses exceeded $220 million. The trustee has pending litigation against Durham's other lender, Textron Financial Corp., which is still pending. The bankruptcy trustee has argued that the two lenders knew or should have known Durham was using the proceeds of the monies they loaned to him to acquire Fair Finance to operate a Ponzi scheme.

CNBC's American Greed Tim Durham Episode A Total Whitewash

The "Playboy of Indiana" episode featured tonight on CNBC's American Greed was pretty much what you would expect from a GE-produced media story--a complete whitewash of events from start to finish. Feed the sheeple what you want them to believe by covering up the real story behind Tim Durham's more than $200 million Ponzi scheme.

To buy the load of crock CNBC fed you tonight required a suspension of disbelief. Durham acted alone driven by raw greed we're told. Nowhere mentioned are the names of the politicians who curried his favor and helped protect him, in particular the corrupt former Marion Co. Prosecutor Carl Brizzi, who remains at large for his long-running crime spree, thanks in large part to the same law enforcement folks taking bows in tonight's broadcast. His stable of attorneys and accountants played no small part along the way as well.

The infamous Pajama Party was titillating to viewers, but what happened to that list of prominent politicians, civic and business leaders who enjoyed the entertainment of the working girls and boys? That was buried just like the video recordings made by the sophisticated surveillance system installed throughout Durham's palatial home, including the guest bedrooms, which come in handy when a little extra convincing is needed to get someone to do what you expect of them. Beurt SerVaas' introduction of the dirty world of using front companies to launder the CIA's ill-gotten proceeds to his former son-in-law and spreading the wealth around to a select few likewise got lost on the cutting room floor.

The illegal boiler room stock-pumping operation on Bright Point stock that made tens of millions for not only Durham but a large cast of Indianapolis' ruling elite who regularly engage in illegal stock trading with impunity was portrayed as a legitimate stock investment that helped launch Durham's meteoric business career. Please. The fact that Dan Laikin, the brother of Bright Point's CEO, wound up as CEO of Durham's National Lampoon and got caught engaging in the same illegal stock price manipulation got lost somewhere in production.

To believe the disingenuous FBI agent, federal law enforcement officials acted immediately based solely on the information it had been provided by Laikin on how Durham used Fair Finance like a Ponzi scheme to bankroll his lifestyle. The reality was that complaints of whistle blowers alerting the SEC, the FBI, the Indianapolis U.S. Attorney's Office and the Ohio Securities Division to Durham's fraud had been ignored for years, allowing more innocent Ohio investors to be lured into investing their life savings in Fair Finance. When the feds finally moved after it was too late, the U.S. Attorney's Office withdrew a critical civil forfeiture action, allowing Durham's equally as corrupt enablers the time they needed to ensure those defrauded investors would never see a dime of their money.

And about the fellow from Indianapolis Monthly featured prominently in tonight's broadcast, the one who drooled all over Durham before his downfall. How much money did Durham spend entertaining you for writing those puff pieces about him? Aren't you the same guy who refused to speak to whistle blowers? Yeah, I thought so.

So the "Playboy of Indiana" was entertaining, part reality and part fiction, just like the news fed to us by the lamestream media. As long as it entertains while re-directing your attention from the real story, that's all that really counts.

Seventh Circuit Upholds Tim Durham's Convictions

Convicted Ponzi schemer Tim Durham came up short in an appeal he and his two partners in crime, James Cochran and Rick Snow, took to the Seventh Circuit Court of Appeals in an attempt to overturn their convictions for defrauding investors of Fair Finance out of more than $200 million. Durham was able to convince the Court to reverse two of his ten wire fraud convictions based on a lack of evidence in the record to support the two convictions, but he lost other challenges, including the wire taps the FBI made of his phone conversations prior to being charged, prosecutorial misconduct, faulty jury instructions and unfair sentencing. The sentencing trial court of Judge Jane Magnus-Stinson has been directed to re-sentence Durham based upon eight wire fraud counts instead of the ten his 50-year sentence is based upon. His two other convictions for securities fraud and conspiracy to commit wire fraud were also affirmed. According to the government lawyers, Judge Diane Sykes wrote in her opinion that the prosecution inadvertently failed to admit evidence it intended to offer in support of those two counts at trial. It is unlikely the two reversals will lessen Durham's harsh sentence given the gravity of the other ten convictions the appellate court allowed to stand in today's ruling.

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.

Fair Finance Trustee Squeezes $15,000 From Former Penthouse Pet

I hesitate to refer to her as a girlfriend of convicted Ponzi schemer Tim Durham, but she was a female acquaintance of Durham for whom he spent about $150,000 of other people's money to purchase her automobiles, clothing and diamond jewelry, including an engagement ring. Erica Lookadoo-Jiles, a/k/a Erica Taylor, a/k/a Juliet Cariaga, a 2000 Penthouse Pet, has entered an agreement with the bankruptcy trustee to repay just $15,000 due to "lack of personal assets" and "limited and sporadic income", at least of the kind reported to the IRS. It probably cost the trustee more money to travel to L.A. to depose her than he recovered from her at the end of the day. It's funny that she was supposedly engaged to Durham since during a NSFW interview with radio talk show host Howard Stern she claimed she was primarily a lesbian who didn't mind sleeping with men as well. She also said she was into voyeuristic sex, which is probably why Durham was so enamored by her. According to Wikipedia, she once cashed $39,000 worth of poker chips for Philadelphia money launderer Andrew Yao at the Bellagio Hotel & Casino in Las Vegas. Yao was convicted of lying about and concealing gambling expenditures and extravagant gifts he purchased for Playboy and Penthouse models.

Fair Finance Trustee Reaches Settlement With SerVaas And Son

The bankruptcy trustee for Fair Finance sought to recover $285,000 in cash transfers convicted Ponzi schemer Tim Durham made to his ex-wife, Joan SerVaas, and step-son, Bernard Durham prior to the demise of his business empire following an FBI raid in November, 2009. According to a court filing with a federal bankruptcy court, Joan and Bernard have reached a settlement with the trustee to repay $100,000 and $10,000, respectively. The trustee says that Bernard provided the trustee with a personal financial statement and supporting documentation that supposedly demonstrated his inability to repay the nearly $60,000 the trustee wanted him to repay the bankruptcy estate. Joan claimed that Durham received value in exchange for the transfers, including care for SerVaas' children, only one of whom was Durham's biological son. She also claimed that some of the transfers involved assets she jointly owned with Durham.

Joan is the daughter of multi-millionaire industrialist and former City-County Council President Beurt SerVaas, a former high-ranking OSS officer during World War II and long-time rumored CIA asset with close ties to the some of the intelligence agency's most prominent past leaders. She and her father posted a $1 million bond for Tim Durham while he awaited trial. Joan is the CEO of Curtis Publishing, one of the companies owned by her father, which publishes The Saturday Evening Post and licenses artwork.

Bernard is the biological son of SerVaas' first husband, Bernard Marie, a French immigrant who has been described as an "off-the-books" French intelligence asset. Marie, a former owner and publisher of Indiana Business Magazine, is the CEO of Penta Corporation, a business marketing and sales company that provides services to U.S. export concerns in the Middle East, Europe and Africa. Marie has also been associated with a private construction firm with significant interests in Saudi Arabia. His biological son, Bernard Durham, also rumored to be an intelligence asset, was working as an obscure investigator in Indiana Attorney General Greg Zoeller's office at the time the FBI raided his step-father's offices. He quietly left the office shortly thereafter. Zoeller returned $11,000 in campaign contributions to the bankruptcy trustee for Fair Finance that he received from Tim Durham.

Tim Durham's New Home

It looks like federal prison authorities have settled on convicted Ponzi schemer Tim Durham's permanent home for the next 43 years. According to the Bureau of Prison's inmate locator, he is serving his sentence at the federal prison in McCreary, Kentucky. It is a high security facility with an adjacent minimum security satellite camp where Durham will presumably be housed. Notable inmates at the facility include a Mexican drug cartel hitman, Gerardo Castillo-Chavez, who is serving a life sentence, two Somali pirates convicted of the 2010 American warship attack on the USS Nicholas and white supremacists Ricky Mungia, who is serving a life sentence for his role in a shooting spree in Lubbock, Texas intended to start a nationwide race war. Two corrections officers at the prison were stabbed by an inmate with a homemade knife in 2010. Durham's scheduled release date is January 25, 2056. He is appealing his conviction.

National Lampoon Suing Durham And Criminal Defense Attorney To Recover $1 Million Paid For Criminal Defense

National Lampoon is accusing its former CEO, convicted Ponzi schemer Tim Durham, of embezzling $1 million intended to be paid to the company, which it alleges that Durham gave to his criminal defense attorney instead to pay his legal bills. The lawsuit also names as defendants his criminal defense attorney, John Tompkins, and his law firm, Brown, Tompkins, Lory and Mastrain. In addition, there are 50 Does named as defendants who the plaintiff says aided Durham in the misappropriation of the embezzled funds but who cannot yet be identified by name.

According to the civil complaint, Durham signed an agreement with Warner Brothers regarding the distribution rights for the National Lampoon Vacation movies, while acting as National Lampoon's CEO, and accepted an advance payment of $2.7 million. Durham then wired $1 million from the business' bank account to Tompkins law firm bank acccount on July 28, 2011 to pay for his legal defense without the approval of the company's board of directors or while acting within the scope of his authority as set forth in the company's bylaws.

Durham made the wire transfer to his Indianapolis attorney after he was arrested and charged with defrauding the investors of Fair Finance Co. out of more than $200 million during a time he was out on bail but confined to his home on house arrest between April, 2011 and January, 2012 when he resigned as the company's CEO. The company says it did not discover the missing $1 million until April, 2012 after Durham resigned. The lawsuit contends that Tompkins and his firm "conspired with, and/or assisted, Durham to misappropriate and convert all or a portion of the Embezzled Funds."

I never understood why National Lampoon allowed Durham to continue in his role once he was formally charged by the federal government given the nature of those allegations. It was almost like an open invitation to steal the company's funds. I also whether any attempt was made to prosecute Durham for the alleged crime after National Lampoon discovered the missing $1 million.

You can view a copy of the complaint filed in the Los Angeles Superior Court here.

UPDATE: National Lampoon's decision to sue Durham and his criminal defense attorney may be in response to the recent discovery by the bankruptcy trustee for Fair Finance that the company had funded Durham's defense. Durham's criminal defense attorney, John Tompkins, told the IBJ that he didn't believe the company had paid for his client's legal defense. "I don’t think it’s accurate that Lampoon funded his defense," Tompkins told the IBJ. "Beyond that, I don’t have anything to say." The bankruptcy trustee had already filed a suit seeking recovery of $9 million from National Lampoon, which it claims received money Durham diverted from Fair Finance to cover its losses over a period of several years.

Former Fair Finance Owner Pays Bankruptcy Trustee $3.5 Million

I don't think Don Fair owed a dime to the bankruptcy trustee for the more than $200 million convicted Ponzi schemer Tim Durham swindled from the small Ohio investors, but the former owner of Fair Finance has agreed to pay $3.5 million to settle a claim brought against him by the trustee. Fair sold the company to Durham and his business partner, James Cochran, back in 2002 for about $20 million. Payments to Fair were spread out over several years, but he otherwise had no part in managing or operating the company after selling it. The rap artist Ludacris has also agreed to return about $75,000 in contributions Durham gave to his foundation when he was being generous in giving away other people's money. With the odds looking less likely the bankruptcy trustee will be able to recover money from anyone with deep pockets, particularly the creditors who loaned money to Durham to buy Fair Finance, it's doubtful the company's investors will ever recover any of the money they invested in the company.

Ponzi Schemer Tim Durham Gets 50-Year Prison Sentence

Convicted Ponzi schemer Tim Durham with former O.J. Simpson house boy Kato Kaelin (left) and Judge Extreme Akim Anastopoulo (right) at the "Eye for an Eye" luncheon in Beverly Hills in Sept. 2005 (photo by L. Cohen, WireImage)

Judge Jane Magnus-Stinson heard arguments by Tim Durham's attorney at the convicted Ponzi schemer's sentencing hearing today that the government and news media were to blame for the more than $200 million thousands of small Ohio investors lost in Durham's Fair Finance, and she heard pleas from victims who lost their entire life savings in the form of testimony and more than 1,000 letters. The IBJ's Cory Schouten provided a play-by-play of today's courtroom action via Twitter. Not surpisingly, Judge Magnus-Stinson showed no mercy towards Durham, handing down a sentence fitting for an "eye for an eye" form of justice Durham jokingly embraced during a September 15, 2005 luncheon in Beverly Hills with his pseudo-celebrity friends. In finding more than 5,100 victims suffered losses of $250 million, Judge Magnus-Stinson sentenced Durham to 50 years in prison, which she described as "an effective life sentence." In her ruling, Judge Magnus-Stinson described his actions of "hosting a Playboy party, buying cars and yachts" while investors suffered losses as "deceit, greed and arrogance."  Judge Magnus-Stinson scolded Durham for being charitable with other people's money, referring to all the money he gave to charities, politicians and his family. "The Court finds there's no remorse on your part that's sincere," the judge said. Durham was saved by an even harsher sentence after the judge agreed that he wasn't acting as a fiduciary at the time he committed his financial fraud on the investors of Fair Finance. "I feel terrible they all last money," Durham told the judge. "My family has lost all of its investments. I feel very badly for all the people here today. . . I probably wasn't as familiar with our investor base as I am now" Yeah, as if his multi-millionaire ex-father-in-law, Beurt SerVaas, won't be taking care of them. I have a tough time believing he didn't recognize that many of his investors were from rural Ohio's Amish and Mennonite community. The IBJ's Cory Schouten notes that Durham concluded his statement without explicitly apologizing to the victims.

UPDATE: Durham's accomplices, James Cochran and Rick Snow, received sentences of 25 years and 10 years, respectively. I just realized that Durham is 50, the same age I turned today. I wonder why I feel like his future is brighter than mine?

Durham's Attorney Seeks 5-Year Sentence

Not surprisingly, the attorney for convicted Ponzi schemer Tim Durham would like Judge Jane Magnus-Stinson to mete out a much lighter sentence than the 225-year prison sentence recommended in a federal sentencing report. A sentencing hearing has been scheduled this Friday in Judge Magnus-Stinson's court for Durham and two business associates convicted along with him, James Cochran and Rick Snow. Durham's attorney, John Tompkins, is seeking a three-year prison sentence, followed by two years of home confinement. "There is no need to incapacitate Mr. Durham beyond [five years] to prevent him from committing further crimes, given his extraordinarily low risk of recidivism, or to deter others from similar conduct," the filing said. “In this case, there is absolutely zero evidence that Mr. Durham subjectively intended any investor to experience a loss, and that’s what the law requires if ‘intended loss’ is to be used for the sentencing calculation,” Tompkins said. I'm guessing that the thousands of small Ohio investors in Fair Finance who collectively lost more than $200 million would take issue with Tompkins' characterization of his client's intent. My prediction is that Judge Magnus-Stinson will sentence Durham to a 30-year prison sentence, a sentence he should be happy to receive given the unusually lengthy sentences a number of other federal court judges have meted out in recent years to high-profile Ponzi schemers.

Somerset Pays $500,000 To Settle Fair Finance Fraud Claim

Somerset CPAs, P.C. has agreed to pay $500,000 to the Fair Finance bankruptcy trustee to settle a claim made against the accounting firm for more than $760,000 convicted Ponzi schemer Tim Durham funneled to the firm through affiliated companies he controlled according to a court filing in a Ohio federal bankruptcy court. Trustee Brian Bash alleged that Fair Finance did not receive any value in exchange for the fees Somerset charged to the affiliated businesses, including Fair Holdings, DC Investments and Obsidian Enterprises, because they were insolvent at the time the services were performed and relied entirely on funds made available by Fair Finance to operate, making the transfers to the accounting firm fraudulent.

Meanwhile, an attorney for Durham has filed his objections to a recommendation by federal prosecutors in the southern district of Indiana that he receive a 225-year prison sentence and be ordered to pay $209 million in restitution to the small Ohio investors of Fair Finance who he was convicted of defrauding. Durham's attorney disputes the size of the losses incurred by the investors and blames federal prosecutors, in part, for the demise of the company. Durham's attorney John Tompkins called his proposed sentence "absurd." Tompkins attributed the company's demise to a raid of the firm by FBI agents and the ensuing bad publicity discussing the allegations that he operated Fair Finance as a Ponzi scheme.

Judge Magnus-Stinson Takes Hard Line On Convicted Ponzi Schemer Durham

Judge Jane Magnus-Stinson showed no sympathy for convicted Ponzi schemer Tim Durham and his business associate, James Cochran, in ordering the pair to remain in jail pending sentencing. Their accomplice, Rick Snow, fared better. Judge Magnus-Stinson will allow him to continue on home detention before he is sentenced.  The judge spoke of her concern that money still missing from the company the two bilked from Fair Finance's investors might be used to finance their escape from justice. According to the IBJ's Cory Schouten, she even suggested the original $1 million bond posted by Durham's father-in-law, Beurt SerVaas, could have came from the missing funds.

Durham's former father-in-law, local businessman Beurt SerVaas, had put up $1 million bond pending trial. The bond will be released since Durham will now be held indefinitely.

Magnus-Stinson suggested the SerVaas bond assets could have been "put up with Fair money in the first place" based on some of the insider loans the company had issued to Durham family members. And besides, she said, the jury's verdict suggests Durham has "no respect for other people's money."

She also expressed skepticism at Tompkins' simultaneous claim that Durham doesn't have the financial means to attempt to flee and that he's essential to recovering more money for Fair's victims.

"It's the missing money the court is concerned about," she said.

Durham and Cochran likely will be transfered to a federal correctional facility in Kentucky. Snow was released following the hearing and will be confined to his home, which he shares with his wife of 22 years and teenage children (who are 14 and 16).

Durham's lawyer, John Tompkins, said he intends to appeal his client's convictions. U.S. Attorney Joe Hogsett said federal prosecutors will seek a life sentence for Durham. The sentencing hearing has not yet been scheduled.

Reaction From Ohio To Durham Conviction

The Akron Beacon-Journal has been doing an excellent job covering the Fair Finance travesty that cost small investors in northeastern Ohio more than $200 million. Reporter Jim Mackinnon has been covering the trial for the newspaper and had this reaction from investors:

Akron-area investors reacted to the verdicts, saying they have little expectation of getting their money back.

Tom Ries of Wadsworth had $72,000 invested with Fair Finance. He had been hoping to use the money to purchase a winter home in Florida. He’s had to settle for a mobile home, he said.

Ries said he’s been told to expect back no more than “pennies on the dollar.”

Still, “there is satisfaction in that [Durham] was found guilty and he won’t be out on the street,” Ries said.

Beverly Barabas, a Wadsworth widow, said she’s still not sure exactly how much she lost with Fair Finance, but she knows losing that money meant giving up all the little extras in life.

“I have grandchildren and children and I told them, ‘Grandma isn’t going to have the money for Christmas and birthdays,’ ” she said.

And while Wednesday’s conviction might not help get any of her money back, “Thank God they’re going to get punished for what they did to me and a lot of other people,” she said.

Mackinnon provides a brief recap of some of the evidence federal prosecutors presented to jurors that convinced them Durham and his business associates, James Cochran and Rick Snow, had intentionally engaged in a scheme to defraud them as opposed to the claims of defense lawyers that the trio was simply caught up in the bad economic conditions of the time:

The government’s evidence showed Durham spent $200,000 from Fair investors toward the $650,000 purchase of a 1929 Duesenberg Derham Phaeton on Jan. 20, 2005. He ordered wire transfers from Fair that sent $107,500 for him to use at the casino at Atlantis Paradise Island Resort in the Bahamas on Jan. 31, 2007.

Durham spent $131,235.97 from Fair to lease an ultra high-end sports car Bugatti Veyron on June 19, 2007. The base price to buy one is $1.7 million.

Durham ordered a wire transfer of $150,000 from Fair on Jan. 28, 2008, spending the money at the Rio Suites Hotel and Casino in Las Vegas.

Durham wired more than $168,000 from Fair to throw a Playboy magazine party in September 2008. The event included entertainment from Ludacris’ Disturbing tha Peace Records at a cost of $60,000, and appearances by Playboy bunnies and reality TV stars Kendra Wilkinson, Bridget Marquardt and Holly Madison, who were paid fees of $10,000 each.

Federal prosecutors told reporters following yesterday's verdicts that they intend to seek the maximum sentences against Durham, Cochran and Snow, which would mean life sentences for the three men. They are now being held in the Marion County Jail pending their sentencing.

Will Mitch Finally Return The Campaign Contributions He Accepted From Durham?

In a bit of irony, the same week we learn that Gov. Mitch Daniels will become the new president of Purdue University when he leaves office at the end of his term early next year, one of his largest campaign benefactors, Tim Durham, was convicted on all twelve charges that he ran a Ponzi scheme at the expense of thousands of small Ohio investors in the Fair Finance Co. A federal bankruptcy trustee, Brian Bash, has been working feverishly over the past couple of years trying to recover as much of the more than $200 million of their investments Durham and his associates squandered on their mansions, sporty cars, private jet, yacht, Playboy parties and gambling-fueled trips to Las Vegas. Durham also showered politicians like Gov. Mitch Daniels with large contributions.

Daniels received more than $200,000 from Durham, but he has been adamant in his refusal to aid Fair Finance's bankruptcy trustee by returning the ill-gotten funds. State Sen. Mike Delph was one of the first politicians to return Durham's contributions, and his lead was soon followed by a string of other politicians. Daniels has remained the last holdout. His campaign committee has returned only about $3,000 of the contributions he received from Durham. The bankruptcy trustee earlier this year sued Daniels to recover $90,000 from him. Daniels, who is personally worth more than $50 million, has defended his decision not to return the money based on the fact that the money is already spent. Perhaps the trustee of Purdue University should condition Daniels' appointment as the university's president on his agreement to settle up and at least repay the $90,000 the trustee has requested he repay. C'mon, if Jami Ferrell, the Playmate who received more than a quarter million dollars from Durham could repay $55,000 to the bankruptcy trustee, surely Daniels could find a spare $90,000 lying around somewhere.

The Party Is Over: Durham Found Guilty On All Charges

Tim Durham

Indicted Ponzi schemer Tim Durham became a convicted Ponzi schemer after a federal jury in Indianapolis deliberated for less than eight hours before returning guilty verdicts on all 12 charges against him, including 10 counts of wire fraud, one count of securities fraud and one count of conspiracy to commit fraud. Durham's business associates, James Cochran and Rick Snow, fared only slightly better. The jury found Cochran guilty on 8 of the 12 counts, while Snow was found guilty on five of the 12 counts. All of the men could face decades in prison. Judge Magnus-Stinson ordered the three men held at the Marion Co. Jail until she can conduct a hearing Monday morning to determine whether the men can remain on home detention as they have since the indictments were first returned against them before the judge delivers their sentences. She is not likely to determine sentencing for the three men for a few months. According to the IBJ's Cory Schouten, federal prosecutors wanted the three men held in jail due to risk of flight:

Assistant U.S. Attorney Winfield Ong urged the defendants be taken into custody, telling the judge they are flight risks. The defense attorneys argued their clients should be released back to home detention pending sentencing.

"Tens of millions of dollars are missing," Ong told the judge. "All of them are facing life sentences. All it takes is $2,000 to get across the border."

U.S. Attorney Joseph Hogsett hailed the jury's decision, calling the case "the most significant piece of litigation the Southern District has seen in a generation."

The verdict was a huge victory for Hogsett's office and the FBI, which began investigating Durham more than three years ago. Hogsett vowed to seek the "full and maximum penalties." He said that makes it "entirely likely (the defendants) will serve the rest of their lives in jail."

As I've recently reported, federal judges have not had a tendency as of late to be lenient on criminals convicted of economic-related crimes involving Ponzi schemes. Those convicted are being sentenced as if they had been found guilty of capital crimes. A number of similarly-situated defendants have faced sentences in excess of 100 years. Each count carries a maximum sentence of 20 years. Thirty years is likely the least sentence Durham could expect from today's verdict. Given the staggering sum out of which he defrauded small Ohio investors of Fair Finance, in excess of $200 million, he will no doubt face a sentence that will put him behind bars the remainder of his life. Durham and his associates' convictions, however, provide little solace to those who lost their entire life savings so they could live their high-flying, Playboy lifestyles. The whistleblower who made today's convictions possible had this to say about today's news:

Who would have thought this would come full circle to my Mennonite step-mother and her family--you picked the wrong girl to stalk and harass year after year which caused me to dig. And, Greg Andrews did the rest along with Cory Schouten, who will forever be my heros. Thank you, Greg and Cory--for believing and reading the documents and daring to dig and running the stories so you got the tips from inside Fair. Thank you to Jeff S who put a stop to the public antics and slander that Carl [Brizzi] emitted because he's mad his friends got busted and the good times for him came to an end. And, thank you to God for putting Tim Durham away so I, and his other victims, can once again have a life. No one should be stalked and harassed and stolen from year after year and this verdict ensures Tim will never again be able to use the financial and or legal system to ruin someones life. And, on a side note I have never met Tim Durham despite the fact I am referred to as his ex girlfriend. Never met him, never been in a room with him, nothing. All I did was turn him in after I was asked to "get in on" a crime he was committing. He then decided to pay me back, because he was paranoid he would be investigated. Never could I have dreamed it would come full circle to my family, and that he was stealing their life savings and that of their friends. It's been surreal, that's for sure, but we will all survive and he will be locked away. THANK YOU GOD.

Durham Trial Likely To Go To Jury Before Week's End

Federal prosecutors plan to call only two more witnesses today in their case against accused Ponzi schemer Tim Durham and his business associates, Jim Cochran and Rick Snow, before resting their case. That means the case could go to jurors as soon as Wednesday, and the defense only plans to call a handful of witnesses. Attorneys for the defendants have not indicated yet if their witnesses will take the stand in their own defense according to the Star's Carrie Ritchie. Defense attorney Jack Crawford tells Ritchie that he thinks the government's case against the accused is strong:

"The government had a good week," said Crawford, who watched part of the trial. "That's my assessment. They have put this case together skillfully."

Prosecutors presented analyses from forensic accountants that show money from Fair Finance being used to help pay for an expensive Playboy party, Durham's classic cars and trips to luxury resorts and casinos.

Fair Finance's former owner, Donald Fair, testified that Durham and Cochran changed Fair Finance's business model after they took over the company in 2002. Instead of purchasing other companies' accounts receivables, or money that customers owed those companies, Fair Finance used investors' money to make loans to Durham, Cochran and their other businesses, Fair said.

Recorded calls played during the trial captured Durham and Cochran talking about excuses to give investors about why they couldn't cash in on their investments and why their interest checks stopped. The excuses, which included computer glitches and clerical errors, weren't true, one employee testified. Durham and Cochran were trying to keep as much money in Fair Finance as possible to keep it afloat.

And investors testified about losing their life savings.

All that will be difficult for the defense attorneys to overcome, Crawford said.

"The good guys and bad guys have been spelled out pretty well," he said. "You set up a scenario like that, and you have a jury that's prone to convict."

Particularly damaging to the defense were recorded conversations of Cochran's explanation to investors why they shouldn't take seriously a story written in the months prior to the FBI raid on the trio's offices by the IBJ's Greg Andrews that discussed the significant amount of Fair Finance's investor's money that had been used for related loans to Durham-owned businesses. Cochran told investors that the IBJ's owner, Mickey Maurer, had invested and lost millions of dollars speculating on Obsidian Enterprises' stock during a period of time when it was publicly-traded and the stock soared from $1.80 a share to $12 in the course of one month.

Cochran told the investor that a couple of Wall Street brokers contacted Durham to find out what was going on, and Cochran said he gave them his honest assessment that the stock was overvalued. "So lo and behold, you know, the next couple of days the stock dropped to a dollar fifty. You know Mickey Maurer never recovered any of the millions he put in," Cochran told the investor. He then goes on to suggest that Maurer had Andrews to write the negative story about Durham to get even with him. Cochran described the IBJ's reporting as "libelous" and "yellow journalism." When asked by the investor whether they planned to sue the publication for defamation, Cochran responded: "Well, um, our attorney, is looking at a lot of different things and this guy just loves controversy so we are um not able to talk to you about that right now." Cochran went on to tell the investor that it probably wouldn't be a good idea to sue Maurer because it would give him the opportunity "to raise thing thing up."

Presumably, Cochran's claim about Maurer investing and losing millions in Obsidian is untrue. The IBJ did not mention the exchange in its coverage of the trial, and the newspaper's past reporting has never mentioned any investments Maurer made in any of Durham's businesses. Judge Jane Magnus-Stinson sided with defense lawyers' arguments in keeping the text of the IBJ story in question out of evidence, although the article's content is discussed frequently in the e-mails and recorded phone conversations the government introduced as evidence.

UPDATE: A daily updated story during last week's coverage that I missed included a passage where IBJ reporter Cory Schouten discussed Cochran's claims and mentions that Maurer denied purchasing Obsidian stock:

Cochran said the story was payback from IBJ co-owner Mickey Maurer, who Cochran claimed had lost millions of dollars on an investment in Obsidian Enterprises before Durham took the company private.

Maurer said he never purchased any Obsidian stock.

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.

First Day Of Trial Bad For Durham

It cannot be understated just how important a first day of a criminal trial is for the prosecution and the defense. Jurors anxious to perform their best civic duty are more attentive and perhaps more easily swayed than at any point during the trial. Lawyers for both sides try to carefully lay out a road map for the jurors to follow during the trial. The government, which has the burden of proving its case beyond a reasonable doubt, puts on its case first and will often lead with its strongest witnesses. That proven strategy appears to be exactly the approach taken by federal prosecutors in the opening day of the trial of accused Ponzi schemer Tim Durham and two of his business associates. If media reports are any indication, it's a strategy that is working well for the government.

The IBJ's Cory Schouten says federal prosecutors painted a picture of a "massive fraud scheme" to explain how Durham and his associates managed to lose more than $200 million invested by small Ohio investors. Durham's attorney, John Tompkins, responded by claiming his client was only guilty of making "bad business judgments, not fraud," which were made much worse by the 2008 financial crisis that swept the country. The compelling testimony of the government's first two witnesses, however, strongly support the government's case.

The government chose to call as its first witness 86-year old Donald Fair, whose father founded the company that bears his name and who sold it Durham and his business associate, Jim Cochran, for $20 million in 2001. Fair told jurors Durham "destroyed" his family's Fair Finance Company and "screwed the company into the ground." Fair explained the departure Durham and his business associates took to business model that had worked so successfully for his father and him for 66 years during good and bad economic times. Fair told jurors that the company began offering "higher rates of interest than I ever could imagine offering myself" to entice investors while making large investments in businesses owned and controlled by Durham that were mostly losing money.

Even more damaging to the defense was the testimony of a former chief financial officer for Durham's parent company, Obsidian Enterprises. The Akron Beacon-Journal quotes Anthony Schlichte as testifying that the affiliated companies to which Durham siphoned funds invested in Fair Finance were money-losers long before the nation's financial crisis hit and never repaid any of the loans the affiliates received from Fair Finance. "Most jurors appeared to be listening intently and taking notes as witnesses testified," the newspaper reported.

The Star adds testimony from Fair Finance's former controller, Doug DeRose, about the inability of the affiliated companies to repay the money Durham had loaned to the businesses, which made it impossible for Fair Finance to pay even interest on its investor's money, let alone repay the principal. "He said Durham then told Fair Finance employees to lie to investors about why they were no longer getting interest payments on their investments. The excuses they used, he said, were not true 'a majority of the time.'"

In the coming days, the prosecutors will put on evidence that Durham used some of the money for luxury items for himself and his friends, including expensive automobiles, homes, country club memberships and costly gambling-fueled trips to Las Vegas. I'm not sure why Durham didn't seek a deal with the government. He doesn't stand a snowball's chance in hell of being acquitted. Dealbook's Peter Henning has a column today titled, Viewing financial crimes as economic homicide," in which he discusses some stiff sentences dealt to recent convicted Ponzi schemers, including:

• Bernie Madhoff--150 years
• Edward Okun--100 years
• Thomas Petters--50 years
• Lee Farkas--30 years

Federal prosecutors are asking a federal judge in Houston to sentence Allen Stanford, who was convicted of operating a multi-billion dollar Ponzi scheme, to 230 years in prison. Durham and his partners each face up to 20 years in prison for each wire fraud count, 20 years for the securities fraud count and five years for the conspiracy charge. The men are charged with 12 felony counts each, ten of which are for wire fraud.