Another Ponzi Scumbag...

DECEMBER 21, 2009.Ponzi Probe Ensnares Indiana Businessman

FBI Raids Two of Timothy Durham's Companies in Inquiry Into Allegations; 'Rise of the Super-Rich'.ArticleComments (14)more in Law ».

 

By DAVID KESMODEL

An Indiana businessman whose lavish lifestyle was featured on a television special about the super-rich is under investigation for running an alleged Ponzi scheme that sold supposedly safe, but high-yielding, notes to elderly investors and used the money to invest in other companies he controls.

 

The federal investigation into Timothy S. Durham, who is also known for his extensive car collection and 30,000-square-foot mansion, is roiling Indiana politics, where Mr. Durham was a big contributor to Republican politicians, including Gov. Mitch Daniels.

 

 

Tony Valainis/Indianapolis Monthly Timothy S. Durham, at his Indianapolis home in front a wall of portraits by 1960s pop artist Peter Max, says Ponzi allegations "weren't true."

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Agents from the Federal Bureau of Investigation raided two of Mr. Durham's companies last month, and the U.S. attorney's office in Indianapolis filed documents in federal court accusing Mr. Durham and at least some of his companies of defrauding investors in an alleged Ponzi scheme, which may involve hundreds of millions of dollars. No criminal charges have been filed.

 

In an interview, Mr. Durham, 47 years old, said he was shocked by the FBI raids and feels "emphatically" that the allegations "weren't true."

 

The probe centers on Fair Finance Co., an Akron, Ohio, investment firm that has sold investment certificates to Ohioans since 1934 and invested the money in consumer-finance loans such as health-club contracts.

 

Mr. Durham and a partner bought Fair Finance in 2002. The company offered interest rates of as much as 9% on two-year notes. Filings made in recent months with Ohio securities regulators show that Fair Finance issued many loans to other companies run by Mr. Durham. The amount of related-party loans outstanding exceeded $160 million, the state regulatory documents show.

 

The federal investigation into Mr. Durham's companies surfaced Nov. 24 when the FBI executed search warrants at Fair Finance in Akron and at Obsidian Enterprises Inc. in Indianapolis, another company controlled by Mr. Durham.

 

Also that day, U.S. Attorney Timothy M. Morrison in Indianapolis filed a request in federal court in Indianapolis to seize Mr. Durham's suburban Indianapolis mansion, a 2008 Bugatti Veyron sports car and other assets.

 

In that court filing, federal prosecutors described what they suspected was a Ponzi scheme involving Fair Finance. Prosecutors said Fair Finance had told investors it would invest their money in low-risk, high-yield consumer debt.

 

 

The Indianapolis Star FBI agents load boxes of objects taken from a raid of Timothy S. Durham's Obsidian Enterprises in Indianapolis on Nov. 24. Mr. Durham and some of his firms are being probed over an alleged Ponzi scheme.

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Instead, prosecutors alleged, "money provided by victims of the scheme was used to make interest and redemption payments to earlier victims of the scheme," which suggests a classic Ponzi scam.

 

Mr. Morrison, the U.S. attorney in Indianapolis, said he later withdrew the request to seize assets after his office received assurances that the items wouldn't be sold or transferred. Mr. Morrison declined to discuss the status of the case.

 

Prosecutors said in the federal court filing that Federal Reserve Bank records show numerous wire transactions in recent years between Fair Finance's parent, Fair Holdings Inc., and other companies controlled by Mr. Durham and business partner James F. Cochran. Mr. Cochran's lawyer, James Voyles, declined to comment. John Tompkins, a lawyer representing Obsidian Enterprises, declined to comment on the case.

 

Earlier this month, CLST Holdings Inc., a public company in Texas in which Mr. Durham serves as chairman, disclosed that the Securities and Exchange Commission subpoenaed documents related to transactions between CLST and Fair Finance. CLST was a wireless-phone distributor that began liquidating itself several years ago.

 

On Dec. 4, an Akron couple that invested in Fair Finance filed a lawsuit in an Ohio state court against the company, Messrs. Durham and Cochran and others, seeking class-action status on behalf of investors.

 

The suit contends that Messrs. Durham and Cochran used Fair Finance "as their own personal bank," noting that the company issued a number of loans to other companies they ran.

 

Fair Finance's nine Ohio branches have been closed since Fair Finance was raided. Fair Finance owes about $200 million to Ohioans who purchased its investment certificates, which aren't insured by the government, according to the state regulatory documents and the lawsuit.

 

"A lot of people are just scared to death that they have lost their entire life savings," said David Meyer, a lawyer representing plaintiffs in the Ohio lawsuit.

 

Mr. Durham, who is chief executive of Fair Finance, said the company invested money in some of his other firms because it believed it is better "to invest in companies that you know the most about." Such related-party loans were disclosed to investors and Ohio regulators, he said.

 

Mr. Durham acknowledged that his companies have endured financial strains amid the U.S. economic downturn. "It's a difficult time for all of our companies," he said.

 

Mr. Durham grew up in a middle-class family in Seymour, the same small southern Indiana town where rock star John Mellencamp was raised.

 

Working as a leveraged-buyout specialist, Mr. Durham has assembled an eclectic assortment of businesses, including Classic Manufacturing Inc., a maker of commercial and recreational trailers, and National Lampoon, the entertainment and licensing company that traces its roots to the now-defunct humor magazine of the same name.

 

In 2008, business-news network CNBC featured him in a program called "Untold Wealth: The Rise of the Super Rich." The program highlighted his expensive tastes, including a 100-foot yacht that he owned at the time and his collection of exotic and classic cars. Mr. Durham then had around 70 cars, but says he has since sold many of them and now has "under 30."

 

The biggest immediate impact of the allegations against him is in the political arena. A Republican candidate for sheriff of Marion County, home to Indianapolis, withdrew from the race after returning all of Mr. Durham's campaign contributions, saying the loss of that money meant he couldn't compete.

 

The county's Republican prosecutor, Carl Brizzi, wrote on his blog this month that he "should have conducted greater due diligence" before joining the board of Fair Finance at Mr. Durham's request this year. He has since quit the board.

 

Mr. Durham has given $195,000 to Gov. Daniels since 2003. The money has been spent, so "there is nothing to return," said a spokeswoman for the governor, who was elected to his second and final term last year.

 

Write to David Kesmodel at [email protected]

national lampoo?

 

geeezuz

Yup...this has been in the news for a month or so I think. Heard about it a while back. He was a very nice guy when I met him and toured his garage and house. But when they kept saying he is worth about 70-80million it really made you wonder how he lived like he did. Hell he had probably $25million in cars at his house alone, maybe even more then that!

He was Dan C's buddy!

And Im sure Doltmo knows him..the guy had a big collection, be interesting to see if they take all the cars and end up at auction...

He was Dan C's buddy!

they were part of the same gardening club?

All the indy guys knew him. Dan and Rick were both on that same tour and drive i was talking about. Like i said, he was a nice guy, pretty shy. Speaking of Dan, he just picked up a Carrera GT.

Dan is Auctung, right?

Dan is Auctung, right?

 

Yeah...most commonly known for his rediculous videos riding a lawn mower around or sitting in the front of his 6.0 while someone drove, or his obscene rants about how anyone who drinks is an idiot.

Yeah...most commonly known for his rediculous videos riding a lawn mower around or sitting in the front of his 6.0 while someone drove, or his obscene rants about how anyone who drinks is an idiot.

 

CGT looks really nice next to the 6.0 though He wants to repaint it.

 

 

I spoke to him last week and he said the 6.0 is almost sold and has his eye on an LP640 now! Im curious if Tim Durhams cars will come up for auction. IN his lower garage he had the following

 

Murci 6.2, Stadale, Espirit V8, Phantom, Conti Silver Spur, Carrera GT, Ford GT, Delorean, Saleen Mustang, AM DB7 Zagato Roadster, and i might be missing one or two. I think many of the cars were wrecks that he had rebuilt.

I always thought highly of Tim, I hope he gets out alright.

 

and why is Auctung banned? I enjoyed his posts.

Can someone explain to me why someone involved in an allegged ponzi sceme would draw attention to himself by going on national

telivision. If your commiting a crime it's usually best not to draw attention to yourself if you want to stay out jail.

what color combo is his veyron

Its black with silver on the sides if I remember correctly. Had a few pics of it on my old phone.

Can someone explain to me why someone involved in an allegged ponzi sceme would draw attention to himself by going on national

telivision. If your commiting a crime it's usually best not to draw attention to yourself if you want to stay out jail.

 

It is amazing how frequently this happens with the Ponzi crowd, dimestore psychologists could probably write a book about how they're all attention-whores who didn't get to suck on their mom's knockers enough as children or something.

 

Billionaire Allen Standford was the same way, this guy was larger than life and everywhere...insane. Who wants to be the next lightning rod? Step right up!

It is amazing how frequently this happens with the Ponzi crowd, dimestore psychologists could probably write a book about how they're all attention-whores who didn't get to suck on their mom's knockers enough as children or something.

 

Billionaire Allen Standford was the same way, this guy was larger than life and everywhere...insane. Who wants to be the next lightning rod? Step right up!

 

I wasn't even thinking about their psychology, haven't these guy's figured that you can't fight city hall. You aren't going to win if the

goverment comes after you unless your sqeaky clean so at least try to maintain a low profile. Idiots.

 

Heres thr video untold wealth:rise of the super rich with him in it

http://www.hulu.com/watch/69479/cnbc-origi...-the-super-rich

Mr. Durham has given $195,000 to Gov. Daniels since 2003. The money has been spent, so "there is nothing to return," said a spokeswoman for the governor,

 

Let's see someone try THAT one with a bank or investors and tell us how it works...

"it cost $22,000 to replace a tire"

 

"my designer can do a lot with an unlimited budget"

 

Money cant buy class!

So it is almost a prerequisite now that if you are stealing money from people with a ponzi scheme, you HAVE to own at least one Veyron.

So it is almost a prerequisite now that if you are stealing money from people with a ponzi scheme, you HAVE to own at least one Veyron.

 

 

This guy was minor league, a real ponzi putz (IE Rothstein) has not one Veyron, HE'S GOT TO HAVE TWO!

Wow, this comes as a shocker to me. I too always wondered about how he could live like that being worth $70 - $80 million, I just figured he could do it, just he was pressing his limits was all.

Its black with silver on the sides if I remember correctly. Had a few pics of it on my old phone.

 

 

thanks

what color combo is his veyron

 

Hope everything gets sorted out quickly...