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Tim Durham Trial Begins

Last updated on Tuesday, June 12, 2012

(INDIANAPOLIS) - A prominent Indi­anapolis businessman, who along with his for­mer business partner and accountant is charged with bilking investors out of $200 mil­lion made poor decisions trying to keep the com­pany afloat amid the 2008 financial crisis, but it didn’t amount to fraud, his attor­ney said Monday at the outset of the men’s tri­al.

Federal prosecu­tors allege Seymour native Tim Durham, his business partner and his accoun­tant used a Ponzi scheme to bilk about 5,000 most­ly elderly investors in Akron, Ohio-based Fair Finance Co. and looted the company to fund lav­ish lifestyles. In Durham's case, that included a pricy Indiana mansion, a yacht, private jets, country club fees and a collection of clas­sic and exotic cars.

A number of civil law­suits have been filed in the wake of the collapse of Fair Finance, naming individuals, busi­nesses and others in an attempt to recoup what is alleged to be stolen money.

Defendants in the civ­il suits include Durham's mother, who lives in Seymour, and Girls Inc. of Jackson County.

The Girls Inc. claim involves a $ 250,000 pledge that Durham made to the agency's capital projects cam­paign. He paid just $37,000 of the pledge in 2007 and 2008 before payments stopped.

Prosecutor Henry Van Dyck told jurors they would hear wiretap recordings of Durham and the others dis­cussing how to hide from investors that Fair Finance was running out of money in late 2009 before the FBI raided the company's offices and those of Durham's Indianapolis-based com­pany, Obsidian Enter­prises.

But defense attorney John Tompkins said in his opening statement the recordings repre­sented only a small slice of time and were record­ed as Durham was struggling to keep his companies afloat after the 2008 financial crisis. He said the government had "extrapolated" what was said in some of the recordings to paint an inaccurate picture of massive fraud.

"There is no massive scheme. There is a reac­tion to a panicked situa­tion,"

Tompkins said, adding that Durham made some poor busi­ness decisions that harmed his companies but that it doesn't repre­sent fraud. " The government is trying to convince you that struggling in the bad economy is fraud," he said. "Bad business judgment is not fraud, either."

Durham, business partner James F. Cochran and their accountant, Rick D. Snow, were indicted last year on 10 counts of wire fraud, one count of securities fraud and one count of conspiracy to commit wire and securi­ties fraud. Their trial is expected to last three to four weeks.

Van Dyck said that when Durham and Cochran bought Fair Finance in 2002, the nearly 70-year-old com­pany was on solid finan­cial ground and investors could expect a good return. Fair Finance had debts of about $ 37 million and income-producing assets of about $48 mil­lion.

By the time Fair Finance closed in November 2009, prose­cutors allege its debts had soared to more than $200 million because the defendants had changed the company's business operations, gave loans to family and friends and spent investor funds on personal indulgences.

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