Executives of Akron-based Fair Finance Co. hope to reopen local offices next week, perhaps as early as Monday, giving customers access to their accounts, a lawyer representing the parent corporation said Wednesday.
State regulators disputed some statements made by the attorney.
Reopening the headquarters on East Market Street and offices elsewhere in the area depends in large part on whether Fair Finance is able to get its computers back from investigators and depends on Ohio regulators, said John Tompkins, who represents Indiana-based Obsidian Enterprises. Obsidian is related to Fair Finance Co., which also does business as Fair Financial.
Offices have been closed since the FBI raided them on Nov. 24 and took away computers and files. According to court documents, federal officials suspect that Fair Finance, which traces its roots to 1934 in Akron, has been run as a Ponzi scheme in recent years and defrauded Ohio residents who bought the firm's investment certificates, which promised high rates of return. The certificates are not federally insured.
Fair Finance is working to avoid a ''run on the bank'' scenario the day it reopens if investors demand back all of their money, Tompkins said. No business, including fully funded banks, can survive that kind of scenario, he said.
State regulators disagreed with a statement by Tompkins that implies they are working with Fair Finance to reopen the offices.
Tompkins said the state might impose conditions on what will be allowed to take place when Fair Finance reopens. ''It is up to the state of Ohio to say what can happen that first day. It depends on what permissions Ohio gives them,'' he said.
Ohio Division of Securities spokesman Dennis Ginty said the state is not coordinating with Fair Finance on reopening.
''Reopening decisions are to be made by Fair Finance, not the state of Ohio,'' Ginty said in an e-mail. ''The [Division of Securities] has not placed any conditions on what investors can or cannot do should Fair Finance reopen its offices.''
Ginty said the division will ''closely monitor Fair Finance's compliance'' with the company's last securities offering. Fair Finance is not allowed to sell securities in Ohio but applied in late October to sell up to $250 million in new investment certificates to Ohio residents.
The division will continue its review of Fair Finance's application to sell the $250 million in new securities ''once the company produces the information the division has requested,'' Ginty wrote. ''Although Fair Finance is not authorized to roll over or sell any new certificates at this time, Fair Finance is authorized and indeed required to pay accrued interest to existing investors and must redeem investment certificates within 60 days of maturity in accordance with the terms of the controlling offering circular.
''Fair Finance reserved the right to permit redemption prior to maturity. The division does not know whether Fair Finance will exercise that right in light of recent events,'' Ginty wrote.
Tompkins said that when Fair Finance offices reopen, ''those assets will be available'' to investors.''
If people ask whether 100 percent of their investments will be available immediately, the answer is no, he said.
''People will have access, but not 100 percent.''
Tim Durham, who heads Obsidian and is a co-owner of Fair Finance, ''is trying very hard, and working with the U.S. attorney out here,'' Tompkins said, adding that Durham was not available for an interview.
Durham, an Indiana businessman, bought the Akron investment and loan company in 2002 from the Fair family, which founded the business.
Durham's initial goal is to re-open Fair Finance on Dec. 10, ''but just the logistics involved would make that difficult,'' Tompkins said. ''His goal is to open next week.''
Fair Finance executives are working this week with Ohio regulators to recertify the business to sell securities, Tompkins said.
The federal government's actions in the past week freed up assets from Fair Finance and Obsidian, Tompkins said. The government initially sued to seize assets, but withdrew the case on Monday.
''No money was taken out of the accounts,'' Tompkins said. ''All other assets of Fair Finance are intact.''
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.