Tim Beringer vividly remembers arriving at the headquarters of Fair Finance Co. the morning of Nov. 24 to check on his investments with the small business.
What the Akron resident found instead were blue-jacketed FBI agents carrying out computers and records to an unmarked white panel van parked outside the East Market Street offices.
''I was thinking my wife's and my investments were not in good shape,'' Beringer said with a small, wry smile Tuesday night. He and his wife, Linda, were among more than 1,000 people who crowded into the Hilton hotel in Fairlawn before 6 p.m. for a public meeting sponsored by two law firms seeking a class action civil lawsuit against the long-time Akron loan and investment firm. Among the crowd were Amish residents from Kidron in Wayne County who said they had invested with Fair Finance.
Investors say they have not received payments on the investments they bought from Fair Finance and have not had access to their accounts since the FBI raided the company just before Thanksgiving. The investors might have as much as $200 million in outstanding certificates, according to court documents.
The larger-than-expected overflow crowd caused a hasty rescheduling of back-to-back meetings in the hotel's largest ballroom to accommodate everyone, with as many as 500 latecomers having to wait an hour in the Hilton's main lobby and hallways for the second meeting to start.
''We didn't anticipate [this many people],'' said David P. Meyer, a Columbus lawyer. He represents an Akron couple, Thomas E. and Nellie M. McKibben, who filed the potential class-action lawsuit against Fair Finance in early December in Summit County Common Pleas Court.
''This response is impressive,'' Meyer said. ''This shows what a significant issue this is to the community.''
The meeting, sponsored by Meyer and Tom Hargett of the Indianapolis law firm Maddox, Hargett & Caruso, was billed as information
al-only. A federal investigation into Fair Finance, related companies and its owners and executives originated in Indiana.
Meyer said if a judge gives the lawsuit class-action status, Ohio residents who bought investment certificates from Fair Finance will not have to take legal action on their own.
''You don't need to do anything to stay in this class action,'' Meyer said. ''You don't need to join this class action. . . . You are automatically in the case when it is certified as a class.''
Meyer said he did not know how long it will take a judge to decide the request.
''It's going to take some time,'' he said. ''It's a legal process that will take a fair amount of time.''
There is also the possibility that the status might not be granted.
Seeking their money
The McKibbens on Dec. 4 sued Fair to get back more than $90,000 for investment certificates. The lawsuit alleges that Fair owes Ohio investors as much as $197 million. The company's investment certificates are not government insured.
The FBI raided Fair Finance headquarters on East Market Street on Nov. 24 and the related offices of Obsidian Enterprises in Indianapolis. Court documents show that the U.S. Attorney's Office for southern Indiana suspected that Fair Finance was being operated as a Ponzi scheme. Ponzi schemes need constant infusions of new money to pay current investors or they otherwise collapse.
No one has been charged or arrested.
Hargett said if the government proves a Ponzi scheme, it will be difficult for investors to get their money back.
''We don't know if it's a Ponzi scheme,'' he said.
Fair Finance, founded in 1934 and which does business as Fair Financial, was purchased from the Fair family in 2002 by Indiana businessmen Timothy Durham and James Cochran. Part of the company's operations involve managing accounts receivables for other businesses. Fair Finance said that its investment certificates, which paid high rates of interest, were funded by short-term consumer credit.
The McKibben lawsuit alleges that Durham and Cochran used Fair Finance as their own personal bank to enrich themselves.
Corporate ties
Fair Finance is owned by an Ohio corporation, Fair Holdings. Fair Holdings, in turn, is owned by Indiana corporation DC Investments, which is related to Obsidian Enterprises, which is run by Durham.
Fair Finance is not allowed to sell securities in Ohio while state regulators review the company's application to sell up to $250 million in new securities.
Also Tuesday, a federal judge in Indiana ruled against newspapers, including the Akron Beacon Journal, that are seeking to unseal search warrants used in the Nov. 24 FBI raids.
The judge denied the motion saying that search warrants were never used in a civil lawsuit filed by the U.S. Attorney's Office for southern Indiana.
Following the judge's ruling, the newspapers on Tuesday slightly reworked and then refiled their motion in Indiana. A federal judge has yet to rule on a related motion in U.S. District Court in Akron.
The Beacon Journal, the Indianapolis Star, the Wall Street Journal and the Indianapolis Business Journal joined to try to unseal the search warrants.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
