INDIANAPOLIS: A former Indianapolis businessman who prosecutors say masterminded a Ponzi scheme that defrauded investors in an Ohio company of $200 million says jurors at his trial last year should not have heard wiretapped conversations.
The Indianapolis Business Journal reports attorneys for Tim Durham and his two co-defendants, Jim Cochran and Rick Snow, filed a 92-page brief with the 7th Circuit Court of Appeals in Chicago seeking to overturn their convictions in the scheme at Akron-based Fair Finance Co.
The brief says investigators should not have been allowed to conduct wiretaps without first demonstrating that “ordinary investigative techniques failed or were unlikely to succeed.”
The wiretaps captured Durham and Cochran discussing ways to keep Fair Finance afloat and raise more money from investors in the weeks before the FBI raided its offices in November 2009.
More than 5,000 Ohio residents purchased unsecured investment certificates from Fair Finance touting interest rates as high as 9 percent. Prosecutors say Durham used that money to prop up other failing businesses and finance a lavish lifestyle that included a 30,000-square-foot Indiana estate, a yacht, private jets and classic cars.
The wiretaps caught Durham discussing ways to recast Fair’s financial statements so that Ohio securities regulators might allow the company to sell additional certificates. One approach, Durham said, would make $28 million in bad loans “just vanish.”
“Given the central role of this erroneously admitted evidence to the government’s case at trial, the defendants’ convictions must be vacated and the case remanded for a new trial,” according to the brief.
The brief also blames the men’s convictions on bungled jury instructions and a flawed sentencing process and argues Judge Jane Magnus-Stinson erred by not calling a mistrial when prosecutors took “unfair advantage” of a misstatement by Cochran’s public defender, William Dazey.
During closing arguments, Dazey said he believed a “scheme to defraud” had occurred. He later said he had not meant that. The appeals brief argues that prosecutors twisted his statement into a “critical concession.”
“To a jury starved for something it could understand, the prosecutor’s endorsement of Dazey’s misstatement must have seemed a comprehensible proposition with which it could too easily agree,” the brief said.
Durham, 51, is serving a 50-year sentence at the federal penitentiary in McCreary, Ky. Cochran, 57, was sentenced to 25 years and is imprisoned in Greenville, Ill., while Snow, 49, is serving his 10-year sentence in Pekin, Ill.
Bob Hammerle, an Indianapolis criminal defense attorney who isn’t involved in the case, said the three men will have a hard time winning a reversal. He noted that Stinson is well-regarded and that Assistant U.S. Attorney Winfield Ong led the prosecution.
“You knew they were going to argue everything they can,” Hammerle said of the attorneys for Durham, Cochran and Snow. “But that is a very high peak they are trying to climb.”
Prosecutors are scheduled to file their response to the brief next month.