INDIANAPOLIS: Timothy Durham was given a 50-year prison sentence Friday for being the ringleader of the $200 million fraud scheme involving Akron-based Fair Finance Co.
“It’s likely an effective life sentence,” U.S. District Court Judge Jane Magnus-Stinson said in addressing Durham, age 50, in court Friday afternoon.
Durham’s co-owner of the Akron company, James Cochran, was given 25 years. Cochran is age 57.
The third defendant in the fraud case, Rick Snow, 49, was given a 10-year prison sentence. The three were found guilty of criminal charges in the case on June 20.
During the sentencing proceedings, the judge said the losses suffered by more than 5,000 investors involved deceit, greed and arrogance by Durham.
She added, “Mr. Durham, you were raised better than that. All of that was jettisoned so you could live a lifestyle that I don’t know how you keep track of.”
Magnus-Stinson said the Fair Finance fraud case “undermines the heart of the country.”
“The court finds there is no remorse on your part that is sincere,” she added.
“This is the heartland. This is where we work hard. We drive Chevys, Buicks and Fords, not Bugattis,” the judge said. Durham’s possessions at one time included a $1.2 million Bugatti auto.
Durham spoke briefly, addressing the court. He never used the word “sorry” in his remarks.
He said, “I feel terrible about the lost money. My family lost all its investments. I feel very badly for all the other people. I never intended these companies wouldn’t succeed, but they have.”
Durham added, “I did not want anyone to suffer. I have regrets. I truly feel badly for them.”
The judge told Cochran she believed his punishment “may be an effective life sentence.”
She added, “You betrayed the very people you grew up with. You were the guy who lied. You were the guy who bragged about it.”
Snow briefly addressed the judge, saying, “I am deeply sorry for any individuals hurt. I am humiliated.”
Snow said, “I had no intention to defraud or steal from anyone. I ask your honor for leniency. I will live every day with remorse.”
Snow’s family members were crying as he spoke.
The U.S. Attorney’s Office asked that Snow get at least 25 years in prison. Judge Magnus-Stinson disagreed. “I don’t think you were as greedy as the other two,” she said. “The reason you were found guilty is because you are.”
Snow was allowed to go home with family members until he is assigned to prison.
Each will have to serve 85 percent of their sentences before being eligible for parole.
Investors testify
Earlier in the day, people who had investment certificates with the company choked up when telling the judge what the scandal had done to their lives.
Four people from Northeast Ohio traveled to testify just prior to the sentencing proceedings.
“What has happened is shameful,” said 74-year-old Barbara Lukacik, a nun who lost $125,000 — all of her savings. As she looked directly at Durham, she said she was speaking not just for herself but for all 5,300 victims.
“I certainly forgive you. I do, with all my heart,” Lukacik said. “I honestly believe justice must be served because it is the righteous thing to do.”
Kristen Schroeder, who lives on the west side of Cleveland, said she lost her entire savings of $60,000 in Fair Finance. She planned to use the money to pay off bills from her wedding and to start an acupuncture business, she said.
The loss affected her emotionally and physically, she said.
Magnus-Stinson said she received 1,035 letters from victims in the 3-year-old case. “I read every one,” she said.
One letter from a man in his 90s simply read, “Now what? Help,” the judge said.
From raid to jail time
Durham and Cochran arrived dressed in prison garb, handcuffed and shackled. Snow, who has been living under house arrest, was dressed in a dark suit and wearing a white shirt.
The sentencings took place shortly after the three-year anniversary of the FBI raids of the headquarters of the company on East Market Street in Akron. The raid led to the three men’s indictments and arrests in 2011.
In the summer trial, the three men never testified.
Defense attorneys had argued that Fair Finance failed not because of criminal activity but because of bad business decisions and the onset of the Great Recession.
All three were convicted of one count apiece of conspiracy and of securities fraud. Durham was found guilty on all 10 counts of wire fraud, Cochran was found guilty of six of 10 counts and Snow found guilty of three of 10 counts.
The FBI raided Fair Finance’s Akron area offices the day before Thanksgiving in 2009. The long-established business never reopened and is now in bankruptcy proceedings.
Durham and Cochran bought Fair Finance in January 2002 from Don Fair, the son of the company’s founder, Ray, who started the business in the 1930s.
Fair Finance’s longtime business model was to buy and process accounts receivables from other businesses. It sold uninsured investment certificates to Ohio residents to provide working capital. The certificates paid interest rates higher than what banks paid.
Most of the people who bought Fair Finance investment certificates were considered unsophisticated investors; many of them are elderly.
The bankruptcy trustee has brought in a bit more than $6 million into the company’s estate; no money has been distributed to date to the thousands of creditors.
Lukacik, the retired nun, indicated Durham’s sentence was satisfactory. “Justice had to be served.”
She said she hoped that during his years in prison, he will feel sorry for what he did. She added that when she spoke directly to Durham, she believed his face showed a blank expression.
“I don’t think he’s sorry,” she said.
Beacon Journal business writer Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
