INDIANAPOLIS: Timothy Durham has gone from playboy to prisoner.
The once high-flying Indianapolis business executive and co-owner of Akron-based Fair Finance was found guilty Wednesday in a U.S. District Court of all 12 charges against him. His two co-defendants also received guilty verdicts on multiple charges in a fraud case involving about 5,300 Northeast Ohio investors who lost more than $200 million.
Fair co-owner James Cochran was found guilty on eight of 12 charges, while former Chief Financial Officer Rick D. Snow was found guilty of five of 12 charges.
They each had to remove their neckties, belts, jackets and empty their pockets before being led away in handcuffs as family and friends cried and hugged; they each face the possibility of life in prison, according to the U.S. Attorney's Office.
Just prior to being handcuffed, Durham hugged his mother and quietly told her, “Don’t worry. I’ll be fine.”
The three men will be in Marion County prison in the Indianapolis area through at least Monday when there will be a court hearing to determine if any of the men is at risk of fleeing if set free prior to sentencing. Formal sentencing may take place in 90 days.
Assistant U.S. Attorney Winfield Ong, who led the prosecution, called the verdict “partial justice” for the thousands of Akron-area investors who lost millions of dollars trusting the Indiana owners of now-bankrupt Fair Finance.
All three men were found guilty of one count apiece of conspiracy and one count apiece of securities fraud. Jurors decided that Cochran was guilty of six out of 10 counts of wire fraud and that Snow was guilty of three out of 10 counts of wire fraud.
Testimony during the case showed Durham used Fair money to pay for a flashy lifestyle and continued to do so even as the firm headed for trouble.
The government conducted studies on five wire transfers involving Fair money that Durham wound up spending on cars, gambling and a Playboy party.
In a news conference outside the Birch Bayh Federal Building where the trial was held, Ong, the assistant U.S. attorney, said, “This case was about justice for Northeast Ohio. I can’t express how strongly I feel some justice was brought to those people.”
Ong said he made visits to Akron to interview people who had lost their investments by buying uninsured Fair Finance investment certificates. The certificates promised higher interest rates than banks had been paying.
The jury started deliberations shortly before 10 a.m. Wednesday. Leading up to the jury receiving the case, Durham and Cochran stared into space ahead of them while Judge Jane Magnus-Stinson read instructions and the entire grand jury indictment to the jury. Only Snow, whose seat faced the jury during the trial, spent much time looking somberly at the jurors.
The verdicts were delivered just after 6 p.m.
Ong said the government will press for the maximum penalties, which could mean life imprisonment for the three men, although he suggested Snow could face a slightly less severe sentence than life. Sentencing will be decided by Magnus-Stinson.
News reaches Akron
Akron-area investors reacted to the verdicts, saying they have little expectation of getting their money back.
Tom Ries of Wadsworth had $72,000 invested with Fair Finance. He had been hoping to use the money to purchase a winter home in Florida. He’s had to settle for a mobile home, he said.
Ries said he’s been told to expect back no more than “pennies on the dollar.”
Still, “there is satisfaction in that [Durham] was found guilty and he won’t be out on the street,” Ries said.
Beverly Barabas, a Wadsworth widow, said she’s still not sure exactly how much she lost with Fair Finance, but she knows losing that money meant giving up all the little extras in life.
“I have grandchildren and children and I told them, ‘Grandma isn’t going to have the money for Christmas and birthdays,’ ” she said.
And while Wednesday’s conviction might not help get any of her money back, “Thank God they’re going to get punished for what they did to me and a lot of other people,” she said.
The criminal trial began June 11, more than 2½ years after the FBI raided Fair Finance’s headquarters on East Market Street in Akron on Nov. 24, 2009. Fair Finance was forced into bankruptcy in February 2010 in U.S. Bankruptcy Court in Akron.
As testimony began, prosecutors outlined where investors’ money had gone. The government's first witness was Fair's former owner, 86-year-old Donald Fair. After six days of testimony, the defense on Tuesday took only the morning to present its side.
Durham, Cochran and Snow did not testify in their own defense.
The jury began deliberations Wednesday morning after receiving instructions from the judge.
Durham and Cochran purchased Fair Finance in 2002 from Fair, whose father, Ray, started the consumer loan and accounts receivables business in 1934. Snow, a former Akron-area accountant, was hired by Durham to be chief financial officer of his Indianapolis-based businesses that included Fair’s corporate parent.
The government said investors were not told that Fair’s business model had changed and that Durham and Cochran were taking millions of dollars out of Fair to make insider loans and for personal expenses to support lavish lifestyles.
Bad economy blamed
The defense argued that Fair fell because of bad business decisions and the terrible economy of 2008-2009, not criminal activity. The attorneys also blamed in part Indiana news reports in 2009 that chronicled the large amounts of Fair Finance-backed insider loans piling up at Durham's Obsidian Enterprises.
The government’s evidence showed Durham spent $200,000 from Fair investors toward the $650,000 purchase of a 1929 Duesenberg Derham Phaeton on Jan. 20, 2005. He ordered wire transfers from Fair that sent $107,500 for him to use at the casino at Atlantis Paradise Island Resort in the Bahamas on Jan. 31, 2007.
Durham spent $131,235.97 from Fair to lease an ultra high-end sports car Bugatti Veyron on June 19, 2007. The base price to buy one is $1.7 million.
Durham ordered a wire transfer of $150,000 from Fair on Jan. 28, 2008, spending the money at the Rio Suites Hotel and Casino in Las Vegas.
Durham wired more than $168,000 from Fair to throw a Playboy magazine party in September 2008. The event included entertainment from Ludacris’ Disturbing tha Peace Records at a cost of $60,000, and appearances by Playboy bunnies and reality TV stars Kendra Wilkinson, Bridget Marquardt and Holly Madison, who were paid fees of $10,000 each.
Prior to the jury being seated Wednesday morning, Durham’s attorney, John Tompkins, made a motion for a mistrial because of a comment during Tuesday's closing arguments by another defense lawyer. Judge Magnus-Stinson denied his motion.
Outside the courtroom after the jury received the case, Tompkins said, “Anything she [the judge] decides is potential grounds for an appeal.”
Beacon Journal staff writer Paula Schleis and the Indianapolis Business Journal contributed to this report. Jim Mackinnon can be reached at firstname.lastname@example.org.