INDIANAPOLIS: The federal criminal case against Fair Finance co-owners Timothy Durham and James Cochran and executive Rick Snow goes to the jury today.
Closing arguments ended Tuesday in the courtroom of U.S. District Judge Jane Magnus-Stinson with the government saying its evidence shows the three Indiana men conspired to defraud 5,300 Ohio investors out of more than $200 million.
The defense attorneys for the three men, meanwhile, said Akron-based Fair Finance failed because of poor business decisions and a terrible economy, not by criminal acts.
Assistant U.S. Attorney Winfield Ong said the three men ran Fair Finance as an Alice in Wonderland-like enterprise where they made up their own facts and gave investors and Ohio state regulators false information.
“Assets weren’t assets. Income wasn’t income,” Ong said.
Durham’s attorney John Tompkins repeatedly told jurors that the government’s “premise fails again.” Durham did not testify in his own defense.
The defense made its case Tuesday morning after the prosecution rested late Monday afternoon.
Lawyers for Cochran and Snow have made a point of trying to shift most of the spotlight on Durham and away from their clients since the trial started more than a week ago.
“My guy was the big boy. He was the boss,” Tompkins explained after the courtroom emptied.
He said Durham was “extraordinarily anxious” over the outcome.
Ong, in his closing arguments Tuesday, said it took all three men to defraud investors. The defendants are each charged with 10 counts of wire fraud, one count of securities fraud and one count of conspiracy to commit wire fraud and securities fraud.
Conviction could mean decades of prison time and hefty fines.
Easy way out?
Ong told jurors that no one starts a business to commit fraud.
“When business starts to go bad, people look to take the easy way out,” he said. “What they do is they start to cheat. That’s how corporate fraud happens.”
And bad decisions led to problems at Fair Finance and other Durham-controlled businesses, the government alleged.
“[In] 2005 and 2006, the lies started. The lying and cheating only increased over the years,” Ong said.
Durham, Cochran and Snow decided to try to solve problems by lying and cheating “rather than face the consequences of those terrible business decisions.”
Fair Finance had been a sound, long-time Akron business offering financial services to Ohio residents prior to it being sold in 2002 to Indiana-based Durham and Cochran, the government has argued. Snow, a one-time Akron-area accountant who had Fair as a client, was hired as chief financial officer for Durham’s business operations.
Over the years, the three men worked to siphon about $85 million out of Fair Finance, with much of the money going to pay personal expenses of Durham and Cochran, for insider loans and to related failed businesses, the government argued.
“Fair Finance is The Little Engine That Could,” Ong said. “But even Fair couldn’t withstand the pillaging it was undergoing. While Fair is a remarkable company, it couldn’t put up with this.”
Durham, Cochran and Snow never disclosed to investors where the $85 million went, Ong said.
Assistant U.S. Attorney Henry Van Dyck, who made closing arguments to jurors Tuesday, said it took all three men to pull off the fraud the government is alleging.
Durham was the boss; Cochran ran Fair Finance and dealt with investors, while Snow worked behind the scenes to falsify financial information, Van Dyck said.
Earlier in the day, the defense ended its presentation without calling Durham.
The only witness called for the defense was an accountant who prepared a report on Durham’s companies in 2005, four years before an FBI raid shut down Fair.
Christopher Hirschfeld, who formerly worked for Indianapolis-based Goelzer Investment Management, said he prepared a financial report on Durham’s Obsidian Enterprises and its five subsidiaries in 2005 as part of a move to take the publicly held company private. He said figures provided by Durham’s accountant, Snow, projected the companies would make profits in the hundreds of thousands of dollars over the next few years.
But federal prosecutor Nicholas Surmacz pointed out during cross-examination that the companies actually posted million-dollar losses or more, and one even went out of business.
The Obsidian companies, he said, relied on “regular infusions of cash from Fair Finance just to survive.”
The Associated Press contributed to this report. Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.