Attorneys representing Fair Finance say they will not oppose a state court appointing an interim receiver for the Akron company and its parent corporation.
The lawyers, based in Indianapolis, said the company and its owners deny any illegal wrongdoing. The business ''does not agree'' that any fraud has taken place, they wrote.
''If not for the FBI's surprise raid and the seizure of the tools Fair needs to do business, the company would likely be making timely payments to its certificate holders today,'' they wrote in a filing with the Summit County Court of Common Pleas.
The filing marks the first time representatives of Fair Finance have given a detailed response to allegations surrounding the company.
The company's offices have remained closed since the FBI raided Fair Finance's headquarters Nov. 24 and a related business in Indianapolis. Court records show federal investigators suspect Fair Finance was being operated as a Ponzi scheme through its selling of hundreds of millions of dollars of investment certificates to Ohio residents. Investors say they have not had access to their money since Fair closed its eight offices in Akron and nearby communities, including in Wayne County.
''For the past 11 weeks since its offices were raided, Fair, its officers and its affiliates have been subjected to withering — and false — attacks from the media, from Internet commentators, from politicians, and from understandably confused and upset certificate holders,'' the filing says. ''They certainly do not agree that they have been 'running a Ponzi scheme' as alleged [in court documents].''
Can trial be fair?
The publicity surrounding Fair Finance diminishes the chances that Fair and other defendants can receive a fair trial in Summit County, the filing said.
The lawyers, Jackie Bennett Jr. and F. Anthony Paganelli of the Indianapolis law firm of Taft Stettinius & Hollister, were responding to a potential class-action lawsuit filed in Summit County by Columbus-based lawyer David Meyer. Meyer a week ago filed paperwork asking the court to appoint a receiver for Fair Finance and its Ohio corporate parent, Fair Holdings.
A separate lawsuit has been filed in U.S. Bankruptcy Court in Akron by Green attorney David Mucklow seeking to place Fair Finance in involuntary bankruptcy.
Paganelli on Thursday said he expects to file a response today to the involuntary bankruptcy petition. He said he and Bennett are representing Fair Finance, its corporate parent and some executives but not Fair co-owners Timothy Durham or James Cochran.
Mucklow said he knows about Fair's filing to not oppose receivership and that he still believes putting the company into bankruptcy is the best means to protect investors.
The Fair filing to not oppose receivership is the company's strategy, Mucklow said. Receivership is limited in scope to just Fair Finance and its Ohio parent, Fair Holdings and not Fair Holdings' corporate parent, DC Investments, which is based in Indiana, Mucklow said.
Receivership also would not cover as many as 50 potential ''interstate assets'' related to Fair Finance, he said.
Bennett and Paganelli said there have been false rumors circulated in the media and online regarding Fair Finance's co-owner, Indiana businessman Timothy Durham, and others selling off assets.
''To be clear, neither Fair nor its officers are liquidating or otherwise improperly dissipating assets to defraud creditors,'' the lawyers wrote.
Fair Finance and Fair Holdings have been cooperating with ''the FBI, the United States Attorney for the Southern District of Indiana, the Securities and Exchange Commission and the Ohio Securities Division,'' they wrote.
At the same time, the businesses are defending themselves against four lawsuits, they said.
''All the while, Fair and its few remaining employees have been working to reopen the company's doors,'' they wrote. ''Their efforts have been hindered by banks and other business partners that have severed their relationships with the company in light of all the negative publicity and because of Fair's present struggles to meet its financial obligations to them.''
A small group of Fair Finance managers has rented office space at an undisclosed location to try to keep the company running, Paganelli said.
''They're not operating out of the company's existing offices in Akron,'' he said.
While they disagree with allegations in the class-action lawsuit, the appointment of a receiver ''might very well expedite Fair's return to normalcy,'' the filing said. ''Moreover, it is in the best interests of Fair, [Fair Holdings], the certificate holders and the other creditors that some order and structure replace the wild speculation and reckless accusations that have permeated the environment since Fair's offices were raided in late November.''
Investors file suit
On Thursday afternoon, another group of investors sued Fair Finance in Summit County Court of Common Pleas. The lawsuit alleges breach of contract, unjust enrichment, fraud and violation of the Ohio Corrupt Practices Act. The lawsuit did not say how much money the Akron and Fairlawn investors had in investment certificates from Fair Finance.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.