There are more than 13,000 outstanding Fair Finance investment certificates valued at more than $208 million, according to the court-appointed trustee overseeing the Akron company in bankruptcy proceedings.
''That puts some perspective on the magnitude of the problem,'' said Cleveland lawyer Brian Bash.
Bash, named trustee of the under-investigation accounts receivables and loan company a month ago, gave a status report Monday in federal bankruptcy court in Akron.
The trustee's investigation into Fair Finance's records found 13,169 investment certificates outstanding as of Nov. 19, just before the FBI on Nov. 24 raided the company's offices and a related business in Indianapolis. The certificates are valued at $208,641,993.54, Bash said.
''We have a listing of all the investors, we believe, that exist,'' he said.
Bash spoke as part of a conference telephone call in the courtroom before Judge Marilyn Shea-Stonum; he was not physically present. There were six onlookers in the courtroom, including Fair Finance investment certificate holders.
The certificate figures mean that more than 13,000 claims will be filed as part of the bankruptcy proceedings, Bash said.
By comparison, 16,000 claims were filed as part of the multibillion-dollar Ponzi scheme investigation of New York investor Bernie Madoff, Bash said. Bash and the trustee appointed to oversee the Madoff case work for the same law firm, Baker & Hostetler.
Court records show federal investigators suspect the company has been operated as a Ponzi scheme. Fair Finance sold investment certificates that promised high rates of return to Ohio residents. The certificates were not government insured.
No one has been charged or arrested under the ongoing investigation into Fair Finance and its related companies, owned and/or operated by Indiana businessmen Timothy Durham and James Cochran. The two men purchased Fair Finance in 2002 from the Fair family, who established the business in 1934.
A group of certificate holders forced Fair Finance into involuntary Chapter 7 bankruptcy in February as a means to protect the firm's assets for eventual reimbursement.
Assets, loans found
The ongoing look into Fair Finance's records is uncovering assets, including loans made to other affiliated and unaffiliated businesses, that might be returned to creditors, Bash said. He also might auction off Fair Finance's computers and office equipment, he said.
Bash said Fair Finance parent company Fair Holdings might be brought into the proceedings and he is looking at ''other entities'' as well.
Bash said he is working to accommodate as many as 1,500 business accounts, including fitness centers and ''food purveyors'' that depended upon Fair Finance to manage their accounts receivables. ''They may go out of business if they don't get their money,'' he said.
Bash said he has heard from certificate holders concerned that the co-owners of Fair Finance are selling off assets purchased with company money.
''No assets of Fair Finance are being dissipated,'' he said. The U.S. attorney's office in southern Indiana and attorneys for Durham and Cochran have also said that no Fair Finance assets are being reduced, he said.
Bash said he also found 1,000 interest checks that were issued to certificate holders in late November but never mailed out.
The investment certificate records were found during forensic investigations of paper and computer records, Bash said.
Computer experts made copies, or mirror images, of the hard drives of 33 Fair Finance servers, he said.
''I learned the system could be accessed off premises, which gave me a terrible fright,'' Bash said. He took steps early on to prevent online access to Fair Finance's computers and is having all of the company's mail forwarded to his office, he said.
Process takes time
Shea-Stonum urged certificate holders to have patience with the bankruptcy process, saying she understands their emotions.
Bash has been trustee for about a month, is still in the early stages of learning about Fair Finance and needs to conduct a careful investigation, she said. The trustee does not represent any particular creditor or holder of investment certificates and cannot do such things as provide tax advice, she said.
''I've asked the trustee basically to walk a tightrope,'' Shea-Stonum said. ''I want him to be as efficient as possible.''
The federal bankruptcy process probably will allow for a more efficient collection of whatever Fair Finance assets remain than state court proceedings would, Shea-Stonum said.
''We want everything to happen instantaneously. But there are procedures to follow,'' she said.
A Web site set up by the trustee should be a good means of communicating with certificate holders and other creditors, Shea-Stonum said. What is posted on the Web site is at the discretion of the trustee, she said.
The site includes information on how certificate holders and others can file claims, read messages from the trustee and review copies of court documents.
''It is [the trustee's] Web page. What goes on his Web page is subject to his business judgment,'' Shea-Stonum said. She said she will not look at the Web site because she does not want to create legal issues.