Nine employees of Fair Finance Co. — all that remains of the Akron firm — are working out of an undisclosed location to try to resurrect the business, a company executive testified Thursday in bankruptcy proceedings.
Robert Letham, vice president and director of operations, testified Thursday afternoon in U.S. Bankruptcy Court in Akron during a hearing that will determine if the under-investigation company is placed into involuntary bankruptcy.
Letham was the first Fair Finance executive to make public statements about the company's
operations since federal investigators closed the company down late last year.
''We are open to a degree,'' Letham said. ''We are requesting not to disclose [where] publicly for employee safety.''
The nine employees are trying to maintain $2 million to $3 million in what he calls the ''core consumer'' lending part of the company, he said. Letham, a nearly 15-year Fair Finance employee, spoke during six-hour hearing before judge Marilyn Shea-Stonum. The hearing ended shortly before 7:30 p.m. with no ruling. A conference call is planned this morning with the judge and attorneys from all of the interested parties. One lawyer said he will not be surprised if the judge rules quickly on the bankruptcy filing.
Another company has taken over parts of Fair Finance's operations that involved collecting and servicing money from businesses, he said. The consumer loan portion does not involve selling or servicing hundreds of millions of dollars in investment certificates that have been sold to Ohio residents, he said.
A group of investors filed papers to try to place Fair Finance Co. into Chapter 7 bankruptcy as a means to protect the company's assets and get back at least some of the money they are owed for buying those investment certificates.
Investors say they have not had access to their money or received interest payments since the FBI raided Fair Finance's headquarters and those of a related business in Indiana on Nov. 24. Court records show federal investigators suspect the business was being operated as a Ponzi scheme.
Company attorneys, meanwhile, have agreed that Fair Finance should have a state-appointed receiver but not be forced into federal bankruptcy.
The two sides presented evidence and questioned witnesses during the court proceeding. A certified public accountant with training in fraud investigations testified that the public documents he reviewed basically showed that Fair Finance and Fair Holdings were insolvent.
Prior to the FBI raids, Fair Finance had about 50 employees, Letham said.
''As of the 24th, we were completely shut down,'' he said. ''It was literally lights out.''
Letham said it was his understanding that Indiana businessmen Timothy Durham and James Cochran, the co-owners of Fair Finance and its Ohio parent company, Fair Holdings, made most of the top-level decisions. Letham said he knew little about the part of the business that sold and serviced investment certificates.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.