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Economy and Business


Bankruptcy trustee's suit calls Akron-based Fair Finance a "cash cow" for insiders
Files to try to get back millions in insider loan; hints at more legal action to come
by WKSU's M.L. SCHULTZE


Web Editor
M.L. Schultze
 
In The Region:
A bankruptcy trustee has now filed a $19 million lawsuit against one of the big players in the Akron-based Fair Finance company.

 

Who ran what
According to the bankruptcy filings, here is the structure of Fair Finance and the companies created to buy it.
Timothy Durham and James Cochran own 50 percent each of the Indiana company, DCI, and of Fair Holdings and Fair Finance.
          DCI owns 100 percent of Fair Holdings.
          Fair Holdings owns 100 percent of Fair Finance.
The lawsuit claims, “Fair Holdings and DCI conducted no business other than to draw money out of the Debtor through purported ‘loans.’” 
 *************
Here are excerpts from the U.S. Bankruptcy Court trustee’s claim against  Daniel Laikin. The trustee represents Fair Finance, which is called “the Debtor.”
 “The Trustee shortly will file a complaint seeking to substantively consolidate the assets of Debtor’s parent, Fair Holdings, … and its parent, DCI, with the debtor’s estate on grounds that the Debtor, Fair Holdings and DCI are a single, indistinguishable entity. The Trustee nonetheless files this action … because the trustee believes time is of the essence due to the probability that Laikin will attempt to dispose of the real property securing his obligations to the Debtor in light of his problems with the federal government, and because the Trustee is informed that Laikin has listed the real property for sale.”
 “… At the time of the purchase in 2002, the Debtor was a strong, viable , reputable company. Bu 2009, the Debtor had been utterly looted through insider loans, resulting in the shut-down of the Debtor’s business after the FBI raid. … Fair Holdings and DCI conducted no business other than to draw money out of the Debtor through purported ‘loans.’ … The current balance due the Debtor on direct loans to Fair Holdings is at least $76 million. The current balance due to Debtor on direct loans to DCI is $66 million.”
 “The money siphoned from the debtor, through Fair Holdings and DCI, was then transferred out in more purported ‘loans’ to others, again mainly insiders, affiliates and related entities, including personal loans to owners Durham and Cochran and Defendant Laikin.”
“For all real and practical purposes, the operations and affairs of the Debtor, Fair Holdings and DCI are so entangled that they are one and the same company. Fair Holdings and DCI essentially used the Debtor as a cash cow to personally enrich the owners and other insiders and affiliates.”
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