Fair Finance had been a family owned company since 1934, attracting more than 5 thousand investors  – most from Northeast Ohio -- who placed their retirement nest eggs in the company’s hands.

It was particularly popular with Ohio’s Amish, some of whom had several generations in a family invest in the company named for the man who founded it during the Depression – Ray Fair.

But on January 7^th, 2002, things changed. Indianapolis businessman Tim Durham bought the company.   The very next day he withdrew money from it to loan to it to Obsidian Enterprises, a holding company he owned that became a black hole for Fair Finance money.   Reporter Greg Andrews of Indianapolis Business Journal says his paper started wondering whether Fair Finance was being looted.

  “We did do a story in October 2009 questioning whether  so much ,money had been taken out of Fair by Tim Durham and others that it wouldn’t  be able to repay the investors in Ohio that had purchased investment certificates.”

 What Andrews didn’t know was the FBI had been looking into the same thing. One month later, agents  raided the Fair Finance offices in Indianapolis and Akron. The company was forced into bankruptcy and investors were left with big questions about whether they’d ever get their money back.

 Today’s trial gets to the question of whether Durham and his partners did anything illegal, or just followed the path of many Wall Street firms. 

  “That’s going to be an interesting question. I think it’s clear Fair Finance was not well run.  I think Tim Durham took a lot of money out of the business but is that a criminal activity?  The government is alleging it is because not only did he take money out but he lied to investors about what the real financial situation was at Fair Finance.”

Tapped phone calls

Durham’s lawyer tried to prevent the FBI’s wire-tapped phone calls of their client from being used as evidence.  Andrews says they were recorded in early November 2009.     

“This was a period when Fair was desperately trying to get approval to sell additional investment certificates. There’s a lot of discussion of how to win over Ohio securities regulators to get that approval.  There are some discussions that at least according to the FBI are quite incriminating   It sounds as though Durham and Tim Cochran were trying to mislead securities regulators.  There was a lot of discussion on how to put off investors who wanted to liquidate their holdings.”

 Durham and his partners decided to close the Akron offices on Veterans Day in 2009 hoping to hold off a run by investors who might demand their money.

 Andrews says Ohio securities officials seem to be asleep at the switch during the years that they continually allowed Fair Finance to sell more investor certificates.

Personal spending

Tim Durham, meanwhile, was becoming well known around Indy for his playboy lifestyle - spending money on yachts and mansions and some 70 automobiles. 

He was even featured on CNBC’s show “Untold Wealth”  where he lamented not getting much use out of $7 million yacht.  

“I’m probably harder on myself.  Making money is a game and when I don’t play the game well I get upset with myself.”  

 Durham was also a political player, donating large sums of money to the Republican Party and conservative politicians like Indiana Governor Mitch Daniels and the local county prosecutor.

The politicians have returned some of those funds as bankruptcy trustee Brian Bash of Cleveland has filed claims to recover money against a range of people from a Playboy Playmate to Durham’s mother.

He’s also filed a 1.2 billion claim against two major investment firms who helped Durham buy and operate Fair Finance, saying they knew -- or should have known -- what was going on.

Greg Andrews says he’s more optimistic than he was that money will be recovered,  but it may take too long for some of Fair Finance’s elderly Ohio investors.