Fair Finance Co. Chief Executive Officer Timothy S. Durham and two other men were indicted on fraud charges by a U.S. grand jury.
U.S. Magistrate Judge Kennard P. Foster in Indianapolis today unsealed the indictment, filed yesterday, in which Durham, 48, Chairman James F. Cochran, 55, and Chief Financial Officer Rick D. Snow, 47, are accused of conspiracy, fraud and using manipulative and deceptive devices.
The finance company, based in Akron, Ohio, raised about $200 million from investors from 2002 to 2009 by selling investment certificates to Ohio residents, according to the indictment.
The men “deceived and defrauded investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money,” prosecutors said.
Automatic not-guilty pleas were entered for each of the defendants and a trial scheduled for May 16.
If convicted, the three men face as many as 20 years imprisonment on the wire fraud and securities fraud charges and as many as five years if they’re found guilty on the conspiracy charge, acting Indianapolis U.S. Attorney Timothy Morrison said at a press conference today announcing the charges.
National Lampoon Chief
Durham, a Republican Party donor, is also chief executive officer of the National Lampoon Inc. media company and of Indianapolis-based Obsidian Enterprises Inc. He was arrested in Los Angeles. Snow and Cochran were arrested in Indianapolis, according to a U.S. Justice Department press release.
Durham’s attorney, Larry Mackey of Indianapolis-based Barnes & Thornburg LLP, didn’t immediately respond to voice mail messages seeking comment. Cochran’s lawyer, James Voyles of Indianapolis, also didn’t reply to a telephone message seeking comment.
The scheme, which involved 5,000 investors, ran from February 2005 through November 2009, according to the Justice Department.
Fair Finance closed after a November 2009 raid by U.S. Federal Bureau of Investigation agents. In February 2010, its creditors forced it into involuntary bankruptcy in Akron. Its creditors, in a court filing, accused Durham, Cochran and companies they controlled of taking $176 million in loans from Fair Finance.
Bankruptcy Trustee Brian Bash said Cochran and Durham, who acquired Fair Finance in 2002, used it to make loans to parent companies Fair Holdings Inc. and DC Investments LLC and ultimately to themselves.
Those allegations are repeated in the indictment.
“Durham and Cochran wired Fair investor money to themselves, to their family, friends and acquaintances and to the companies that they owned or controlled,” including Fair Holdings and Obsidian, according to the indictment.
Allegedly aided by Snow, the men made false and misleading statements about the company’s financial condition in filings with Ohio securities regulators and in offering circulars distributed to their investors, the charging document said.
Snow’s attorney, Thomas Farlow of Indianapolis, said in a telephone interview that his client maintains he is innocent.
“He asserts that he hasn’t committed any crime,” Farlow said of Snow. “He’s confident that he hasn’t done anything that’s a violation of any law.”
The case is U.S. v. Durham, 1:11-cr-00042, U.S. District Court, Southern District of Indiana (Indianapolis).