Nov. 30 (Bloomberg) -- Timothy S. Durham, the onetime chief executive officer of National Lampoon Inc., was sentenced to 50 years in prison for defrauding investors in an unrelated company he partly controlled.
“I found no sincere remorse,” U.S. District Judge Jane Magnus-Stinson in Indianapolis said today before imposing punishment on Durham, 50. She said the former Fair Finance Co. CEO exhibited deceit, greed and arrogance.
Prosecutors sought a sentence of 225 years under nonbinding federal guidelines, which the judge rejected as unrealistic.
Durham, who was also the CEO of Indianapolis-based buyout firm Obsidian Enterprises Inc., and an accomplice, James Cochran, 57, were convicted in June of taking money raised from Fair Finance investors, spending it on themselves and lending it to other entities they controlled. A third man, Rick Snow, 49, was convicted of helping to deceive investors about the company’s financial condition.
The three squandered $208 million of investors’ money, according to U.S. Attorney Joseph Hogsett in Indianapolis.
Cochran, who was the chairman of Akron, Ohio-based Fair Finance, was sentenced to 25 years, not the 145 years prosecutors asked for. The government recommended 85 years for Snow, Fair Finance’s ex-chief financial officer. He received a 10-year term.
Each man addressed the court before being sentenced.
“I feel badly about all this,” Durham told Magnus-Stinson. He said he was surprised at the amount of money lost by four victims who also spoke in court today.
“I wish I had tried harder to make things clearer for them,” he said of Fair Finance’s public disclosures.
Founded in 1934, Fair Finance provided retailer liquidity by buying receivables at a discount with money raised through sales of interest-bearing certificates.
Durham and Cochran acquired Fair Finance through a holding company in 2002. By February 2005, Fair Finance had shifted from providing commercial financing to making loans to its principals, their associates, Obsidian and other entities they controlled, according to the indictment.
His voice choked with emotion today, Cochran told the judge he hadn’t intended for “any of this to happen.” He said he had grown up with people like those who invested in the company and that he understood the impact of their losses.
Snow said he was humiliated and asked for leniency.
“This sentence is the longest white-collar fraud sentence in Indiana history,” Hogsett told reporters outside the courthouse after Magnus-Stinson set Durham’s punishment.
“Throughout these proceedings, we all heard Tim Durham say his failures were the fault of many things -- the government, the media and the nation’s economic struggles,” the prosecutor said. “It was Tim Durham and the selfish destructive actions of people like him that squandered America’s economic strength. It was Tim Durham, along with Rick Snow and James Cochran who stole the hopes and dreams of those people.”
At trial, Durham defense attorney John Tompkins had argued his client was trying to prop up a faltering company and had put $28 million of his own money into it.
The lawyer returned to that theme in a pre-sentence court filing in which he’d attributed Fair Finance’s losses to the U.S. financial downturn in 2008 and 2009 and negative press coverage that reduced investor interest in the business.
A jury on June 20 found Durham guilty of all 10 counts of wire fraud and one count of securities fraud, each punishable by as long as 20 years in prison, and one count of conspiring to commit those crimes. Jurors deliberated for less than a day after a 10-day trial.
Cochran was found guilty of eight counts and Snow was convicted on five. The jury found all three men guilty of wire fraud as well as the lone securities fraud count and the charge of conspiring to commit each of those crimes.
Four victims of Fair Finance addressed the court before the sentences were imposed.
One, retired nun Barbara Lukacik, 74, of Akron, told the judge she invested $125,000 with Fair and lost it all. She said she avoids taking public assistance by caring for children.
“You probably felt you were above the law,” Lukacik said to the defendants. “Shame on you.”
Durham, a Republican Party fundraiser, resigned from National Lampoon in January. The Los Angeles-based media company wasn’t named in the government’s charging documents.
The case is U.S. v. Durham, 11-cr-00042, U.S. District Court, Southern District of Indiana (Indianapolis).
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