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Durham found guilty on all counts

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A federal jury found attorney and financier Tim Durham guilty Wednesday on all 12 felony counts stemming from what prosecutors charged was a massive Ponzi scheme that cost investors in Ohio-based Fair Finance more than $200 million.

The jury found Jim Cochran, who co-owned Fair, guilty on eight of 12 felony counts and Rick Snow, the firm's chief financial officer, guilty on five of 12 counts.

U.S. District Judge Jane Magnus-Stinson ordered all three held at the Marion County Jail until a hearing Monday morning, when she will determine whether they should remain detained or be released on home detention until sentencing.

Durham, 49, Cochran, 56, and Snow, 48, were handcuffed and led out of the courtroom by U.S. Marshals, who transported them to jail. The defendants did not exhibit an obvious reaction, though a few family members who had gathered in the courtroom wept.

The defendants each faced the same 12 counts: 10 counts of wire fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud and securities fraud.

After deliberating for about eight hours, the jury found Durham guilty on all counts, while splitting its decision on Cochran and Snow. The pair were found not guilty on three charges involving wire transfers of funds from Fair that wound up in Durham's bank account.

For wire fraud charges involving recorded phone calls, the jury found the two defendants on each particular call guilty. Durham was a participant on every call that resulted in charges.

The jury found all three defendants guilty of securities fraud, conspiracy to commit wire and securities fraud and two counts of wire fraud involving the dissemination of an offering circular for investors in Fair Finance.

Assistant U.S. Attorney Winfield Ong urged the defendants be taken into custody, telling the judge they are flight risks. The defense attorneys argued their clients should be released back to home detention pending sentencing.

"Tens of millions of dollars are missing," Ong told the judge. "All of them are facing life sentences. All it takes is $2,000 to get across the border."

The judge said she would make the decision after hearing evidence on the question at 10 a.m. Monday.

U.S. Attorney Joseph Hogsett hailed the jury's decision, calling the case "the most significant piece of litigation the Southern District has seen in a generation."

The verdict was a huge victory for Hogsett's office and the FBI, which began investigating Durham more than three years ago.

Hogsett vowed to seek the "full and maximum penalties." He said that makes it "entirely likely (the defendants) will serve the rest of their lives in jail."

Each wire fraud charge can carry a prison sentence of up to 20 years; the punishment on the securities fraud charge would take into account the number of investors who lost money and how much they lost.

Sentencing will occur in the next few months. At that hearing, defendants would have the opportunity to call character witnesses.

Durham defense attorney John Tompkins declined to comment as he left the courtroom Wednesday.

David Spector, an Ohio businessman who lost about $200,000 in Fair and testified for the prosecution, expressed gratitude when reached by phone Wednesday evening.

"I think the jury heard all the evidence, and it's pretty clear from the short deliberation and the verdict that the evidence was overwhelming," said Spector, who lives in Wooster, Ohio. "It sounds to me like the system worked."

Brady Cassidy, a 68-year-old Wooster resident who lost $90,000, added: "It doesn't put a dime in our pocket. But justice is served, and that's great. I'll have a good evening."

The judge read the verdicts starting at about 6:25 p.m. Wednesday.

Attorneys for the prosecution and defense offered their closing arguments Tuesday afternoon, a few hours after defense attorneys for the three defendants rested their cases. The jury began its deliberations at 9:50 a.m. Wednesday. The trial began June 11 in U.S. District Court after jury selection on June 8.

The U.S. Attorney's Office offered six days of testimony, thousands of pages of documents and recordings from FBI wiretaps as it tried to convince jurors the defendants ran Ohio-based Fair Finance as a Ponzi scheme, defrauding more than 5,000 investors.

Prosecutors said the defendants gutted Fair Finance by doling out tens of millions of dollars in related-party loans to Durham, Cochran, their friends and their failing businesses. Those loans were never repaid.

Defense attorneys blamed the 2009 collapse of the consumer-loan company on a "perfect storm" of a bad economy, bad press and newly skeptical Ohio regulators. Defense presentations lasted less than two hours and did not include testimony from Durham or his co-defendants.

On June 1, the Indiana Supreme Court suspended Durham for not paying his annual registration fee. He was admitted to the Indiana bar in 1987 and does not have a history of discipline, according to the Indiana Roll of Attorneys. The suspension is to begin June 22.

To catch up on the Indianapolis Business Journal's coverage of Fair Finance and Tim Durham, click here.


 

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  1. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  2. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  3. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  4. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  5. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

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