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Judge orders Durham, Cochran jailed until sentencing

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Convicted Ponzi schemers Tim Durham and James Cochran will be held in a federal prison until sentencing under an order issued Monday afternoon by U.S. District Judge Jane E. Magnus-Stinson.

The judge agreed to release accomplice Rick Snow on home detention including GPS monitoring, noting his comparatively smaller role in the fraud and the young age of his children.

Magnus-Stinson did not set a sentencing date.

The defendants were convicted of operating Ohio-based Fair Finance Co. as a Ponzi scheme that swindled 5,000 investors out of more than $200 million. A jury last week found Durham guilty of 12 fraud-related charges, Cochran of eight and Snow of five.

Magnus-Stinson issued her ruling on whether the defendants would remain in jail at about 2:30 p.m. after 90 minutes of testimony, including from Durham's son and Snow's wife, both of whom said their loved ones have expressed no desire to flee. Defense attorneys argued their clients should be released under home detention pending a sentencing hearing.

The court's decision to jail Durham and Cochran is based on the fear some of the "missing money" from Fair Finance could help bankroll an escape, said Magnus-Stinson, who repeatedly referenced the infamous Ponzi scheme operated by Bernie Madoff in a stern ruling.

She scoffed in particular at a suggestion by Durham defense attorney John Tompkins that she could require a higher bond on Durham in exchange for allowing him to maintain an office and help find more money to pay back investors in Fair.

Durham's former father-in-law, local businessman Beurt SerVaas, had put up $1 million bond pending trial. The bond will be released since Durham will now be held indefinitely.

Magnus-Stinson suggested the SerVaas bond assets could have been "put up with Fair money in the first place" based on some of the insider loans the company had issued to Durham family members. And besides, she said, the jury's verdict suggests Durham has "no respect for other people's money."

She also expressed skepticism at Tompkins' simultaneous claim that Durham doesn't have the financial means to attempt to flee and that he's essential to recovering more money for Fair's victims.
"It's the missing money the court is concerned about," she said.

Durham and Cochran likely will be transferred to a federal correctional facility in Kentucky. Snow was released following the hearing and will be confined to his home, which he shares with his wife of 22 years and teenage children (who are 14 and 16).

"I'm happy she decided he wasn't a risk," said Snow attorney Jeffrey Baldwin. "I agree with the court's decision."

The judge had ordered all three defendants held in the Marion County Jail over the weekend, pending Monday's hearing.

Tompkins first called Gary Sallee, an attorney who represented a handful of Durham businesses over the years. Sallee said Durham has cooperated with the Fair Finance bankruptcy trustee, turning over more than 40 cars and artwork appraised at more than $6 million to help repay investors.

"It's always been his intention to transfer to the bankruptcy estate as many assets as he could," Sallee said.

Timothy Scott Durham added testimony that his father has never expressed a desire to flee. When he and his father heard the jury had reached a verdict, they put on their suits and were on their way to the court within 30 seconds, he said.

"There's only been talk of an appeal," he said.

Tompkins suggested Fair investors would have a better chance of recovery if the court allowed Durham to continue assisting the bankruptcy trustee.

He described as "farfetched" the suggestion by the prosecution that any of Durham's friends or family members might help facilitate an escape.

Assistant U.S. Attorney Winfield Ong called the prospect of a life sentence an "extraordinary incentive to flee."

"Tens of millions of dollars is missing," Ong added, noting the "cryptic, meaningless" accounting at Fair left plenty of room for Durham to squirrel away cash. "He has shown complete disregard for others in consideration of his own gain."

Ong said little else during the hearing, other than to request the judge consider the trial record in her decision.

Both Baldwin and Cochran attorney Bill Dazey called probation officers who had been assigned to their clients. The officers testified the defendants had followed the rules and made no attempt to flee.

Dazey also introduced exhibits to show the court Cochran does not have enough money to mount an escape: So far this year he has sold two of his three houses and is nearing a deal to sell the third, all for less than the first mortgage balance. And Cochran had a balance of $2,098.54 in his lone bank account at the end of May.

Baldwin called Snow's wife, Stacey, who said the family has spent most of its savings and drawn on a home equity line to keep up with expenses. He reminded the judge Snow never received a related party loan or wire transfer from Fair or exercised any control over the enterprise.

The next step is a sentencing hearing at which the defendants will be allowed to call character witnesses to appeal to Magnus-Stinson, who has wide discretion on sentencing. The hearing likely will be held in the next few months.

Durham, Cochran and Snow face decades in prison under federally recommended sentencing guidelines. They are expected to appeal their convictions.

Observers say succeeding at such an appeal is a longshot.

The jury returned the guilty verdict on June 20, after eight hours of deliberations, and a trial in U.S. District Court that began June 11.

The U.S. Attorney's Office offered six days of testimony, thousands of pages of documents and recordings from FBI wiretaps.

Prosecutors said the defendants gutted Fair 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.

 

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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