A federal appeals court in Chicago has upheld all but two of the 25 felony convictions for Tim Durham and two other Fair Finance Co. executives found guilty two years ago of carrying out a $200 million Ponzi scheme.
Attorneys for Durham, Fair co-owner Jim Cochran and Chief Financial Officer Rick Snow had argued their June 2012 convictions stemmed from a string of legal missteps, starting with a court’s misguided decision to allow the FBI to conduct wiretaps without first demonstrating that “ordinary investigative techniques failed or were unlikely to succeed.”
However, in a victory for federal prosecutors and for Judge Jane Magnus-Stinson, who presided over the eight-day jury trial and handed down the sentences, the three-judge appellate panel tossed aside nearly all their arguments in United States of America v. Timothy S. Durham, James F. Cochran and Rick D. Snow, 12-3819, 12-3833 & 12-3867.
“We reject all the challenges save one,” Thursday’s 31-page ruling says. “The government failed to enter into the trial record key documentary evidence supporting two counts of wire fraud against Durham. It was clearly an oversight, but the mistake leaves a crucial gap in the evidence on those counts.”
The jury had found Durham guilty on all 12 criminal counts, and Magnus-Stinson sentenced him to 50 years in prison. Cochran, who was convicted on eight of 12 counts, received 25 years. Snow, convicted on five of 12 counts, got 10.
Because Thursday’s ruling leaves Durham with two fewer convictions, the appellate panel ordered him resentenced. It left the convictions and sentences for Cochran and Snow unchanged.
It's unclear how much the dismissed wire-fraud counts—which involved transfers totaling just $300,000—might reduce Durham's prison time. At the November 2012 sentencing, prosecutors had sought 225 years, but Magnus-Stinson suggested 50 was more than enough to ensure he will spend the rest of his life in prison..
"This case was all about numbers that were puffed up to create appearances," she said before announcing the sentence. "I’m not going to play that game. Mr. Durham is 50 years old."
Attorneys for the three men had sought a new trial, arguing the jury never should have heard the incriminating phone conversations that capture Durham and Cochran in a panicked quest to whitewash Fair’s financial problems and raise more money from investors.
The government had defended its investigative techniques, asserting the FBI pursued wiretaps in late 2009 only after investigating the business using less-invasive techniques for 7-1/2 months.
During that span, the filing says, the FBI used confidential informants, analyzed 6,400 wire transactions, secured grand jury subpoenas for records, and began seeking an order to release Durham’s tax returns.
Prosecutors used the wiretaps to full effect during the trial, playing them day after day as they cast Durham as the mastermind behind a massive Ponzi scheme at the Akron, Ohio-based company.
The business was funded by more than 5,000 mom-and-pop Ohio investors who purchased more than $200 million in unsecured notes from Fair boasting interest rates as high as 9 percent. Prosecutors say Durham burned through that money to finance a lavish lifestyle, ply friends and prop up other businesses he owned.
Durham, 52, is serving his sentence at a federal penitentiary in McCreary, Kentucky. Cochran, 58, is in Greenville, Illinois., and Snow, 50, is in Pekin, Illinois.