Ponzi scheme operator Tim Durham has failed to persuade a federal judge to dismiss the government’s civil action against him and other convicted accomplices.
Durham, an attorney disbarred for his white-collar crimes, is representing himself as he serves a sentence for a wire fraud conviction in a federal prison in Pine Knot, Kentucky. He asked District Judge Jane Magnus-Stinson to dismiss the Securities and Exchange Commission’s civil securities fraud suit against him.
The SEC suit was filed the day after Durham and co-defendants James F. Cochran and Rick D. Snow were indicted by a grand jury in 2011, and the civil action largely mirrors the charges in the criminal case. Magnus-Stinson sentenced Durham to 50 years in prison and co-defendants James F. Cochran and Rick D. Snow to 25 and 10 years, respectively. The judge also ordered the three to make restitution of more than $208 million to some 5,200 Fair Finance Co. investors. Those investors in Fair’s unsecured certificates saw their funds looted to support Durham’s lavish lifestyle.
The civil suit against the three was stayed pending the outcome of the criminal prosecution, and Durham and Cochran moved for the suit be dismissed. They argued that the SEC’s request to reopen the civil proceeding is untimely and that it “should remain dismissed, with prejudice” – language the government disputed because the matter had merely been put on hold as the criminal case played out. The SEC also said Durham’s argument of untimeliness made little sense.
Magnus-Stinson agreed, writing that it appears Durham and his accomplices are out of options for appeal in their criminal cases. On Tuesday, she issued an order that affirms reopening the civil suit against them. Durham and Cochran indicated they weren’t interested in settling the SEC suit.
While Cochran and Snow’s options for appeal have been exhausted, Magnus-Stinson wrote, the record is unclear for Durham, who was granted until July 5 to petition the U.S. Supreme Court for review. “Mr. Durham either exhausted his appellate rights on July 5, 2016 when he failed to file such a petition, or, if he did file a petition, he is continuing to exercise them at this time. Either way, the SEC’s request to reopen the civil securities case on June 7, 2016, was not untimely; it was actually premature,” the judge wrote.
“(E)ven if the SEC’s request was untimely, the draconian sanction of dismissal with prejudice would not be warranted,” Magnus-Stinson wrote. She ordered proceedings to determine whether Durham filed a petition with the Supreme Court, and if he didn’t, to set the matter for the SEC’s anticipated motion for summary judgment.
The case is Securities and Exchange Commission v. Timothy S. Durham, James F. Cochran and Rick D. Snow, 1:11-cv-370.