Timothy S. Durham, Wire and Securities Fraud, Ohio 2011

Ohio Businessmen Convicted in $200 Million Fraud Scheme

In a stunning verdict, a federal jury in the Southern District of Indiana has found three former executives of Fair Financial Company, an Ohio financial services business, guilty of their roles in a scheme to defraud approximately 5,000 investors of more than $200 million.

The defendants, Timothy S. Durham, 49, the former chief executive officer of Fair; James F. Cochran, 56, the former chairman of the board of Fair; and Rick D. Snow, 48, the former chief financial officer of Fair, were found guilty of their involvement in the scheme that lasted from February 2005 through November 2009.

According to the evidence presented at trial, the defendants made and caused others to make false and misleading statements about Fair's financial condition and the manner in which they were using Fair investor money. The scheme was intended to enrich the defendants and conceal the true financial condition of Fair from the investing public.

“Mr. Durham and his co-conspirators used lies and deceit as their business model,” said Assistant Attorney General Lanny A. Breuer. “They duped investors into thinking they were running a legitimate financial services company and misled regulators and others about the health of their failing firm. But all along, they were lining their pockets with other people’s money.”

The verdict represents a victory in the pursuit of justice, and it sends a powerful warning that if you sacrifice the truth in the name of greed, if you steal from another’s American dream to try and make your own, you will be caught.

The defendants face significant prison time for their crimes. Durham was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud. Cochran was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud. Snow was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.

When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income-producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair's debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair's income-producing assets consisted only of loans to Durham and other insiders, totaling approximately $12 million.

Source: https://www.justice.gov/archives/opa/pr/three-former-executives-convicted-roles-200-million-fraud-scheme-involving-fair-financial