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NEW YORK – Fair Finance Co., the Akron, Ohio, investment company closed since a November raid by the FBI, faces a petition to force it into bankruptcy.
Fair Finance’s owner, Indiana businessman Timothy S. Durham, a Republican political contributor whose holdings include National Lampoon Inc., has been targeted in lawsuits and investigations over claims he funded a luxurious lifestyle with the proceeds of a Ponzi scheme.
The involuntary petition, filed by three creditors in bankruptcy court in Akron on Monday, seeks to force the company into bankruptcy and appoint a trustee to oversee the return of funds.
Durham and co-owner James Cochran took $176 million in loans transferred from the investment fund into Fair Holdings and DC Investments, according to a motion to appoint a trustee. They used the money to fund $220 million in other loans, court documents alleged.
“As many as 50 insider companies may be involved, and loans were made throughout the U.S. and Canada,” the creditors alleged.
Creditors said millions of dollars’ worth of certificates held by investors, mostly senior citizens who invested their life savings, now can’t be redeemed. The total number of investment certificates isn’t known, and lawyers on behalf of 100 creditors with $6 million in certificates said they believe they represent less than 5 percent of the total value.
In a complaint filed Nov. 24 in federal court in Indianapolis, prosecutors said Durham falsely told investors that one of his companies, Fair Finance Co., was selling certificates backed by low-risk, high-yield consumer debt. The complaint sought to seize assets owned by Durham and several of his companies, including a 2008 Bugatti Veyron automobile.
“In fact, that money was not invested in the types of investments represented to the investors,” prosecutors said in the complaint. “Instead, the money provided by victims of the scheme was used to make interest and redemption payments to earlier victims of the scheme.”
Durham, who hasn’t been charged with a crime, didn’t return a voice-mail message seeking comment.
Cochran couldn’t be reached through Fair Financial’s offices, which are closed. His home number in McCordsville, Ind., is unpublished.
Durham is a former corporate attorney with Ice Miller LLP in Indianapolis.
He has been sued in at least two civil cases involving fraud claims.
