Jeremy Brilliant/Eyewitness News
Indianapolis - A former Indianapolis investment manager faces criminal charges. Prosecutors say Tim Durham was running a Ponzi scheme that defrauded investors out of hundreds of millions of dollars in Indiana and Ohio. It is the largest corporate fraud case in Indiana history with some 5,000 victims.
Tim Durham, who once headed a multi-million dollar empire of businesses, was arrested without incident at his Los Angeles home Tuesday. Former partners James Cochran and Rick Snow were taken into custody in Indianapolis.
"The arrests this morning in California and Indiana follow the largest corporate fraud investigation in the history of the FBI in Indiana," said Michael Welch, FBI special agent in charge.
5,000 investors at Akron, Ohio based Fair Financial lost an estimated $200 million. Instead of selling investment certificates, authorities say Durham used $250,000 to remodel his garage and took $150,000 to spend at a casino. Prosecutors also say that James Cochran took $50,000 from Fair Financial to pay country club fees.
The FBI raided Durham's Monument Circle offices in November 2009, and for the past 16 months agents have been pouring over records.
"Thousands of types of records, bank records, most obviously, internal financial books and records, thousands of other types of records as well," said Winfield Ong, assistant US attorney.
That led investigators to the conclusion that Durham and associates lied about Fair Finance's ability to pay loans, turning investors into financial victims.
"Our responsibility is not just to describe what happened. Our responsibility is to prove it to twelve people beyond a reasonable doubt," said Timothy Morrison, US attorney.
For nearly a year and a half, Tim Durham has maintained his innocence, suggesting the federal government mistook his actions for criminal activity.
"The nature of crime is that there's some intention to it," said Morrison.
This entire time, Durham has denied any wrongdoing. He told Eyewitness News in an exclusive interview that he believes all of his business dealings were above board. He denies operating a Ponzi scheme. Durham says his investors knew the risks, and that his net worth has been wiped out.
Durham told Eyewitness News, "I really don't want anybody to feel sorry for me. I'm a man and I can restart my life. I have many times before and I'll survive so I don't look for pity or sympathy from anybody. I do feel sorry for a lot of the other people whose lives have been destroyed in this aftermath."
All three men are charged with securities fraud, wire fraud and conspiring to commit fraud. If convicted of all the charges they face a maximum of 225 years in prison.
Cochran and Snow had initial hearings Wednesday morning and released but are wearing electronic monitoring devices. Durham is in custody in Los Angeles and will be brought back to Indiana to face a judge.
It could take up to five years to resolve the Fair Finance case, but investors are unlikely to get their money back.
The FBI seized Durham's assets, including his collection of high-end cars and art, to sell at auction to recoup some of the money that was lost.
Former Marion County Prosecutor Carl Brizzi accepted and then declined to sit on Fair Financial's board after learning of the investigation into the company's financial dealings. In December 2009, WTHR interviewed Brizzi about his relationship with Durham and his involvement in Durham's business.
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