Fair Finance. When I first heard that name I was confused. I thought it might be a non-profit organization – left leaning perhaps – that fought for or advocated “fair finance” for the underprivileged. Man…isn’t if funny what’s in a name. Was I sure wrong!
Below is an article written by By Jim Mackinnon – Beacon Journal business writer. Turns out Fair Finance was nothing more than massive Ponzi scheme. Read the great article by Mr. Mackinnon and you’ll get a clearer picture of what “Fair Finance” really was all about.
The court-appointed trustee for Fair Finance Co. has his eyes on lots of fancy cars and artwork that he believes were purchased with money from the under-investigation Akron finance and loan business.
There are three Bentleys, an antique Duesenberg, Mercedes and Jaguar cars, even a Lamborghini. The possible value is in the millions — same thing for the art, primarily paintings purchased by Fair Finance co-owner Timothy Durham, said the trustee, Cleveland attorney Brian Bash.
Bash on Tuesday said he is looking into the sale of more than $1 million in antique and exotic cars by an affiliated company in Indiana, Diamond Investments LLC, as he works to preserve assets for the bankrupt Akron business.
Bash said he is placing liens on perhaps as many as 100 vehicles listed under Diamond, which does business as Diamond Auto Sales. The business is owned by Durham.
”These are pretty fancy cars,” Bash said. Most of the vehicles are in storage, while the Duesenberg and three Bentleys were among vehicles sold recently in Indiana, he said. The vehicles were not ”on the books” of Fair Finance, he said.
Bash talked about the cars and artwork during a monthly status report in federal bankruptcy court in downtown Akron.
”Those are unique assets,” said Marilyn Shea-Stonum, chief judge of U.S. Bankruptcy Court for the Northern District of Ohio, who is overseeing the Chapter 7 liquidation process.
Of the more than $1 million from the car sale proceeds, ”it looks like a number of law firms were paid over $908,000,” Bash said. ”We’re going to be investigating that.”
Bash gave his report over a telephone conference call in open court; just six Fair Finance certificate holders attended. Bash’s monthly update took place less than a week before he will hold a creditors meeting at 1 p.m. Monday at Akron City Centre Hotel, 20 W. Mill St. in downtown Akron. Bash booked the hotel’s Salon A ballroom because he said he anticipates a large turnout.
More than 5,300 people and organizations that include churches bought investment certificates totaling about $200 million from Fair Finance, a small investment and loan company founded decades ago in Akron. The Fair family sold it to Durham and Jim Cochran, two Indiana-based businessmen, in 2002. Most of the certificate holders are in the greater Akron area.
The FBI in late November raided Fair Finance and a related business in Indiana, with court records showing investigators suspected the business was being operated as a Ponzi scheme. Then some investors earlier this year forced Fair Finance into bankruptcy as means to recover assets. The investment certificates, which promised to pay high interest rates, were not government insured.
Bash said he and the team he has assembled continue to look for Fair Finance assets.
Besides the cars, Bash told Shea-Stonum that he is in discussions to have ”a number of pieces of artwork” turned over to him.
Afterward, Bash said Durham had estimated the value of his art collection in the millions of dollars.
The pieces that he does have are ”secured, stored and insured” but he wants the entire collection, Bash said.
”I don’t even have half of it,” he said. ”I’m hopeful they will start cooperating more.”
There also might be as much as $5 million in Fair Finance equity in accounts overseen by two firms, Fortress Investment Group LLC and Duvera Financial, that did business with Fair Finance, Bash said. He said he has asked for an accounting of the money and that the two firms said the information is in more than 80,000 pages of documents.
And in what would be a significant move in the bankruptcy proceeding, Bash said he also expects to shortly have all the assets of Fair Holdings, which is Fair Finance’s Ohio corporate parent, and those of DC Investments — the Indiana corporate parent — assigned over.
”My view right now is, I’ve heard them [Fair Holdings and DCI’s representatives] wanting to cooperate but I haven’t seen the actions follow the words,” Bash said.
The FBI is continuing to scan Fair Finance documents, Bash said. ”My accountant goes out to Indianapolis to review those records,” he said.
It does not look as if any former Fair Finance employees will testify or answer questions at Monday’s creditors’ meeting, Bash said.
”It’s my understanding none of the individuals are willing to testify because of the ongoing investigation by the FBI,” he said.
In addition, the Indianapolis law firm representing Fair Finance, Taft Stettinus & Hollister, told Bash in writing and the judge during the conference call that it intends to withdraw as Fair Finance’s counsel. The firm did not give a reason.
Shea-Stonum said investment certificate holders and other creditors who have questions about the case need to go online and review court documents. She said the bankruptcy court clerk’s office is not in a position to respond to questions about the case.
The judge also said certificate holders need to guard themselves from scam artists who claim that they can recover their money from Fair Finance. Scam artists have taken advantage of people in other cases, she said.
”It appears to me the certificate holders in this case have been the victims of what appears to be, well, I’m not going to characterize it. People have been parted from their money,” she said. ”I do not want to see this case become a hotbed for scam artists.”
Shea-Stonum asked Bash to use the trustee’s Fair Finance Web site to post information on how creditors can legitimately find ways to recover assets.
The trustee status report is available online at http://www.kccllc.net/fairfinance.
Here’s another link to Fair Finance articles.
One more time it seems that we see the reality behind the Ponzi scheme…fancy living, fast cars, a lifestyle that cannot be supported by a real business enterprise. Sadly, what started out as a legitimate business enterprise that helped many, became a vehicle for fraud. And while I have not been following this active investigation it appears that I sure should be…so look for more information to come.
OF COURSE, YOUR COMMENTS ARE WELCOME!