Tim Durham

Tim Durham
Born Timothy Shawn Durham, Sr.
1962 (age 54–55)
Seymour, Indiana
Occupation Attorney (disbarred), investor
Criminal charge Wire fraud, securities fraud, conspiracy to defraud
Criminal penalty 50 years in prison, two years' supervised release (overturned September 4, 2014; reinstated June 26, 2015)
Criminal status Inmate #60452-112; incarcerated at United States Penitentiary, McCreary; McCreary County, Kentucky; earliest possible release January 12, 2056
Spouse(s) Joan SerVaas Durham
Children Timothy Durham, Jr.
Conviction(s) June 20, 2012

Timothy Shawn "Tim" Durham, Sr. (born 1962) is an American lawyer and financier convicted in 2012 of the largest white collar crime in Indiana history.[1] His investment firm Obsidian Enterprises invested in a number of companies, including wireless device company BrightPoint and comedy brand National Lampoon, Incorporated, where Durham served as CEO.[2] In 2012, Durham was sentenced to 50 years in prison in connection with a Ponzi scheme that defrauded 5,400 investors, many of them elderly, of approximately $216 million, according to the U.S. Securities and Exchange Commission.[3]

Life and career

Durham grew up in Seymour, Indiana. He graduated from Indiana University and its law school. He worked for Ice Miller after graduation, and in 1989 he married Joan SerVaas. Their son Timothy Durham, Jr. (born 1990) attended University of Southern California.[4]

Durham soon joined the investment firm owned by his wife's father, Indianapolis financier and longtime city council president Beurt SerVaas. Durham left the firm after his 1998 divorce. Durham was involved in taking over numerous ailing companies, including school bus manufacturer Carpenter, cargo trailer makers Danzer Industries and United Expressline, U.S. Rubber Reclaiming, and bus leasing firm Pyramid Coach.

In 2001, he took his company Obsidian public. The public company then invested in a range of companies, including a rally-car builder, a plastic surgery center, a car magazine, a tour bus operator, a limousine rental company, a nightclub, an Italian restaurant, and a cell-phone billing processor. Obsidian also invested in mobile device distributor BrightPoint and National Lampoon, Incorporated. From 2001 to 2006, Obsidian had cumulative losses of $30 million, according to the bankruptcy trustee. During that time Obsidian was borrowing heavily from Fair Finance Company, an Akron, Ohio-based creditor. Durham and accomplice James Cochran had acquired Fair Finance through a holding company in 2002.[5] Durham appointed Dan Laikin as CEO of National Lampoon Inc. The SEC alleged Laikin conspired to inflate the company's stock price to $5 in order to prevent the company from being delisted from the American Stock Exchange.[6] Laikin alerted authorities to Durham's financial schemes in hopes of getting a reduced sentence. Durham took over as Lampoon CEO after Laikin stepped down.

The offices of Obsidian and Fair Finance were raided by federal agents in 2009, suspected of involvement in a Ponzi scheme. Durham was arrested in 2011.[7]

On June 20, 2012; an Indianapolis jury convicted Durham of 10 counts of wire fraud, one count of securities fraud, and one count of conspiracy to defraud. On November 30, 2012; he was sentenced to 50 years in prison.[8] While he faced a maximum of 225 years under sentencing guidelines, federal district judge Jane Magnus-Stinson said there was no point in handing down a sentence that long.[9] Nonetheless, Joe Hogsett, the U. S. Attorney for the Southern District of Indiana, called it the longest sentence ever imposed for a white-collar offense in Indiana history.[8]

On September 4, 2014, a federal appeals court overturned two of 10 wire fraud counts against Durham and ordered a new sentencing hearing, saying prosecutors failed to enter some key evidence into the trial record.[10] On June 26, 2015, Durham had his 50-year sentence reinstated. Magnus-Stinson said that "the huge number of victims and the amount of devastation" left little reason to reduce the original sentence. He is serving his sentence at United States Penitentiary, McCreary in McCreary County, Kentucky;[11] He was also sentenced to two years' supervised release, but this was largely academic since his prison term amounts to a life sentence at his age. He will not be eligible for release until January 25, 2056--when he will be 94 years old.

Durham's mother, Mitza Durham, agreed to repay Fair Finance Co. $500,000, plus interest. Fair Finance Co. trustee Brian Bash alleged in a lawsuit filed in 2012 that Mitza Durham received more than $828,521 in "fraudulent transfers" from her son between 2006 and 2009 that needed to be repaid to the company estate.

Political activism

According to Businessweek, Durham was a prominent Republican fundraiser. He served on the steering committee for Mitch Daniels' successful gubernatorial bid in 2004 and headed the Indiana fundraising effort for Rudy Giuliani's 2008 Presidential campaign."[3]

References

  1. ↑ Hayes, Jessica (March 16, 2011). Tim Dunham indicted. WISH-TV
  2. ↑ Mackinnon, Jim (February 18, 2011). Lawsuit says Fair Finance owner Timothy Durham 'looted' investment company. Akron Beacon Journal
  3. 1 2 Lowrey, Annie (July 28, 2011). Tim Durham, the Madoff of the Midwest. BloombergBusinessweek
  4. ↑ Tiernon, Anne Marie (November 17, 2010). Tim Durham: Exclusive interview. WTHR-TV
  5. ↑ http://www.businessweek.com/news/2012-11-30/ex-national-lampoon-ceo-tim-durham-gets-50-years-prison
  6. ↑ Irwin, Mary Jane (December 19, 2008). Lampooned By Its Own Petard. Forbes
  7. ↑ Blankstein, Andrew (March 16, 2011). National Lampoon chief arrested in alleged $200-million Ponzi scheme. Los Angeles Times
  8. 1 2 Harris, Andrew. Ex-National Lampoon CEO Tim Durham Gets 50 Years Prison. Bloomberg News, 2012-11-30.
  9. ↑ Ritchie, Carrie (November 30, 2012). Judge sentences Tim Durham to 50 years in prison for defrauding investors Indianapolis Star
  10. ↑ Russell, John. Two fraud counts against Tim Durham overturned. The Indianapolis Star, 2014-09-04.
  11. ↑ Olson, Scott. Durham fails to convince judge to reduce 50-year sentence. Indianapolis Business Journal, 2015-06-26.
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