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Thursday, September 04, 2014

Ind. Decisions - 7th Circuit upholds most Tim Durham convictions

In U.S. v. Timothy Durham (SD Ind., Magnus-Stinson), a 31-page opinion, Judge Sykes writes:

Timothy Durham, James Cochran, and Rick Snow were convicted of perpetrating a widespread financial fraud that caused more than $200 million in losses to thousands of victims, many of them elderly or living on modest incomes. After taking control of Fair Finance Company, a previously well-established and respected business, the trio quickly turned it into their personal piggy bank. They used money invested in Fair to support their lavish lifestyles and to fund loans to related parties that would never be repaid. When the company’s auditors raised red flags about its financial status, the auditors were fired. When Fair experienced cashflow problems, it misled investors and regulators so it could keep raising capital.

Eventually the scheme began to unravel. One of the company’s directors, himself under investigation in a separate matter, alerted the FBI that Fair was being operated as a Ponzi scheme. After an investigation, the FBI seized Fair’s computer servers and arrested Durham, Cochran, and Snow. A jury convicted them on various counts of conspiracy, securities fraud, and wire fraud.

They now appeal their convictions and sentences on several grounds. We reject all of their challenges save one. The government failed to enter into the trial record key documentary evidence supporting two counts of wire fraud against Durham. It was clearly an oversight, but the mistake leaves a crucial gap in the evidence on those counts. Accordingly, we reverse Durham’s convictions on Counts 2 and 5 of the indictment and remand for resentencing without those countsin the mix. In all other respects, we affirm the defendants’ convictions and sentences. * * *

For the foregoing reasons, we REVERSE Durham’s convictions on Counts 2 and 5 and REMAND for resentencing without those counts. In all other respects, the defendants’ convictions and sentences are AFFIRMED.

Posted by Marcia Oddi on September 4, 2014 03:44 PM
Posted to Ind. (7th Cir.) Decisions