Timothy Durham’s rich and famous lifestyle may have had less to do with investing prowess and more to do with his ability to allegedly defraud investors, according to court papers filed by the federal government on Nov. 24. The documents accuse Durham of committing wire fraud and seek forfeiture of Durham’s $30 million mansion, his residence in Los Angeles, a 2008 Bugatti Veyron and 18 different investment accounts.
The complaint alleges that Durham, his companies and various associates concocted a scheme to defraud investors, convincing them to buy investment certificates from Durham’s company – Fair Finance – and that their money would go toward low-risk, high yield, short term consumer debts. In turn, investors were to receive high regular interest payments on their investments.
Instead, court papers allege that the money essentially was used to carry out a Ponzi scheme, with funds “provided by victims of the scheme used to make interest and redemption payments to earlier victims of the scheme, thereby lulling the earlier victims into believing that their money was being [used] responsibly and enticing new investors into the scheme in order to fund payments to the earlier investors.”
The civil forfeiture action was filed on the same day that the FBI conducted simultaneous raids on Durham’s businesses in Indianapolis and Ohio – Obsidian Enterprises and Fair Financial (also known as Fair Finance).
The complaint of forfeiture further alleges that Durham wired $84.2 million of Fair Finance’s funds to a First Indiana bank account of Fair Holdings, the parent company of Fair Finance. Fair Holdings then wired money to 50 individuals and businesses over a five-year period, according to the complaint. Among the most significant transactions noted, approximately $20 million went to:
•$6.9 million to U.S. Rubber Reclaiming (a subsidiary of Obsidian Enterprises, owned by Durham;
•$5.3 million to Speedster, Inc. (a classic car company owned by Durham)
•$1.8 million to Danzer Industries (former parent company of Obsidian Enterprises)
•$1.4 million RM Auctions (a classic car auctioneer; as of June 2008, Durham owned 70 classic and exotic cars)
•$1 million to Champion Trailer (former subsidiary of Obsidian Enterprises)
•$804,000 to Playa Del Racing (IndyCar racing team controlled by Durham)
•$730,000 to Pyramid Coach (former subsidiary of Obsidian Enterprises)
•$690,000 to Evaco Acquisition Corp. d/b/a Superline Trailers
•$495,000 to McDonald Investments (a brokerage firm)
•$155,000 to United Expressline Trailers (a subsidiary of Obsidian Enterprises)
•$277,000 to Car Collector Magazine (a Durham-owned company)
•$30,000 to James Cochran (co-owner of Fair Financial)
•$100,000 to Tim Durham (co-owner of Fair Financial)