Fair Financial’s Investors File Suit Against Brizzi’s Buddy Durham

IBJ.com launched this piece of breaking news at 4:00 PM today:

Attorneys on Friday afternoon filed a class-action lawsuit seeking to rescind $200 million in investor purchases of Fair Finance Co. securities and to slap Tim Durham and other company insiders with millions of dollars in punitive damages.

The case, filed in Summit County, Ohio, appears to be the first  investor lawsuit filed since the U.S. Attorney’s Office alleged in court papers late last month that the business was operating as a Ponzi scheme, using the influx of money from new investors to pay off existing ones.

Attorneys with Maddox Hargett & Caruso of Fishers and David P. Meyer & Associates of Columbus, Ohio, allege that Fair Finance offering circulars provided to prospective investors contained material misrepresentations and omissions. They also charge that insiders breached their fiduciary duty to investors, and unjustly enriched themselves.

The suit alleges that Durham and co-owner Jim Cochran have used Fair like a personal bank since buying it in 2002, pulling tens of millions of dollars out in the form of related-party loans. Fair, which was founded in 1934 and historically made money by purchasing customer-finance contracts, obscured the fundamental change in its business in the offering circulars, the suit alleges. Fair Finance used “a tangled web of financial transactions to conceal the withdrawal of the funds … for their own enrichment.,” according to the suit.

“Upon buying the company, the two out-of-state owners promoted the same values and business models to deceive investors into investing tens of millions of dollars of their hard-earned life savings in the company even though the new owners had  no intention of continuing to operate the business as the Fair family had for so many years.”

Investors, who were required to be Ohio residents, purchased investment certificates, ranging in term from six months to two years, that paid interest rates substantially higher than those for certificates of deposit. But unlike CDs, the securities have no government guarantee if Fair fails to pay.

Sorry Mr. Prosecutor. This story isn’t going anywhere.


One response to “Fair Financial’s Investors File Suit Against Brizzi’s Buddy Durham

  1. Pingback: Brizzi: Countdown to Stepdown « A Loyal Opposition