INDIANAPOLIS (AP) -- An attorney for an Indianapolis financier convicted of swindling some $200 million from investors as his business fell apart claims the government caused the company's collapse by ruining its reputation.
The claims were included in documents that Tim Durham's lawyer, John Tompkins, filed Wednesday in federal court, protesting a recommendation that a judge sentence Durham to 225 years in prison. A sentencing hearing is scheduled for Nov. 30.
A federal jury in Indianapolis convicted Durham in June of securities fraud, conspiracy and 10 counts of wire fraud. Prosecutors claimed that after buying Akron, Ohio-based Fair Finance in 2002, Durham and his partners stripped it of its assets and tapped it to buy mansions, classic cars and other luxury items. Prosecutors said the men also funneled funds from Fair Finance to Durham's Indianapolis-based holding company, Obsidian Enterprises, to keep its failing subsidiaries intact.
But in the 38-page objection, Tompkins claims the government's calculation of investor losses — an integral factor in determining a sentence — is based largely on disputed assertions never proven by prosecutors. The document also asserts that government attorneys failed to prove the men's activities caused the investor losses, which occurred during a turbulent economy.
"It is not a fraud to lose money," Tompkins maintained in court papers.
The company wasn't in as bad financial shape as federal prosecutors claimed until authorities raided the offices of Obsidian and Fair in November 2009, the document claims.
"The FBI's decision to raid Fair Finance's offices, seize records and just walk away leaving fear and panic, followed by the immediate filing of a civil forfeiture lawsuit in which the government labeled Fair Finance a Ponzi scheme, and the resulting devastating press accounts about the business, caused the disintegration of a company that employed approximately 75 employees, and held hundreds of millions of dollars in assets," Tompkins wrote.
"This, combined with the government's decision to alert the press hours in advance of the raid, ensured maximum negative publicity about Fair Finance. Then, the lawsuit was dismissed by the government only one day after it was filed, but the intended damage to investor confidence was done," he added.
A spokesman said Thursday that the U.S. attorney's office had no comment.
Tompkins said Durham and his partners didn't deliberately mislead investors and informed them that they were making loans to themselves and their businesses out of Fair funds, despite government claims the loans were hidden. He also says Durham had personally guaranteed tens of millions of dollars of loans.
"Bankrupting or stealing from Fair Finance would have been stealing from himself," Tompkins wrote in the objection.
A federal grand jury in Indianapolis indicted Durham and two of his partners in March 2010. The allegations against Durham — a major Indiana Republican Party donor — led several GOP politicians, including Indiana Gov. Mitch Daniels, to return hundreds of thousands of dollars in campaign contributions sought by Fair Finance's bankruptcy trustee.