Fair Financial Execs Charged With $200 Million Fraud

According to U.S. Justice Department, three former executives of Fair Financial Company, an Ohio financial services business, were arrested and charged in an indictment filed in the Southern District of Indiana for their roles in a scheme to defraud approximately 5,000 investors of more than $200 million.

“These arrests follow the largest corporate fraud investigation in the history of the FBI in Indiana which resulted in over 5,000 victims and an estimated loss of $200 million dollars,” said special agent in charge Michael E. Welch of the FBI in Indiana.

The indictment, returned by a federal grand jury on March 15, 2011 charges Timothy S. Durham, James F. Cochran and Rick D. Snow with one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. Durham was arrested in Los Angeles, and Cochran and Snow were arrested in Indianapolis.

According to the indictment, Durham and Cochran purchased Fair, whose headquarters were in Akron, Ohio, in 2002. Durham was the chief executive officer of Fair and a member of the board of directors, Cochran was the chairman of the board of Fair, and Snow, a certified public accountant, served as the chief financial officer of Fair.

“These former executives are charged with engaging in fraudulent and deceptive business practices to hide from investors and regulators Fair’s true financial condition and their misuse of the company’s funds,” said Assistant Attorney General Lanny A. Breuer. “As alleged in the indictment, by using investors’ money to fund their failing business ventures and personal lifestyles, they perpetrated a $200 million fraud. Today’s charges and arrests reflect that investigating and prosecuting financial fraud is a Justice Department priority.”

A local Indianapolis newspaper notes that defendant James F. Cochran, co-owner and chairman of Fair Financial, was previously president of Carpenter Financial and vice president of Newcourt Credit Group. Former Fair chairman and CEO Timothy S. Durham was chairman and acting chief executive of National Lampoon.

To link to full text of U.S. Justice Department news release:
click here.

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