Timothy Shawn Durham Sr. (born 1962) is an American former lawyer and businessman convicted in 2012 of the largest corporate fraud ever investigated by the
Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...
in Indiana. His
investment firm
An investment company is a financial institution principally engaged in holding, managing and investing securities. These companies in the United States are regulated by the U.S. Securities and Exchange Commission and must be registered under th ...
Akron Beacon Journal
The ''Akron Beacon Journal'' is a morning newspaper in Akron, Ohio, United States. Owned by Gannett, it is the sole daily newspaper in Akron and is distributed throughout Northeast Ohio. The paper's coverage focuses on local news. The Beacon Jo ...
'' In 2012, Durham was sentenced to 50 years in prison in connection with a
Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
that defrauded 5,400 investors, many of them elderly, of approximately $216 million, according to the
U.S. Securities and Exchange Commission
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
.
Early life and education
Durham grew up in
Seymour, Indiana
Seymour is a city in Jackson Township, Jackson County, Indiana, Jackson and Redding Township, Jackson County, Indiana, Redding Townships, Jackson County, Indiana, United States, located 62 miles south of Indianapolis, and 55 miles north of Louisvi ...
. He graduated from
Indiana University
Indiana University (IU) is a state university system, system of Public university, public universities in the U.S. state of Indiana. The system has two core campuses, five regional campuses, and two regional centers under the administration o ...
He worked for law firm Ice Miller after graduation, and in 1989 he married Joan SerVaas. Durham soon joined the investment firm owned by his wife's father,
Indianapolis
Indianapolis ( ), colloquially known as Indy, is the List of capitals in the United States, capital and List of municipalities in Indiana, most populous city of the U.S. state of Indiana and the county seat of Marion County, Indiana, Marion ...
financier and longtime city council president Beurt SerVaas. Durham left the firm after his 1998 divorce. Durham was involved in taking over numerous ailing companies, including school bus manufacturer Carpenter, cargo trailer makers Danzer Industries and United Expressline, U.S. Rubber Reclaiming, and bus leasing firm Pyramid Coach.
In 2001, he took his company Obsidian public. The public company then invested in a range of companies, including a rally-car builder, a plastic surgery center, a car magazine, a tour bus operator, a limousine rental company, a nightclub, an Italian restaurant, and a cell-phone billing processor. Obsidian also invested in mobile device distributor BrightPoint and National Lampoon, Incorporated. From 2001 to 2006, Obsidian had cumulative losses of $30 million, according to the bankruptcy trustee. During that time Obsidian was borrowing heavily from Fair Finance Company, an
Akron, Ohio
Akron () is a city in Summit County, Ohio, United States, and its county seat. It is the List of municipalities in Ohio, fifth-most populous city in Ohio, with a population of 190,469 at the 2020 United States census, 2020 census. The Akron metr ...
-based creditor. Durham and accomplice James Cochran had acquired Fair Finance through a holding company in 2002. Durham appointed
Dan Laikin
Daniel S. Laikin is an American business executive. He was chief operating officer and chief executive officer of National Lampoon, Inc. from 2002 to 2008.
Laikin was co-chairman of Indiana
Indiana ( ) is a U.S. state, state in the Midwes ...
as CEO of National Lampoon Inc. The SEC alleged Laikin conspired to inflate the company's stock price to $5 in order to prevent the company from being delisted from the
American Stock Exchange
NYSE American, formerly known as the American Stock Exchange (AMEX), and more recently as NYSE MKT, is an American stock exchange situated in New York City. AMEX was previously a mutual organization, owned by its members. Until 1953, it was known ...
Forbes
''Forbes'' () is an American business magazine founded by B. C. Forbes in 1917. It has been owned by the Hong Kong–based investment group Integrated Whale Media Investments since 2014. Its chairman and editor-in-chief is Steve Forbes. The co ...
'' Laikin alerted authorities to Durham's financial schemes in hopes of getting a reduced sentence. Durham took over as Lampoon CEO after Laikin stepped down.
Raid and arrest
The offices of Obsidian and Fair Finance were raided by federal agents in 2009, suspected of involvement in a
Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
Los Angeles Times
The ''Los Angeles Times'' is an American Newspaper#Daily, daily newspaper that began publishing in Los Angeles, California, in 1881. Based in the Greater Los Angeles city of El Segundo, California, El Segundo since 2018, it is the List of new ...
''
On June 20, 2012; an Indianapolis jury convicted Durham of 10 counts of
wire fraud
Mail fraud and wire fraud are terms used in the United States to describe the use of a physical (e.g., the U.S. Postal Service) or electronic (e.g., a phone, a telegram, a fax, or the Internet) mail system to defraud another, and are U.S. fede ...
, one count of
securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information.Ex-National Lampoon CEO Tim Durham Gets 50 Years Prison
Bloomberg News
Bloomberg News (originally Bloomberg Business News) is an international news agency headquartered in New York City and a division of Bloomberg L.P. Content produced by Bloomberg News is disseminated through Bloomberg Terminals, Bloomberg T ...
Indianapolis Star
Indianapolis ( ), colloquially known as Indy, is the capital and most populous city of the U.S. state of Indiana and the county seat of Marion County. Indianapolis is situated in the state's central till plain region along the west fork of ...
'' Nonetheless,
Joe Hogsett
Joseph Hadden Hogsett (born November 2, 1956) is an American attorney, prosecutor, and politician who is the 49th mayor of Indianapolis, Indiana. Prior to being elected mayor, Hogsett served as the secretary of state of Indiana from 1989 to 1994 ...
, the U.S. Attorney for the Southern District of Indiana, called it the longest sentence ever imposed for a white-collar offense in Indiana history.
On September 4, 2014, a federal appeals court overturned two of 10 wire fraud counts against Durham and ordered a new sentencing hearing, saying prosecutors failed to enter some key evidence into the trial record. On June 26, 2015, Durham had his 50-year sentence reinstated. Magnus-Stinson said that "the huge number of victims and the amount of devastation" left little reason to reduce the original sentence. He is serving his sentence at
United States Penitentiary, McCreary
The United States Penitentiary, McCreary (USP McCreary) is a high-security United States federal prison for male inmates in unincorporated McCreary County, Kentucky. It is operated by the Federal Bureau of Prisons, a division of the United State ...
in
McCreary County, Kentucky
McCreary County is a county located in the U.S. state of Kentucky. As of the 2020 census, the population was 16,888. Its county seat is Whitley City. The county is named for James B. McCreary, a Confederate war soldier and two-time Governor ...
. He was also sentenced to two years' supervised release, but this was largely academic given the likelihood that he will die in prison. His earliest possible release will be February 1, 2056, when he will be 94 years old.
Fair Finance Co. trustee Brian Bash alleged in a lawsuit filed in 2012 that Durham's mother, Mitza Durham, received more than $831,000 in "fraudulent transfers" from her son between 2006 and 2009 that needed to be repaid to the company estate. In 2014, Mitza Durham agreed to repay Fair Finance Co. $500,000, plus interest.
In 2016, Durham was
disbarred
Disbarment, also known as striking off, is the removal of a lawyer from a bar association or the practice of law, thus revoking their law license or admission to practice law. Disbarment is usually a punishment for unethical or criminal conduc ...
by the Indiana Supreme Court.
Political activism
According to ''
Businessweek
''Bloomberg Businessweek'', previously known as ''BusinessWeek'' (and before that ''Business Week'' and ''The Business Week''), is an American monthly business magazine published 12 times a year. The magazine debuted in New York City in Septembe ...
'', Durham was a prominent Republican fundraiser. He was on the steering committee for
Mitch Daniels
Mitchell Elias Daniels Jr. (born April 7, 1949) is an American Academic administration, academic administrator, businessman, author, and retired politician who served as the 49th governor of Indiana from 2005 to 2013. A Republican Party (United ...
' successful gubernatorial bid in 2004 and headed the Indiana fundraising effort for
Rudy Giuliani
Rudolph William Louis Giuliani ( , ; born May 28, 1944) is an American politician and Disbarment, disbarred lawyer who served as the 107th mayor of New York City from 1994 to 2001. He previously served as the United States Associate Attorney ...
Durham's exploits are featured in the 2015 episode " Playboy of Indiana", of the television series ''
American Greed
''American Greed'' (also known as ''American Greed: Scams, Scoundrels and Scandals'' and as ''American Greed: Scams, Schemes and Broken Dreams'') is an American documentary television series on CNBC. The series focuses on cases of Ponzi schemes, ...