May 16, 2025 • 41 mins
Today we discuss the largest Ponzi scheme, the largest FBI investigation, and the longest conviction handed down in a White Collar crime... in Indiana. Tim Durham was unapologetically greedy and loved to flaunt his wealth, but when a friend flipped on him the playboy wannabe was about to come crashing back to Earth.
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(00:02):
Wall Street veteran Bernard Madoff has been arrested and
charged with running a $50 billion Ponzi scheme.
Congress wants to know what caused the Enron meltdown, and
while the collective rage currently is focused on low
comp. Tyco CEO Dennis Koslowski was
convicted of looting hundreds ofmillions of dollars.
This is one of the biggest fraudcases ever.
(00:23):
Their president's a crook. Well, I'm not a crook.
Find out more on this week's episode of White Collars, Red
Hands. Whoa, so technical difficulties
this week and our video file gotcorrupted.
Fear not, the episode is still being published, but we're back
into the dark ages of audio onlypodcasts.
(00:46):
So without further ado, here's just our voices.
When you imagine the Midwest, you conjure up Rust Belt
pictures of old corn silos marking the horizon that seems
to stretch to Infinity 'cause it's just so damn flat.
You think of humble people who truly know the value of a hard
(01:08):
day's work bringing pies to their new neighbors.
Maybe you imagine Cookie Monsterpajama pants, Skyline chili, the
dulcet tones of a steel mill refinery.
The Midwest has long been associated with being Canada
South, filled with nice people oops and looking like it's about
time to hit the road dares. Which makes our topic today such
(01:32):
a combo breaker. Indiana born Tim Durham was
greedy. He had aspirations of being the
richest person on the planet before he died, but he instead
embroiled himself in the largestPonzi scheme that Indiana had
ever seen, stealing hundreds of millions and earning himself the
moniker The Mad Off of the Midwest.
(01:54):
His story is dotted with expensive cars, private jets,
and over the top birthday parties themed after the Playboy
Mansion, which is why I'm calling him Hoosier Hefner.
So let's get right into the centerfold of this week's
episode of White Collar's Red Hands.
I love a good Midwestern boy. Yeah, You know, I think he
(02:15):
didn't like being a Midwestern boy, though.
Yeah, he seemed like he wanted to be a West Coast boy or an
East Coast boy. He he pretty much moved to LA as
soon as he could so he wanted toget out there.
Sun fun. What is there in Indiana?
Indianapolis, I've heard, is oneof the most boring cities.
Oh, there's not. I've been there.
There's nothing there. Nothing in Indianapolis.
(02:36):
Not much in Indiana in general. Sorry Indianans, if you are
Indiana a Hoosier. Just call them Hoosiers.
You're a Hoosier. Who's your Mama?
Indiana. That sounds awful, but welcome
back to another episode of WhiteCollars, Red Hands.
I'm Kashawn. And I'm Nina and like.
We already said today we're talking about Tim Durham, one of
(02:57):
the had to be one of the richestpeople in Indiana at the time
and now one of the one of the saddest little boys in Indiana
prism. Yeah.
Yeah, Tim Durham was born and raised in the small town of
Seymour, IN. I don't need to Seymour IN, I've
seen enough. Well, just when you think you
don't, suddenly Seymour. Seymour IN which boasts a
(03:19):
population of just over 21,000 residents today.
And by the way, when I say SmallTown, I really mean it because
this was the town that musician John Cougar Mellencamp grew up
in and is therefore the inspiration for his hit song
Small Town. There you go.
Growing up in a small town, got to feel Jesus in a small town.
(03:44):
Yeah, so it's the small town. It is the one.
So this is like kids riding to school on tractors territory.
Seymour, IN OK Tim likes to say that he didn't come from a
wealthy family, although his dadwas a dentist, right?
And when Tim was nine years old in 1971, the median income for
(04:06):
dentists in America was $48,000 a year, which, adjusted for
inflation, is over $380,000 a year today.
I mean, I guess it depends on what you think is rich and what
you think is poor. That would, I think it's
objective because that would puthim in the top 2% of Americans
today. All right, So no, Tim, you did
(04:26):
come from a wealthy family, justobviously not as wealthy as you
wanted it to be. Well, and especially to
everyone, like compared to everyone who was probably around
him in that small town. I mean, if it's anything like
the small town that I grew up inand the one that you grew up in,
like not very many people were making over $100,000 a year and
everybody, pretty much everybodyhad a blue collar job.
(04:49):
So for your dad to be a dentist,yeah, you were fine.
Yeah, he also, he tells this story in an interview once where
he he talks about his dad like he's like, Oh yeah, he was fine
with just driving the same Hondafor 12 years 'cause it had
enough room to fit his golf clubs in it.
And then he goes on to say that that his dad, like, this is the
story about how his dad just didn't really have the want to
(05:11):
go out and amass more money likehe does.
And I was like, but the fact your dad plays golf, Yeah, Tim,
you're not in a normal. Normal.
Family fine you're. Fine if your dad has thrown his
golf clubs in the back of his car. 100%.
You know, instead of like tryingto get his 1970s like Ford
(05:34):
Ranger to run so he can get to his construction job all right.
You guys are fine. Yeah, it's fine.
Golfing's fucking expensive. Obviously Tim wanted more out of
life than his already well to doparents could offer him, so when
he went to college he chose something that he could rake in
(05:54):
the cash with. So he picked law and he
graduated from Indiana University in 1987 and became a
lawyer, passed the bar, and was actually known to already be
driving a BMW to school when he was in college.
So you know how kids from normalmiddle class families can drive
BMWs to school? Well, that's what I thought
(06:15):
happened, Yeah, yeah. Straight out of college, he
started working at ICE Miller, which is a national law firm
with an office in Indianapolis. And two years after graduation,
he married Now magazine editor Joan Servos.
But Tim maybe didn't marry Joan just for love, because her dad
(06:36):
was a pretty influential person.Bert Cervos was a World War Two
officer and a previous member ofthe OSS, which was the precursor
to the CIA. But by the time that Tim married
his daughter, he was better known in the Indianapolis area
as a businessman and politician.Bert had a track record of
buying companies through leveraged buyouts, which is just
(07:00):
getting a bunch of debt to buy acompany.
He would then revitalize the company and flip them for a
profit, and he had done pretty well at this.
He was also a prominent member of the Indianapolis City
Council, a position that he served in from the early 1960s
until he stepped down in 2002. Wow, even at the local level our
politicians are in there for waytoo long.
(07:21):
I think city councils that, I mean, with 40 years, I, I don't
even know if there's like reelection.
No, I think you're just in the city.
Council. City Council, Yeah.
Tim left Ice Miller to join Bert's investment firm and to
learn from his new father and tolearn from his new father-in-law
(07:42):
and quickly realized that the richest of the rich were those
that dealt in entire company level assets.
So he became a Padawan in the art of the leveraged buyout.
After about a decade though, hismarriage soured and although I
have no proof of this, he just like seems like the guy that.
(08:02):
Was definitely cheating on his wife a bunch.
Oh yeah, he. Is the epitome of scuzzy
douchebag frat boy business major in college.
Like this guy sucks. Like imagine like the the person
that went to Business School that you know and now is
actually like has a lot of moneybut is a fucking prick about it.
(08:24):
That is Tim Durham to AT like Patagon.
Like not then, but like now. Patagonia vesting flannels for
sure. Talking about how hot waitresses
are like when you go out like inreally groceries bragging about
cheating on his wife when he he went on a business trip to Las
Vegas, something that was actually done to me by business
(08:45):
people I knew. And I was like, please don't do
this. Oh, I don't know if you knew
this Kashan, but if you are, if it's out of the country, it's
not cheating. I said Vegas.
I know, but I'm just letting youknow that if you have, if you
leave the country and you you have sex with someone else other
than your spouse, it's actually not cheating.
So that's the loophole. That's what my coworker told me.
All right, good. When he told me he was cheating
(09:06):
on his girlfriend, it's. Good to know it's in Canada so
it. Doesn't it?
Doesn't matter if it's in Canada.
Sure, it's a 45 minute drive, but it is another.
Puerto Rico might be a territory, but it's another
country and I can stick my Dick wherever I want.
They're like, actually only the continental United States
counts. So you can do Hawaii, you're a.
Last. Yeah, for sure.
(09:27):
That's totally fine. So whether because of that or
because Joan finally came to hersenses, I don't really know.
The two called it quits in 1998 and Tim left the firm, no longer
a Padawan but now a fully fledged leverage buyout Jedi
Master. With his new found skills he
started Obsidian Enterprises andstarted getting up work and
(09:51):
started getting to work buying up a weird motley crew of
companies. And at the beginning, they were
largely manufacturing companies that made things from buses to
cargo trailers to rubber reclamation plants.
He really hit it big with his investment into Bright Point,
though, which is a wireless device distributor.
(10:12):
I think at the time they were doing mostly cell phones, but
they just described themselves as a wireless device
distributor. So maybe there are other
wireless devices, I don't know. He made an initial investment of
about $1 million that as the company grew into a Fortune 500
company by 2012. OK.
So I that was pretty quick to become a Fortune 500 company.
(10:33):
That's pretty impressive. Obsidian's not a Fortune 500
company. I want to specify bright points
is. A Oh, sorry, sorry, sorry,
sorry. Spoiler alert, Obsidian is no
longer around in 2020. They ended up getting bought
out, but so that $1 million investment that Tim made into it
with Obsidian grew to like 20 to$30 million in return, which is
(10:58):
that's pretty good. Tim took Obsidian Enterprises
public and began really wanting to flaunt his wealth.
And this big win with Bright Point really brought in a lot of
like people to invest in Obsidian.
So he was kind of getting money thrown at him, thrown at him,
and now he was a millionaire, but he would constantly talk
(11:20):
about wanting to swap that M forAB.
He really wanted to be a billionaire.
He he gave interviews where he publicly claimed that his goal
in life was that when he died, he wanted to be the richest
person on the planet and he wanted to be worth more than
everyone else on the planet. Well, I it's pretty hard to beat
Elon Musk at this point. That being said, although Tim
(11:41):
wanted to be the richest person in the world, he was not miserly
with his wealth. Not really.
But he would kind of flash it around as a sort of like Dick
measuring contest. Like he wanted people to know he
was rich. That was his favorite thing to
do is to let people know just how rich he was.
His office was in the penthouse at then Chase Tower, the tallest
(12:02):
building in Indiana and it was huge, his office, but it only
housed like a few employees. He had like 6 people working
there but. Yeah, but he had massive.
He had the whole penthouse floorof the Chase Tower and also he
got all of his employees tailored suits.
He bought them all tailored suits and he gave them all a
(12:24):
Rolex for Christmas. They're like, that's great,
could you pay me a living wage? They probably.
Got paid. I'm just kidding.
Oh, and by the way, if you're wondering, hey, what's the
cheapest commercially available Rolex that you can even get?
Like, let's say he really wantedto cheat out on it, right?
Well, it's one of two models, atleast.
Now it's the Oyster Perpetual orthe Milgaus, both of which come
(12:45):
with a price tag of $6400. Right, that's it.
Commercially so, yeah. My car was not even that
expensive. I can tell every time he would
go out to eat also or even went on his boat that he owned, he
would hand out $100 bills to anyone who did anything for him.
So like filled up his water, it's $100 to the busboy made him
(13:08):
a drink, it's $100 to the bartender.
Like everyone he would just handout $100.
Which don't get me wrong from working in the service industry
it's great for them. But he was really just trying to
forward his image as a big. Shot.
It's kind of gross, like, like you could see, like, you know,
people would do this. In a gross way, yeah,
absolutely. However I would.
(13:29):
I loved it when I benefited. From it, sometimes I didn't like
if you expected like me to be like overly thankful or.
Something. Oh yeah, take your.
Fucking 100 bucks back my my dignity is worth more than 100.
Dollars, Yeah. No, that's fair.
And I feel like he might have been kind of like.
That no, yeah, he did. I mean, he definitely seemed
like somebody that like somebodywho like definitely talked down
(13:53):
to people and was like $100 probably a lot for you.
Here you go. Yeah, no, he definitely looked
down on poor people. He, I bet you he did not like
poor people for sure. He also was like a really big
donor to large Republican campaigns.
Like he he backed Rudy Giuliani's like 2008
presidential campaign, so. Bad tracks.
Yeah, I think he'd probably be on the side of hating poor
(14:15):
people. Obsidian bought more and more
obscure things, including a plastic surgery center, a luxury
bus leasing company, a race car team, a replica vintage car
manufacturer and National Lampoon.
What? Yeah.
You you know the name that precedes movies that you watched
(14:37):
when you were 12 because you knew they had boobies in them.
I watch them now 'cause there's boobies in them.
Yeah, or, or if you are older, maybe it was the comedy News
magazine that you read when you were 12 because you knew they
had boobies in them which didn'tknow that National Lampoon
personally started as a comedy magazine in the 1970s.
(14:58):
I did not know that. You know who worked there?
Bill Murray, Chevy Chase, like 6of the National.
The people that like were originally writers for National
Lampoon moved on to SNL. Like the original cast of SNL.
That just, you know, all that makes sense.
So. That's cool though.
And they were famous because they had these like comic strips
in them that usually featured nudity.
(15:19):
So, you know, either way, by thetime that Tim acquired National
Lampoon, they had stopped makingmovies by themselves, like
Animal House, which they made and literally just started
selling their name for other people to use on their movies,
which is why you'd see it so much like National Lampoon
presents, blah, blah, blah. It's because they just sold
(15:39):
their name and then those peoplewould use in their movies with
hero creative influence from. National, that's interesting.
Which is why such atrocities such as National Lampoon
Presents Transyl Mania were madewith the National Lampoon logo
decades after their vacation movie successes.
(16:00):
Their vacation movie successes. But to be fair, they had just
recently had their only recent success right before Tim took it
over in 2002 with National Lampoon's Van Wilder.
I remember that I remember the name.
I don't think I ever saw it. It's the first time that we saw
Ryan Reynolds. That's in a movie.
(16:20):
In addition to buying companies,Tim was acquiring the The Rich
Guy Infinity Stones. If you were a 14,500 square foot
Indiana mansion somehow with more bathrooms than bedrooms.
It had eight bathrooms but only 7 bedrooms.
People we shouldn't. Make that make that make sense
(16:41):
to me. Why?
You got hey, you know, we got tocuddle up now me and the hot
girl at the party. There's not another bedroom.
OK but she might have to shit so.
It also had three bars, 2 full kitchens.
It was very large. So he so mansion check, he had a
(17:01):
private jet check he had a 100 foot yacht called Insert Name
worth around $6.5 million that cost him literally $5000 a month
just to dock. What the fuck?
Yeah, and supposedly he went on it like 4 * a year.
That just all makes yeah, that that's, I mean, that's how he
seems, you know? That's $60,000 a year just to
(17:23):
dock something that you visit like every now and again.
Stupid. Not to mention you got to staff
it too. There's staff on the boat.
He's got to like pay bartenders and shit to just be on his
personal. Yeah, that's bull.
It's crazy. He had a car collection of
almost 70 cars. He.
Had Rolls Royces. He had every fancy car you can
(17:44):
have. He had there some a bunch of
vintage cars and he stored them all in a custom built garage on
his property that you'd walk through and it was it was
multiple floors of just like like lines of cars.
That's so weird. One of his cars was a $1.8
million Bugatti. Damn.
Which I think has to be like oneof the most expensive cars that
(18:08):
you can buy. So check fancy cars.
He also had a model girlfriends he was dating a knock off
Playboy Bunny penthouse pet of the month at one point Erica.
Taylor, oh Erica Taylor. Do you know who that is?
No, no, neither did I. No, I I looked her up and then I
(18:28):
just got a bunch of naked pictures of her.
Was she a hat? She's all right.
He also mentioned like a bunch that he was friends with the
rapper Ludacris. He met him once.
They had pictures together like multiple.
Yeah, at the one party they met each other at.
It was more he was actually friends with Ludacris.
(18:48):
That's funny. And he said that like Luda would
call him and ask him which of his cars that he was riding
around in that day. Oh my God, you know that this is
what this guy talked about at every fucking party.
You know it. And Tim said that he that he
said back to him, he's like, oh,you know, it's raining out
Saturday. So I'm just going to take the
Bentley. Yeah, well, you just take the
(19:09):
Bentley. He was like Ludacris was like
the other cars. Was like your rainy day car is a
Bentley. I'm like Oh my God I hate this
guy. Like this guy would be so
annoying to talk to you. That's why I'm saying I don't
want his hundred. Bucks No, I don't want his 100
bucks No, I was so. Shitty.
This all culminated in one of the biggest events that he had
his 45th birthday party that wasPlayboy Mansions themed.
(19:31):
Like I mentioned earlier, Hoosier Hefner wore a smoking
jacket all night, threw $100 bills from the second story of
his mansion on to the partygoers, paid for and flew in
20 models, including that personfrom Megan Wants a Millionaire
to Tell like she was a reality television show star.
(19:52):
Whatever, she went out there andhe just paid them to show up and
like dress in. Skanky clothes like.
Skimpy outfits and walk around and just party.
My dream. He also had ice sculptures
shaped like dollar signs and he had a birthday cake shaped like
a like a $1 million bill and hisface was in the middle and they
(20:14):
served it like in front of his $1.8 million Bugatti.
Like they cut the cake in front of the Bugatti.
It's just so gross, man. Yeah, this is like an egregious
flaunt of wealth. Like this is the worst guy ever.
That's what he was known for. It's like the exact opposite of
what Midwest people are supposedto be like.
Yeah. So as you can tell, all of this
(20:37):
costs a lot of money, so you would assume that Obsidian
Enterprises must be doing well. Right.
Well, from 2001 to 2006, they reported a cumulative loss of
$30 million. Wow.
So. That's a lot.
How was he getting the money? Enter Dan Lakin.
(21:02):
So Dan Lincoln was appointed CEOof National Lampoon Inc in 2002
when the company was formed and taken public when Tim had bought
it. Also, he originally tried to
revitalize the successful past of the brand by bringing back
original writers from like the magazine days when it was good
(21:22):
for like a decade, but it didn'twork and the company was losing
like $5,000,000 a year. So Dan instead tried to pay
people kickbacks to purchase thestock to make it seem more
desirable and to inflate its price in early 2008 and attempts
(21:44):
to avoid getting the stock delisted from the American Stock
Exchange, which it was in dangerof of doing.
He was very quickly discovered, like in the matter of months,
they found him out and arrested him.
And when they did arrest him, though, he's like, OK, you know
what guys? I can lead you to a bigger fish
(22:05):
to fry in order to reduce my sentence.
And that bigger fish was the manwho replaced Dan Lakin as CEO of
National Lampoon and owner of the company Tim Durham.
Dan told authorities that Tim had been running hundreds of
millions of dollars in schemes out of a small Ohio based
(22:27):
company, Fair Financial. Doesn't sound very fair.
If believe it or not, it was named off the guy who founded
it. His last name was fair, so it
has nothing to do with fairness being fair.
His name was. Just fair.
Something fair. Tim Durham bought Fair Financial
for with partner James Cochran in 2002 and at the time Fair
(22:50):
Financial dealt with buying customer account receivables.
What the heck is that? Fair Financial would go to
businesses that are owed money over a long time, like a gym.
Let's say you purchase a gym membership and you agree to a
one year contract that you have to pay on monthly.
So the gym sells a group of their memberships to Fair
(23:13):
Financial that All in all on thememberships they're owed
$100,000. So maybe they should sell it to
Fair Financial for $80,000. And Fair Financial is the one
that actually works on collecting those gym membership
fees over the life of all of them.
So sure, not everyone will pay the full amount over that
duration, so you'll probably make a little less than
(23:35):
$100,000, but most will. And Fair Financial gets to make
a profit on the difference. And the gym also gets a lump sum
of cash now and doesn't have to go through the headache of
actually collecting the payments.
So it's kind of boring, but it'sa solid business model.
And that promised and delivered pretty modest returns for a very
(23:56):
long time. Fair Financial would get the
money to go out and buy these account receivables by issuing
investment certificates just to normal people that acted kind of
like bonds. The purchaser would receive
regular interest payments over afixed duration of time, maybe 6
(24:17):
to 24 months is what it usually was.
And at the end they were entitled to the entire amount
that they had originally invested.
So kind of exactly like a bond before Tim and James took it
over, Fair Financial was family owned and had built decades long
reputations with investors by consistently providing a return
(24:37):
in like 6 to 8%, which is which is good.
I mean, if anyone's promising you more than that, it's
probably a. Lot.
And this was mostly to elderly people in Ohio, like just small
town folks that they got to invest, the kind of people that
would probably go buy Google Play gift cards to.
Like for someone from Microsoft who accidentally transferred
(24:59):
$5000 into their bank account instead of 50 on a refund.
You know, it's like they're they're people that maybe they
don't know what they're doing all the time.
Yeah. When it was purchased, Fair
Financial had investor debt of $38 million, but owned accounts
receivable in the amount of 47 million.
So well balanced, you know, theyhad more assets than they did
(25:22):
debt to their investors, so they're still going to make
money. But by 2009, Fair Financial owed
$200 million to investors but had somehow less in accounts
receivable assets at only 27 million.
So not good. You know, it's very bad.
(25:44):
It turns out that they had stopped really doing business at
all, and Tim Durham, James Cochran and their CFO, Rick
Snow, turned Fair Financial justinto a Piggy Bank to fund their
personal lives and their corporate failures.
All three took loans out of the business, with Tim being the
(26:08):
worst offender, consistently taking money out to fund
personal expenses like remodeling his car collection
garage and also to funnel into the companies that he owned
through Obsidian which were failing 'cause he was bad at his
job. I was gonna say these all sound
legitimate. Like for good things to, yeah.
Yeah, for sure. They, they also then doubled
(26:29):
down and misrepresented their loans, these loans to investors
by telling them they were actually assets.
We've seen them do this before when they're like, but now we
have these loans would will get paid back and with interest.
So their assets on our balance sheet now instead of like
liabilities. Because they were issuing the
investment certificates, though,they were required to send
(26:50):
around things called circulars to investors, which had to
include facts about how the company was doing and about the
risks. You were assuming by investing
in these. They would point to the loans as
assets because they were going to be paid back to the company
with interest, like I said. But in reality, the men and the
companies that these funds were going to were not likely to ever
(27:13):
pay them back. They didn't have enough money.
And a lot of the companies that they were giving the loans to
either went under it, so definitely weren't paying them
back or were only propped up by funds from Fair Financial and
never were never turning a profit because they're buying
like luxury car remake manufacture.
Like this is stupid shit. Fair financials accountants
(27:38):
actually said as much after Tim took over the company.
They were like, there's no way you guys are going to be able to
pay back these loans. You should write them off as a
loss. Yeah, and they didn't want to do
that. No.
So they fired them and so then they got a replacement and the
(27:59):
replacement said the same thing.They were like, these loans are
pretty bad. You should put up collateral to
cover them. But then they were like, OK, you
have enough collateral for 2003 and 2004, but now you guys don't
even have enough collateral to cover the loans you've taken in
2005. So then they were like, ah damn,
fax, you're fired too. They're like shit, They keep
(28:20):
saying the same thing. It's like the same bad advice
over and over and over. And then after they fired that
second accounting firm, Tim alsolike sold all the stuff he put
up for collateral for the loans,which you're not supposed to do
obviously. So then they hired 1/3
accounting firm, but this time they hired them only to review
(28:43):
their financials, not to performan audit.
This is like when you're on a diet and you're, like, putting
in your food and then you just, like, don't include the dessert.
Yeah, You're like, no, let me track everything except the
dessert. I'll review it, but I'm not
gonna look. I'm not gonna like, but don't
you guys look too closely. Don't give us any advice.
(29:04):
So Fair Financial then only released unaudited financial
statements that were simply signed by Durham with an with
like a claim that says they are accurate to the best of his
knowledge. To the best of his knowledge.
They they weren't. By 2009, things have gotten
pretty thin and Fair Financial was struggling to make payments
(29:26):
to investors, especially if someone, they were usually
banking on people to reinvest the principal investment so that
they only had to pay out the small interest payments, but
they were struggling to even do those for people.
But but if people came back and they were like, I'd like to take
$10,000 out, they were like theydid not have the.
Ability, they're like $10,000. That's that's crazy.
(29:48):
In recordings of phone calls between James and Tim, they talk
explicitly about lies to tell investors that ask why they
haven't been receiving payments.They were just like, oh, yeah,
like, just give them an excuse. Like, verbatim.
They're like, just give them an excuse.
And then at one point they were talking about it.
(30:09):
And I think James told Tim, he'slike, you're the best at you're
the best at this, like telling people lies to get them to
believe them why they couldn't take their money out.
And then he was like, oh, in another conversation, he was
like, give this guy the same explanation you gave this other
person the other day. But don't use it too much
because it's not necessarily true.
(30:32):
This is crazy. You're just like, that's not
good. They also discussed accounting
strategies to get rid of millions of dollars in bad debt,
money that they would have to disclose.
And they talked about how getting new investors would help
them pay off the interest payments to old investors, which
is like, which is just, that is the definition of a Ponzi scheme
(30:54):
is getting new investments to pay off old investors.
So that's basically how they were running everything.
They were looting the place. After Dan Lakin brought the FBI
in Indiana's attention to Tim Durham, they subpoenaed fair
financial bank records and they found that the story he was
spinning was pretty true. Everything he said was right.
(31:16):
They sent a fake investor to meet with James Cochran and he
gave the fake investor a bunch of of lies saying that they
never dealt in loans more than afew $1000 and that they had
never missed any interest payments in decades of
operation. Both of which may have been true
before they took over and ruinedthe company, but we're
(31:37):
definitely far from it at this point.
The FBI then raided the offices of Obsidian and Fair Financial
in 2009 and with all the evidence put together, all three
of Durham, Cochrane and Snow were arrested in 2011 and
charged with multiple accounts of wire and securities fraud as
well as conspiracy to commit both of those as well.
(32:01):
All three men were then convicted in late 2012.
Rick Snow was sentenced to 10 years in prison, James Cochran
was sentenced to 25 years in prison, and Tim Durham got the
longest sentence for a white collar criminal in the history
of Indiana at 50 years, which athis age of 50 upon sentencing is
(32:23):
almost certainly a death sentence.
So although it is relatively lenient considering the total
could have been up to 225. Years.
They did him a favor. You know, they chilled out a
little bit. They didn't fully slap him with
the burning made off like 160 years in prison or whatever.
Yeah, This large of a sentence was probably given, at least in
(32:46):
part, due to the 1300 victim statement letters that were sent
to and read by the judge in the case as elderly people lost
their ability to live comfortably in the twilight
years of their lives. I don't know why that like
upsets it. Like it always gets me.
Like it just gets me. It's so sad.
I I don't know why, Like I don'tknow why it upsets me so much.
(33:09):
But when I hear about this stuff, I'm like, no, you really
are a piece of shit. And I don't know if it's because
like my one grandmother isn't totally like completely
comfortable. And I don't know if like that's
why it upsets me so much, but itjust, I get so angry when these
guys fuck over old people and ruin their life savings because
it's really not these old people's fault.
(33:30):
Like sure, could they have made some better investment
decisions? Yes.
But like. They they said they didn't even
really know when the company gotbought.
Like it was kind of. It was like all hush hush.
Like they didn't send out an announcement that it was a new
management. So they were like surprised at
the end by like, wait, what do you mean?
Like, things have changed aroundhere and they're like.
And they had no idea. That's horrible and.
(33:52):
They were lying on the circularsthey sent out and everything.
So it was really, really hard tofigure it out.
Yeah, it's sad. It's like seeing a, it's like
seeing a like 93 year old woman,like working at a, a convenience
store or something. You're like, uh, like this just
kind of sucks. Well, it's like my grandma, she
didn't want, she retired at 80. She didn't want to.
(34:14):
She part of the reason she didn't want to retire is because
she was afraid she wasn't going to have enough money.
And it's like, damn, at 80 you didn't that's it's sad, but I'm
probably going to be that way. So.
The the price of being an artist.
The price of being an artist. A few years after afterward,
Durham successfully appealed to get two of the 12 convictions
(34:36):
for wire fraud overturned, and the case was remanded for
resentencing. To the same judge that handed
out the first sentence, though, and upon reviewing the case in a
new light, decided Nah, hell Nah.
I got it right the first time and resentenced him to the same
amount of 50 years. In 2022, after serving 10 years,
(35:00):
Tim Durham tried again to get his sentence reduced and was
once again hit with a big fat hell.
Nah. So at this point, his only hope
is that someone I don't know with a lot of power, who happens
to sympathize with greedy narcissists and has the power to
commute his sentence to commute a sentence or something will do
that. But you know, like you find one
(35:22):
of those. No, it is.
Sounds like a long shot. Right.
Yeah, I don't think that. I don't know if we have anybody
who would do something like that.
Definitely not. So I think that we can easily
say Tim Durham is an asshole of the highest caliber.
His biggest goal in life was to gain more money than anyone
(35:42):
else, and he would take any measures to get there, including
ruining the lives of 5000 peoplewho invested in fair financial.
There were many people whose dreams of retirement were
dashed, now having to work untilthey die so that Tim could drive
around an almost $2,000,000 car.Which, by the way, after they
seized his assets to help pay back the $200 million of
(36:07):
restitution that he now owed, orat least the three men owed
collectively, they discovered that he didn't even own almost
any of the cars in his collections.
They were all leased. Yeah, that makes sense.
So by the time they sold them, they made almost no money on
them because they had to pay back.
The lease. They had to pay back the lease
and then only the profit they could give back to the people
(36:28):
and it wasn't a lot. And now he says he's too poor to
afford further appeals on his sentencing it.
Sucks to suck. What scares me the most is that
if you I asked his true opinion,I kind of bet you almost
anything he'd say he'd do it again.
Oh yeah. You know, and that's why he
deserves to spend the rest of his life in a cell.
(36:53):
Because if I went to like if I went to this white ass man's
knock off ditty party. Oh, that just I'm not.
I bet the cake tasted like shit,Tim.
Oh, you know you. Don't.
You know what cake that big withfondant.
It was not delicious. Gross.
Anyway, yeah, that was the storyof Tim Durham, the largest FBI
(37:18):
investigation and the largest sentence handed down for a white
collar crime in Indiana. So.
He deserved it, He deserved it. And you know what we deserve?
Hopefully. Money.
Money, yes please and support. Kisses.
We need your support. Hugs.
(37:38):
Support. You must.
You must. I compel you to leave us a five
star review, please. You can do that on iTunes or
Spotify. You can even write something on
iTunes if you want Really, really share the message.
If you're not on those, feel free to like, subscribe, share
whatever you do on the pod catcher you use.
It'd be super helpful. Let's say you want to really
(38:00):
support us. You can go to our T Public
store. You can get to the T Public
store. It's in the link in the show
description. It's becoming some other thing
now. I think it's dashery.
Haberdashery. Oh wow, that might actually be
why they chose the title. Because what does a haberdasher
do, Nina? They make hats.
Not just hats. Other things too, they do make.
(38:22):
Hats, though, they specialize specifically in men's
accessories. Men's clothing, accessories,
hats, belts, wallet chains, you know, stuff like.
That tough flanks. Yeah, we're getting there.
We're getting there. And Ascot one of those little
things that go in a pocket. Your Ascot.
(38:46):
What's up? Bro.
It it did, I gained 20 lbs. Jesus Christ, what the hell was
I? They call me BB.
It stands for Baby Beluga. No one calls you that.
No one calls you anyway. Anyway, you can support us by
(39:08):
doing that. Like I said, Dash restore or T
Public, whatever it is by the time you're reading this, you
can also get that from our website,
whitecollarsredhands.com. There's a button that says check
out our merch, it'll take you there.
That's fine. Hey, while you're there, you can
listen on the site. You can also contact us.
There's a contact this page or you can send an e-mail to
whitecollarsredhands@gmail.com. We're getting a bunch of episode
(39:29):
suggestions recently. So thank you guys so much for
who has reached out. And you can do that too.
If you haven't done it already, you can reach out and suggest an
episode. We try to do a fan submitted
episode every single season. So you could be next, yeah.
And we've done 2 so far this season.
Yeah, we're getting a lot. And I think we are going to do a
third one actually, because I accidentally had picked an
(39:52):
episode we had already done. We have 100 and like 50.
Episodes live, so it's hard. They get a little confuddled.
What was I? You can also contact us by
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(40:15):
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So with that, thank you very much for listening.
And we'll see you next week on another episode of White
(40:38):
Collar's Red. Hands.
Wall Street veteran Bernard Madoff has been arrested and
charged with running a $50 billion Ponzi scheme.
Congress wants to know what caused the Enron meltdown, and
while the collective rage currently is focused on low
comp. Tyco CEO Dennis Koslowski was
convicted of looting hundreds ofmillions of dollars.
This is one of the biggest fraudcases ever.
(00:23):
Their president's a crook. Well, I'm not a crook.
Find out more on this week's episode of White Collars, Red
Hands. Whoa, so technical difficulties
this week and our video file gotcorrupted.
Fear not, the episode is still being published, but we're back
into the dark ages of audio onlypodcasts.
(00:46):
So without further ado, here's just our voices.
When you imagine the Midwest, you conjure up Rust Belt
pictures of old corn silos marking the horizon that seems
to stretch to Infinity 'cause it's just so damn flat.
You think of humble people who truly know the value of a hard
(01:08):
day's work bringing pies to their new neighbors.
Maybe you imagine Cookie Monsterpajama pants, Skyline chili, the
dulcet tones of a steel mill refinery.
The Midwest has long been associated with being Canada
South, filled with nice people oops and looking like it's about
time to hit the road dares. Which makes our topic today such
(01:32):
a combo breaker. Indiana born Tim Durham was
greedy. He had aspirations of being the
richest person on the planet before he died, but he instead
embroiled himself in the largestPonzi scheme that Indiana had
ever seen, stealing hundreds of millions and earning himself the
moniker The Mad Off of the Midwest.
(01:54):
His story is dotted with expensive cars, private jets,
and over the top birthday parties themed after the Playboy
Mansion, which is why I'm calling him Hoosier Hefner.
So let's get right into the centerfold of this week's
episode of White Collar's Red Hands.
I love a good Midwestern boy. Yeah, You know, I think he
(02:15):
didn't like being a Midwestern boy, though.
Yeah, he seemed like he wanted to be a West Coast boy or an
East Coast boy. He he pretty much moved to LA as
soon as he could so he wanted toget out there.
Sun fun. What is there in Indiana?
Indianapolis, I've heard, is oneof the most boring cities.
Oh, there's not. I've been there.
There's nothing there. Nothing in Indianapolis.
(02:36):
Not much in Indiana in general. Sorry Indianans, if you are
Indiana a Hoosier. Just call them Hoosiers.
You're a Hoosier. Who's your Mama?
Indiana. That sounds awful, but welcome
back to another episode of WhiteCollars, Red Hands.
I'm Kashawn. And I'm Nina and like.
We already said today we're talking about Tim Durham, one of
(02:57):
the had to be one of the richestpeople in Indiana at the time
and now one of the one of the saddest little boys in Indiana
prism. Yeah.
Yeah, Tim Durham was born and raised in the small town of
Seymour, IN. I don't need to Seymour IN, I've
seen enough. Well, just when you think you
don't, suddenly Seymour. Seymour IN which boasts a
(03:19):
population of just over 21,000 residents today.
And by the way, when I say SmallTown, I really mean it because
this was the town that musician John Cougar Mellencamp grew up
in and is therefore the inspiration for his hit song
Small Town. There you go.
Growing up in a small town, got to feel Jesus in a small town.
(03:44):
Yeah, so it's the small town. It is the one.
So this is like kids riding to school on tractors territory.
Seymour, IN OK Tim likes to say that he didn't come from a
wealthy family, although his dadwas a dentist, right?
And when Tim was nine years old in 1971, the median income for
(04:06):
dentists in America was $48,000 a year, which, adjusted for
inflation, is over $380,000 a year today.
I mean, I guess it depends on what you think is rich and what
you think is poor. That would, I think it's
objective because that would puthim in the top 2% of Americans
today. All right, So no, Tim, you did
(04:26):
come from a wealthy family, justobviously not as wealthy as you
wanted it to be. Well, and especially to
everyone, like compared to everyone who was probably around
him in that small town. I mean, if it's anything like
the small town that I grew up inand the one that you grew up in,
like not very many people were making over $100,000 a year and
everybody, pretty much everybodyhad a blue collar job.
(04:49):
So for your dad to be a dentist,yeah, you were fine.
Yeah, he also, he tells this story in an interview once where
he he talks about his dad like he's like, Oh yeah, he was fine
with just driving the same Hondafor 12 years 'cause it had
enough room to fit his golf clubs in it.
And then he goes on to say that that his dad, like, this is the
story about how his dad just didn't really have the want to
(05:11):
go out and amass more money likehe does.
And I was like, but the fact your dad plays golf, Yeah, Tim,
you're not in a normal. Normal.
Family fine you're. Fine if your dad has thrown his
golf clubs in the back of his car. 100%.
You know, instead of like tryingto get his 1970s like Ford
(05:34):
Ranger to run so he can get to his construction job all right.
You guys are fine. Yeah, it's fine.
Golfing's fucking expensive. Obviously Tim wanted more out of
life than his already well to doparents could offer him, so when
he went to college he chose something that he could rake in
(05:54):
the cash with. So he picked law and he
graduated from Indiana University in 1987 and became a
lawyer, passed the bar, and was actually known to already be
driving a BMW to school when he was in college.
So you know how kids from normalmiddle class families can drive
BMWs to school? Well, that's what I thought
(06:15):
happened, Yeah, yeah. Straight out of college, he
started working at ICE Miller, which is a national law firm
with an office in Indianapolis. And two years after graduation,
he married Now magazine editor Joan Servos.
But Tim maybe didn't marry Joan just for love, because her dad
(06:36):
was a pretty influential person.Bert Cervos was a World War Two
officer and a previous member ofthe OSS, which was the precursor
to the CIA. But by the time that Tim married
his daughter, he was better known in the Indianapolis area
as a businessman and politician.Bert had a track record of
buying companies through leveraged buyouts, which is just
(07:00):
getting a bunch of debt to buy acompany.
He would then revitalize the company and flip them for a
profit, and he had done pretty well at this.
He was also a prominent member of the Indianapolis City
Council, a position that he served in from the early 1960s
until he stepped down in 2002. Wow, even at the local level our
politicians are in there for waytoo long.
(07:21):
I think city councils that, I mean, with 40 years, I, I don't
even know if there's like reelection.
No, I think you're just in the city.
Council. City Council, Yeah.
Tim left Ice Miller to join Bert's investment firm and to
learn from his new father and tolearn from his new father-in-law
(07:42):
and quickly realized that the richest of the rich were those
that dealt in entire company level assets.
So he became a Padawan in the art of the leveraged buyout.
After about a decade though, hismarriage soured and although I
have no proof of this, he just like seems like the guy that.
(08:02):
Was definitely cheating on his wife a bunch.
Oh yeah, he. Is the epitome of scuzzy
douchebag frat boy business major in college.
Like this guy sucks. Like imagine like the the person
that went to Business School that you know and now is
actually like has a lot of moneybut is a fucking prick about it.
(08:24):
That is Tim Durham to AT like Patagon.
Like not then, but like now. Patagonia vesting flannels for
sure. Talking about how hot waitresses
are like when you go out like inreally groceries bragging about
cheating on his wife when he he went on a business trip to Las
Vegas, something that was actually done to me by business
(08:45):
people I knew. And I was like, please don't do
this. Oh, I don't know if you knew
this Kashan, but if you are, if it's out of the country, it's
not cheating. I said Vegas.
I know, but I'm just letting youknow that if you have, if you
leave the country and you you have sex with someone else other
than your spouse, it's actually not cheating.
So that's the loophole. That's what my coworker told me.
All right, good. When he told me he was cheating
(09:06):
on his girlfriend, it's. Good to know it's in Canada so
it. Doesn't it?
Doesn't matter if it's in Canada.
Sure, it's a 45 minute drive, but it is another.
Puerto Rico might be a territory, but it's another
country and I can stick my Dick wherever I want.
They're like, actually only the continental United States
counts. So you can do Hawaii, you're a.
Last. Yeah, for sure.
(09:27):
That's totally fine. So whether because of that or
because Joan finally came to hersenses, I don't really know.
The two called it quits in 1998 and Tim left the firm, no longer
a Padawan but now a fully fledged leverage buyout Jedi
Master. With his new found skills he
started Obsidian Enterprises andstarted getting up work and
(09:51):
started getting to work buying up a weird motley crew of
companies. And at the beginning, they were
largely manufacturing companies that made things from buses to
cargo trailers to rubber reclamation plants.
He really hit it big with his investment into Bright Point,
though, which is a wireless device distributor.
(10:12):
I think at the time they were doing mostly cell phones, but
they just described themselves as a wireless device
distributor. So maybe there are other
wireless devices, I don't know. He made an initial investment of
about $1 million that as the company grew into a Fortune 500
company by 2012. OK.
So I that was pretty quick to become a Fortune 500 company.
(10:33):
That's pretty impressive. Obsidian's not a Fortune 500
company. I want to specify bright points
is. A Oh, sorry, sorry, sorry,
sorry. Spoiler alert, Obsidian is no
longer around in 2020. They ended up getting bought
out, but so that $1 million investment that Tim made into it
with Obsidian grew to like 20 to$30 million in return, which is
(10:58):
that's pretty good. Tim took Obsidian Enterprises
public and began really wanting to flaunt his wealth.
And this big win with Bright Point really brought in a lot of
like people to invest in Obsidian.
So he was kind of getting money thrown at him, thrown at him,
and now he was a millionaire, but he would constantly talk
(11:20):
about wanting to swap that M forAB.
He really wanted to be a billionaire.
He he gave interviews where he publicly claimed that his goal
in life was that when he died, he wanted to be the richest
person on the planet and he wanted to be worth more than
everyone else on the planet. Well, I it's pretty hard to beat
Elon Musk at this point. That being said, although Tim
(11:41):
wanted to be the richest person in the world, he was not miserly
with his wealth. Not really.
But he would kind of flash it around as a sort of like Dick
measuring contest. Like he wanted people to know he
was rich. That was his favorite thing to
do is to let people know just how rich he was.
His office was in the penthouse at then Chase Tower, the tallest
(12:02):
building in Indiana and it was huge, his office, but it only
housed like a few employees. He had like 6 people working
there but. Yeah, but he had massive.
He had the whole penthouse floorof the Chase Tower and also he
got all of his employees tailored suits.
He bought them all tailored suits and he gave them all a
(12:24):
Rolex for Christmas. They're like, that's great,
could you pay me a living wage? They probably.
Got paid. I'm just kidding.
Oh, and by the way, if you're wondering, hey, what's the
cheapest commercially available Rolex that you can even get?
Like, let's say he really wantedto cheat out on it, right?
Well, it's one of two models, atleast.
Now it's the Oyster Perpetual orthe Milgaus, both of which come
(12:45):
with a price tag of $6400. Right, that's it.
Commercially so, yeah. My car was not even that
expensive. I can tell every time he would
go out to eat also or even went on his boat that he owned, he
would hand out $100 bills to anyone who did anything for him.
So like filled up his water, it's $100 to the busboy made him
(13:08):
a drink, it's $100 to the bartender.
Like everyone he would just handout $100.
Which don't get me wrong from working in the service industry
it's great for them. But he was really just trying to
forward his image as a big. Shot.
It's kind of gross, like, like you could see, like, you know,
people would do this. In a gross way, yeah,
absolutely. However I would.
(13:29):
I loved it when I benefited. From it, sometimes I didn't like
if you expected like me to be like overly thankful or.
Something. Oh yeah, take your.
Fucking 100 bucks back my my dignity is worth more than 100.
Dollars, Yeah. No, that's fair.
And I feel like he might have been kind of like.
That no, yeah, he did. I mean, he definitely seemed
like somebody that like somebodywho like definitely talked down
(13:53):
to people and was like $100 probably a lot for you.
Here you go. Yeah, no, he definitely looked
down on poor people. He, I bet you he did not like
poor people for sure. He also was like a really big
donor to large Republican campaigns.
Like he he backed Rudy Giuliani's like 2008
presidential campaign, so. Bad tracks.
Yeah, I think he'd probably be on the side of hating poor
(14:15):
people. Obsidian bought more and more
obscure things, including a plastic surgery center, a luxury
bus leasing company, a race car team, a replica vintage car
manufacturer and National Lampoon.
What? Yeah.
You you know the name that precedes movies that you watched
(14:37):
when you were 12 because you knew they had boobies in them.
I watch them now 'cause there's boobies in them.
Yeah, or, or if you are older, maybe it was the comedy News
magazine that you read when you were 12 because you knew they
had boobies in them which didn'tknow that National Lampoon
personally started as a comedy magazine in the 1970s.
(14:58):
I did not know that. You know who worked there?
Bill Murray, Chevy Chase, like 6of the National.
The people that like were originally writers for National
Lampoon moved on to SNL. Like the original cast of SNL.
That just, you know, all that makes sense.
So. That's cool though.
And they were famous because they had these like comic strips
in them that usually featured nudity.
(15:19):
So, you know, either way, by thetime that Tim acquired National
Lampoon, they had stopped makingmovies by themselves, like
Animal House, which they made and literally just started
selling their name for other people to use on their movies,
which is why you'd see it so much like National Lampoon
presents, blah, blah, blah. It's because they just sold
(15:39):
their name and then those peoplewould use in their movies with
hero creative influence from. National, that's interesting.
Which is why such atrocities such as National Lampoon
Presents Transyl Mania were madewith the National Lampoon logo
decades after their vacation movie successes.
(16:00):
Their vacation movie successes. But to be fair, they had just
recently had their only recent success right before Tim took it
over in 2002 with National Lampoon's Van Wilder.
I remember that I remember the name.
I don't think I ever saw it. It's the first time that we saw
Ryan Reynolds. That's in a movie.
(16:20):
In addition to buying companies,Tim was acquiring the The Rich
Guy Infinity Stones. If you were a 14,500 square foot
Indiana mansion somehow with more bathrooms than bedrooms.
It had eight bathrooms but only 7 bedrooms.
People we shouldn't. Make that make that make sense
(16:41):
to me. Why?
You got hey, you know, we got tocuddle up now me and the hot
girl at the party. There's not another bedroom.
OK but she might have to shit so.
It also had three bars, 2 full kitchens.
It was very large. So he so mansion check, he had a
(17:01):
private jet check he had a 100 foot yacht called Insert Name
worth around $6.5 million that cost him literally $5000 a month
just to dock. What the fuck?
Yeah, and supposedly he went on it like 4 * a year.
That just all makes yeah, that that's, I mean, that's how he
seems, you know? That's $60,000 a year just to
(17:23):
dock something that you visit like every now and again.
Stupid. Not to mention you got to staff
it too. There's staff on the boat.
He's got to like pay bartenders and shit to just be on his
personal. Yeah, that's bull.
It's crazy. He had a car collection of
almost 70 cars. He.
Had Rolls Royces. He had every fancy car you can
(17:44):
have. He had there some a bunch of
vintage cars and he stored them all in a custom built garage on
his property that you'd walk through and it was it was
multiple floors of just like like lines of cars.
That's so weird. One of his cars was a $1.8
million Bugatti. Damn.
Which I think has to be like oneof the most expensive cars that
(18:08):
you can buy. So check fancy cars.
He also had a model girlfriends he was dating a knock off
Playboy Bunny penthouse pet of the month at one point Erica.
Taylor, oh Erica Taylor. Do you know who that is?
No, no, neither did I. No, I I looked her up and then I
(18:28):
just got a bunch of naked pictures of her.
Was she a hat? She's all right.
He also mentioned like a bunch that he was friends with the
rapper Ludacris. He met him once.
They had pictures together like multiple.
Yeah, at the one party they met each other at.
It was more he was actually friends with Ludacris.
(18:48):
That's funny. And he said that like Luda would
call him and ask him which of his cars that he was riding
around in that day. Oh my God, you know that this is
what this guy talked about at every fucking party.
You know it. And Tim said that he that he
said back to him, he's like, oh,you know, it's raining out
Saturday. So I'm just going to take the
Bentley. Yeah, well, you just take the
(19:09):
Bentley. He was like Ludacris was like
the other cars. Was like your rainy day car is a
Bentley. I'm like Oh my God I hate this
guy. Like this guy would be so
annoying to talk to you. That's why I'm saying I don't
want his hundred. Bucks No, I don't want his 100
bucks No, I was so. Shitty.
This all culminated in one of the biggest events that he had
his 45th birthday party that wasPlayboy Mansions themed.
(19:31):
Like I mentioned earlier, Hoosier Hefner wore a smoking
jacket all night, threw $100 bills from the second story of
his mansion on to the partygoers, paid for and flew in
20 models, including that personfrom Megan Wants a Millionaire
to Tell like she was a reality television show star.
(19:52):
Whatever, she went out there andhe just paid them to show up and
like dress in. Skanky clothes like.
Skimpy outfits and walk around and just party.
My dream. He also had ice sculptures
shaped like dollar signs and he had a birthday cake shaped like
a like a $1 million bill and hisface was in the middle and they
(20:14):
served it like in front of his $1.8 million Bugatti.
Like they cut the cake in front of the Bugatti.
It's just so gross, man. Yeah, this is like an egregious
flaunt of wealth. Like this is the worst guy ever.
That's what he was known for. It's like the exact opposite of
what Midwest people are supposedto be like.
Yeah. So as you can tell, all of this
(20:37):
costs a lot of money, so you would assume that Obsidian
Enterprises must be doing well. Right.
Well, from 2001 to 2006, they reported a cumulative loss of
$30 million. Wow.
So. That's a lot.
How was he getting the money? Enter Dan Lakin.
(21:02):
So Dan Lincoln was appointed CEOof National Lampoon Inc in 2002
when the company was formed and taken public when Tim had bought
it. Also, he originally tried to
revitalize the successful past of the brand by bringing back
original writers from like the magazine days when it was good
(21:22):
for like a decade, but it didn'twork and the company was losing
like $5,000,000 a year. So Dan instead tried to pay
people kickbacks to purchase thestock to make it seem more
desirable and to inflate its price in early 2008 and attempts
(21:44):
to avoid getting the stock delisted from the American Stock
Exchange, which it was in dangerof of doing.
He was very quickly discovered, like in the matter of months,
they found him out and arrested him.
And when they did arrest him, though, he's like, OK, you know
what guys? I can lead you to a bigger fish
(22:05):
to fry in order to reduce my sentence.
And that bigger fish was the manwho replaced Dan Lakin as CEO of
National Lampoon and owner of the company Tim Durham.
Dan told authorities that Tim had been running hundreds of
millions of dollars in schemes out of a small Ohio based
(22:27):
company, Fair Financial. Doesn't sound very fair.
If believe it or not, it was named off the guy who founded
it. His last name was fair, so it
has nothing to do with fairness being fair.
His name was. Just fair.
Something fair. Tim Durham bought Fair Financial
for with partner James Cochran in 2002 and at the time Fair
(22:50):
Financial dealt with buying customer account receivables.
What the heck is that? Fair Financial would go to
businesses that are owed money over a long time, like a gym.
Let's say you purchase a gym membership and you agree to a
one year contract that you have to pay on monthly.
So the gym sells a group of their memberships to Fair
(23:13):
Financial that All in all on thememberships they're owed
$100,000. So maybe they should sell it to
Fair Financial for $80,000. And Fair Financial is the one
that actually works on collecting those gym membership
fees over the life of all of them.
So sure, not everyone will pay the full amount over that
duration, so you'll probably make a little less than
(23:35):
$100,000, but most will. And Fair Financial gets to make
a profit on the difference. And the gym also gets a lump sum
of cash now and doesn't have to go through the headache of
actually collecting the payments.
So it's kind of boring, but it'sa solid business model.
And that promised and delivered pretty modest returns for a very
(23:56):
long time. Fair Financial would get the
money to go out and buy these account receivables by issuing
investment certificates just to normal people that acted kind of
like bonds. The purchaser would receive
regular interest payments over afixed duration of time, maybe 6
(24:17):
to 24 months is what it usually was.
And at the end they were entitled to the entire amount
that they had originally invested.
So kind of exactly like a bond before Tim and James took it
over, Fair Financial was family owned and had built decades long
reputations with investors by consistently providing a return
(24:37):
in like 6 to 8%, which is which is good.
I mean, if anyone's promising you more than that, it's
probably a. Lot.
And this was mostly to elderly people in Ohio, like just small
town folks that they got to invest, the kind of people that
would probably go buy Google Play gift cards to.
Like for someone from Microsoft who accidentally transferred
(24:59):
$5000 into their bank account instead of 50 on a refund.
You know, it's like they're they're people that maybe they
don't know what they're doing all the time.
Yeah. When it was purchased, Fair
Financial had investor debt of $38 million, but owned accounts
receivable in the amount of 47 million.
So well balanced, you know, theyhad more assets than they did
(25:22):
debt to their investors, so they're still going to make
money. But by 2009, Fair Financial owed
$200 million to investors but had somehow less in accounts
receivable assets at only 27 million.
So not good. You know, it's very bad.
(25:44):
It turns out that they had stopped really doing business at
all, and Tim Durham, James Cochran and their CFO, Rick
Snow, turned Fair Financial justinto a Piggy Bank to fund their
personal lives and their corporate failures.
All three took loans out of the business, with Tim being the
(26:08):
worst offender, consistently taking money out to fund
personal expenses like remodeling his car collection
garage and also to funnel into the companies that he owned
through Obsidian which were failing 'cause he was bad at his
job. I was gonna say these all sound
legitimate. Like for good things to, yeah.
Yeah, for sure. They, they also then doubled
(26:29):
down and misrepresented their loans, these loans to investors
by telling them they were actually assets.
We've seen them do this before when they're like, but now we
have these loans would will get paid back and with interest.
So their assets on our balance sheet now instead of like
liabilities. Because they were issuing the
investment certificates, though,they were required to send
(26:50):
around things called circulars to investors, which had to
include facts about how the company was doing and about the
risks. You were assuming by investing
in these. They would point to the loans as
assets because they were going to be paid back to the company
with interest, like I said. But in reality, the men and the
companies that these funds were going to were not likely to ever
(27:13):
pay them back. They didn't have enough money.
And a lot of the companies that they were giving the loans to
either went under it, so definitely weren't paying them
back or were only propped up by funds from Fair Financial and
never were never turning a profit because they're buying
like luxury car remake manufacture.
Like this is stupid shit. Fair financials accountants
(27:38):
actually said as much after Tim took over the company.
They were like, there's no way you guys are going to be able to
pay back these loans. You should write them off as a
loss. Yeah, and they didn't want to do
that. No.
So they fired them and so then they got a replacement and the
(27:59):
replacement said the same thing.They were like, these loans are
pretty bad. You should put up collateral to
cover them. But then they were like, OK, you
have enough collateral for 2003 and 2004, but now you guys don't
even have enough collateral to cover the loans you've taken in
2005. So then they were like, ah damn,
fax, you're fired too. They're like shit, They keep
(28:20):
saying the same thing. It's like the same bad advice
over and over and over. And then after they fired that
second accounting firm, Tim alsolike sold all the stuff he put
up for collateral for the loans,which you're not supposed to do
obviously. So then they hired 1/3
accounting firm, but this time they hired them only to review
(28:43):
their financials, not to performan audit.
This is like when you're on a diet and you're, like, putting
in your food and then you just, like, don't include the dessert.
Yeah, You're like, no, let me track everything except the
dessert. I'll review it, but I'm not
gonna look. I'm not gonna like, but don't
you guys look too closely. Don't give us any advice.
(29:04):
So Fair Financial then only released unaudited financial
statements that were simply signed by Durham with an with
like a claim that says they are accurate to the best of his
knowledge. To the best of his knowledge.
They they weren't. By 2009, things have gotten
pretty thin and Fair Financial was struggling to make payments
(29:26):
to investors, especially if someone, they were usually
banking on people to reinvest the principal investment so that
they only had to pay out the small interest payments, but
they were struggling to even do those for people.
But but if people came back and they were like, I'd like to take
$10,000 out, they were like theydid not have the.
Ability, they're like $10,000. That's that's crazy.
(29:48):
In recordings of phone calls between James and Tim, they talk
explicitly about lies to tell investors that ask why they
haven't been receiving payments.They were just like, oh, yeah,
like, just give them an excuse. Like, verbatim.
They're like, just give them an excuse.
And then at one point they were talking about it.
(30:09):
And I think James told Tim, he'slike, you're the best at you're
the best at this, like telling people lies to get them to
believe them why they couldn't take their money out.
And then he was like, oh, in another conversation, he was
like, give this guy the same explanation you gave this other
person the other day. But don't use it too much
because it's not necessarily true.
(30:32):
This is crazy. You're just like, that's not
good. They also discussed accounting
strategies to get rid of millions of dollars in bad debt,
money that they would have to disclose.
And they talked about how getting new investors would help
them pay off the interest payments to old investors, which
is like, which is just, that is the definition of a Ponzi scheme
(30:54):
is getting new investments to pay off old investors.
So that's basically how they were running everything.
They were looting the place. After Dan Lakin brought the FBI
in Indiana's attention to Tim Durham, they subpoenaed fair
financial bank records and they found that the story he was
spinning was pretty true. Everything he said was right.
(31:16):
They sent a fake investor to meet with James Cochran and he
gave the fake investor a bunch of of lies saying that they
never dealt in loans more than afew $1000 and that they had
never missed any interest payments in decades of
operation. Both of which may have been true
before they took over and ruinedthe company, but we're
(31:37):
definitely far from it at this point.
The FBI then raided the offices of Obsidian and Fair Financial
in 2009 and with all the evidence put together, all three
of Durham, Cochrane and Snow were arrested in 2011 and
charged with multiple accounts of wire and securities fraud as
well as conspiracy to commit both of those as well.
(32:01):
All three men were then convicted in late 2012.
Rick Snow was sentenced to 10 years in prison, James Cochran
was sentenced to 25 years in prison, and Tim Durham got the
longest sentence for a white collar criminal in the history
of Indiana at 50 years, which athis age of 50 upon sentencing is
(32:23):
almost certainly a death sentence.
So although it is relatively lenient considering the total
could have been up to 225. Years.
They did him a favor. You know, they chilled out a
little bit. They didn't fully slap him with
the burning made off like 160 years in prison or whatever.
Yeah, This large of a sentence was probably given, at least in
(32:46):
part, due to the 1300 victim statement letters that were sent
to and read by the judge in the case as elderly people lost
their ability to live comfortably in the twilight
years of their lives. I don't know why that like
upsets it. Like it always gets me.
Like it just gets me. It's so sad.
I I don't know why, Like I don'tknow why it upsets me so much.
(33:09):
But when I hear about this stuff, I'm like, no, you really
are a piece of shit. And I don't know if it's because
like my one grandmother isn't totally like completely
comfortable. And I don't know if like that's
why it upsets me so much, but itjust, I get so angry when these
guys fuck over old people and ruin their life savings because
it's really not these old people's fault.
(33:30):
Like sure, could they have made some better investment
decisions? Yes.
But like. They they said they didn't even
really know when the company gotbought.
Like it was kind of. It was like all hush hush.
Like they didn't send out an announcement that it was a new
management. So they were like surprised at
the end by like, wait, what do you mean?
Like, things have changed aroundhere and they're like.
And they had no idea. That's horrible and.
(33:52):
They were lying on the circularsthey sent out and everything.
So it was really, really hard tofigure it out.
Yeah, it's sad. It's like seeing a, it's like
seeing a like 93 year old woman,like working at a, a convenience
store or something. You're like, uh, like this just
kind of sucks. Well, it's like my grandma, she
didn't want, she retired at 80. She didn't want to.
(34:14):
She part of the reason she didn't want to retire is because
she was afraid she wasn't going to have enough money.
And it's like, damn, at 80 you didn't that's it's sad, but I'm
probably going to be that way. So.
The the price of being an artist.
The price of being an artist. A few years after afterward,
Durham successfully appealed to get two of the 12 convictions
(34:36):
for wire fraud overturned, and the case was remanded for
resentencing. To the same judge that handed
out the first sentence, though, and upon reviewing the case in a
new light, decided Nah, hell Nah.
I got it right the first time and resentenced him to the same
amount of 50 years. In 2022, after serving 10 years,
(35:00):
Tim Durham tried again to get his sentence reduced and was
once again hit with a big fat hell.
Nah. So at this point, his only hope
is that someone I don't know with a lot of power, who happens
to sympathize with greedy narcissists and has the power to
commute his sentence to commute a sentence or something will do
that. But you know, like you find one
(35:22):
of those. No, it is.
Sounds like a long shot. Right.
Yeah, I don't think that. I don't know if we have anybody
who would do something like that.
Definitely not. So I think that we can easily
say Tim Durham is an asshole of the highest caliber.
His biggest goal in life was to gain more money than anyone
(35:42):
else, and he would take any measures to get there, including
ruining the lives of 5000 peoplewho invested in fair financial.
There were many people whose dreams of retirement were
dashed, now having to work untilthey die so that Tim could drive
around an almost $2,000,000 car.Which, by the way, after they
seized his assets to help pay back the $200 million of
(36:07):
restitution that he now owed, orat least the three men owed
collectively, they discovered that he didn't even own almost
any of the cars in his collections.
They were all leased. Yeah, that makes sense.
So by the time they sold them, they made almost no money on
them because they had to pay back.
The lease. They had to pay back the lease
and then only the profit they could give back to the people
(36:28):
and it wasn't a lot. And now he says he's too poor to
afford further appeals on his sentencing it.
Sucks to suck. What scares me the most is that
if you I asked his true opinion,I kind of bet you almost
anything he'd say he'd do it again.
Oh yeah. You know, and that's why he
deserves to spend the rest of his life in a cell.
(36:53):
Because if I went to like if I went to this white ass man's
knock off ditty party. Oh, that just I'm not.
I bet the cake tasted like shit,Tim.
Oh, you know you. Don't.
You know what cake that big withfondant.
It was not delicious. Gross.
Anyway, yeah, that was the storyof Tim Durham, the largest FBI
(37:18):
investigation and the largest sentence handed down for a white
collar crime in Indiana. So.
He deserved it, He deserved it. And you know what we deserve?
Hopefully. Money.
Money, yes please and support. Kisses.
We need your support. Hugs.
(37:38):
Support. You must.
You must. I compel you to leave us a five
star review, please. You can do that on iTunes or
Spotify. You can even write something on
iTunes if you want Really, really share the message.
If you're not on those, feel free to like, subscribe, share
whatever you do on the pod catcher you use.
It'd be super helpful. Let's say you want to really
(38:00):
support us. You can go to our T Public
store. You can get to the T Public
store. It's in the link in the show
description. It's becoming some other thing
now. I think it's dashery.
Haberdashery. Oh wow, that might actually be
why they chose the title. Because what does a haberdasher
do, Nina? They make hats.
Not just hats. Other things too, they do make.
(38:22):
Hats, though, they specialize specifically in men's
accessories. Men's clothing, accessories,
hats, belts, wallet chains, you know, stuff like.
That tough flanks. Yeah, we're getting there.
We're getting there. And Ascot one of those little
things that go in a pocket. Your Ascot.
(38:46):
What's up? Bro.
It it did, I gained 20 lbs. Jesus Christ, what the hell was
I? They call me BB.
It stands for Baby Beluga. No one calls you that.
No one calls you anyway. Anyway, you can support us by
(39:08):
doing that. Like I said, Dash restore or T
Public, whatever it is by the time you're reading this, you
can also get that from our website,
whitecollarsredhands.com. There's a button that says check
out our merch, it'll take you there.
That's fine. Hey, while you're there, you can
listen on the site. You can also contact us.
There's a contact this page or you can send an e-mail to
whitecollarsredhands@gmail.com. We're getting a bunch of episode
(39:29):
suggestions recently. So thank you guys so much for
who has reached out. And you can do that too.
If you haven't done it already, you can reach out and suggest an
episode. We try to do a fan submitted
episode every single season. So you could be next, yeah.
And we've done 2 so far this season.
Yeah, we're getting a lot. And I think we are going to do a
third one actually, because I accidentally had picked an
(39:52):
episode we had already done. We have 100 and like 50.
Episodes live, so it's hard. They get a little confuddled.
What was I? You can also contact us by
reaching out on any of our socials.
You can DM us there. Facebook.com/white collars Red
hands Twitter at white collars under score Red hands X at white
collars pod TikTok it's white collars red hands and is this?
(40:15):
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Yeah, all right. Tell a friend you can shout from
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Make collars. Red Hands write a manifesto and
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So with that, thank you very much for listening.
And we'll see you next week on another episode of White
(40:38):
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