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Lawsuit Focuses on Previous Owner of Troubled Business

The bankruptcy trustee for an Ohio financial company has pressed charges against its former owner, claiming he should have realized the Indianapolis businessmen to whom he sold it were raiding the business. The $150 million claim alleges Donald Fair of dishonest transfer, helping and abetting theft, and breach of fiduciary duty, according to various reports.

Indianapolis businessmen James Cochran and Tim Durham were indicted last March on a claim they stole Fair Finance Co. and bamboozled investors in excess of $200 million from 2002 to 2009. The claim filed Thursday in federal court in Akron, Ohio, alleges a Ponzi scheme was the potential situation only due to the fact that Fair, an octogenarian who has property in Akron, Ohio, and LaQuinta, Calif., complied with staying with the corporation as chairman emeritus for five years after he sold it. His contract required him to receive millions of dollars when it was finished in 2007. The case claims Fair's sustained role in the business provided investors with false confidence, and the postponed payments gave him motivation to keep quiet about how the company was being operated.

"Don Fair was or should have been aware of, or was willfully blind to, ample red flags showing Durham's ongoing fraud as early as 2002," the claim states. "Don Fair silently sat by and allowed it to happen," it says.

Fair's lawyer, Patrick J. Keating, claimed Friday his client didn't have details of the business's operations after it was sold in 20012.

"He had no idea Mr. Durham and Cochran were going to run a Ponzi scheme. To claim he knew anything of that is completely erroneous," Keating said.

"I don't like what I see," Fair said. "It is such a departure. It is not how we operated," he added.

The lawsuit claims the company had morphed into a Ponzi scheme, which some investors are compensated with others' investments, by 2003. It says Fair realized Durham had terminated two sets of auditors because of their worries over large loans issued to Durham and other insiders and to failing companies they owned. The 57-page claim seeks at least $150 million from Fair and three trusts that received compensation from the sale of the business.

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