- Associated Press - Wednesday, March 16, 2011

INDIANAPOLIS (AP) — A former Indianapolis businessman and top Republican donor was indicted Wednesday on charges stemming from an investigation into whether he operated a Ponzi scheme to defraud investors of hundreds of millions of dollars.

FBI spokeswoman Laura Eimiller said Timothy Durham was arrested at his home in West Hollywood, Calif., without incident Wednesday morning. He was scheduled to appear Wednesday afternoon in U.S. District Court in Los Angeles.

The U.S. Attorney’s Office planned a news conference Wednesday afternoon in Indianapolis to discuss the indictment, spokeswoman Mary Bippus said.

The Indianapolis Star reported that Mr. Durham, business partner James F. Cochran and their accountant, Rick D. Snow, were each indicted on 12 felony counts including wire fraud and securities fraud. Prosecutors have alleged that their Akron, Ohio-based Fair Finance Co. promised investors it would use their money for low-risk, high-yield consumer debt but instead used it to repay earlier investors.

A Securities and Exchange Commission lawsuit filed Wednesday in U.S. District Court in Indianapolis accuses all three of defrauding about 5,000 investors of some $230 million.

A bankruptcy trustee for Fair Finance told creditors in August that Mr. Durham had borrowed $54 million from the company and spent it on such things as gambling, cars, artwork and political donations. The company since has filed for bankruptcy.

The FBI raided the offices of Fair Finance and Mr. Durham’s Indianapolis-based company, Obsidian Enterprises, in November 2009.

The investigation into Mr. Durham’s dealings has sparked calls for top Indiana Republicans, including Gov. Mitch Daniels, to return more than $800,000 that Durham donated to the party and candidates. Mr. Daniels, who received about $195,000 between 2003 and 2009, has said the money was spent and that there was nothing to return.

Mr. Durham was known for a flashy lifestyle that included a 30,000-square-foot estate, a yacht, private jets, and a collection of classic and exotic cars.

An attorney for Mr. Durham did not immediately return a call seeking comment.


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