138. The Lampoon (Tim Durham)

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Everything in the lampoon is a joke.

It's intended to be funny.

Nothing is ever published to be lascivious or lured.

We don't have that in mind when we publish it.

We publish a nude.

It's not because we want to be a rock.

It's because we use it as a tool to be funny.

Dan Lakin was flipping through the Wall Street Journal

one morning in 1999 when a classified ad caught his eye.

National lampoon, the once revered subversive comedy brand,

was seeking a $1 million investment

to help launch a website.

How could this be, Lakin wondered?

This was the company that made Animal House once

the highest grossing comedy of all time.

And the vacation franchise with Chevy Chase.

Not to mention the legendary magazine,

which had a million subscribers at one point.

Why was an American institution like National Lampoon

asking for money?

The sad reality is that by the turn of the century,

National Lampoon was a shell of its former self.

The blue sheets, the murries, the ray misses were long gone.

The studio hadn't produced anything culturally relevant

in at least 10 years.

Even the magazine had ceased publication.

What remained was a little more than a licensing operation.

National lampoon was surviving off of old royalties

and a once iconic name.

And that name, Dan Lakin believed,

was extremely undervalued.

With the right leadership he thought,

the lampoon could be restored to its former glory.

And in Dan's mind, he was the one who could do it.

At 37, Dan Lakin was a college dropout

who had already built a successful residential development

business and managed a tech-focused venture capital

firm in Indianapolis.

More importantly, he knew the right people to call

to raise money.

Over the next three years, Lakin and a group of investors

quietly accumulated shares in National Lampoon,

executing what amounted to a slow motion,

hostile takeover.

Eventually, they secured a controlling stake.

Dan Lakin installed himself as CEO.

His belief in the brand was validated almost immediately.

In April 2002, a movie called Van Wilder,

starring a young Ryan Reynolds as a perpetually

enrolled college student, became a surprise box office success.

For Lakin, it was the only proof of concept he needed.

College boys still love alcohol.

They still love girls.

They loved to have a good time.

He told The New York Times,

those things haven't changed.

National Lampoon leaned into those sensibilities

in the years following Van Wilder

and began slapping its name on just about anything

that featured a college campus or TNA

preferably both forgettable titles

like National Lampoon Presents, Dorn Days.

National Lampoon Presents, Dorn Days 2.

And of course, National Lampoons pledged this.

From the people who brought you Animal House

and Van Wilder, National Lampoon is proud to present

its latest greatest new star, Paris, Hilton.

All of these straight to video flops

turned to National Lampoon into a punchline.

But Dan Lakin was unfazed.

The company went on an expansion spree.

It acquired a television network

that broadcast exclusively on college campuses.

It launched a record label, a book publishing arm.

It even a spring break travel agency.

Game shows bottled water.

Lampoon branded slot machines on Native American reservations.

There wasn't a bad idea the company wouldn't pursue.

But alas, nothing seemed to stick.

The one bright spot was their digital content.

National Lampoon's network of comedy websites

such as drunkuniversity.com, BarackObamajokes.com,

and religiousidious.com, which for the record is now owned

by Yours Truly, was pulling in roughly five million

monthly views, more than Comedy Central, College Humor,

and the Onion.

But that online popularity

hadn't translated the financial success

under Lakin's leadership.

National Lampoon had dug itself into a $40 million

hole, losing between $5 million and $12 million a year.

Lakin and his investors kept writing checks

to keep the company alive, but the future was grim.

The home video market was drying up.

A recession was looming.

And more than half of the company's revenue

still came from decades old properties

they had nothing to do with.

The sense of dread was reflected

in National Lampoon's stock price,

which was trading as low as $1 by 2008,

down from $8 when the company changed hands.

Not only were Lakin and his partners underwater,

but the American stock exchange

was threatening to de-list the company entirely

if its market cap didn't improve.

Dan Lakin, however, refused to give up.

That spring he embarked on a final desperate bid

to save National Lampoon and to ensure

that it would be he who would have the last laugh.

Here's what we're going to do.

Lakin laid it out to Dennis Barski,

the consultant brought in to help steady the company.

Let's pay people to quietly buy up

tens of thousands of shares of National Lampoon

on the open market, just enough volume

to create the illusion of demand.

The stock price should jump from $1 to about $3

and eventually $5 per share.

Other investors will see this movement and buy in.

The momentum Lakin believed could become self-sustaining.

That's all it would take to turn something manufactured

into something real.

And if it worked, the payoff would be tremendous.

A higher stock price would not only make them

and the other shareholders personally rich,

but also make the Lampoon look viable again.

Hell, even respectable.

They would give the company leverage and deals,

credibility with partners,

and make it more attractive for acquisition.

Recent offers had been almost insulting.

These major media companies were vultures

just waiting to pick clean the bones of a dying brand.

Well, the jokes on them.

Lakin and Barski knew just the man

who could orchestrate their plan.

A New Jersey stock broker turned comedy club owner

named Ed Rodriguez.

They offered him a one for six deal.

For every six dollars spent propping up the stock,

Ed could pocket one for himself.

Ed was gain, within days,

National Lampoon wired him $60,000.

He peeled 20 off the top

and sent the remaining $40,000 to Tim Doherty,

a stock promoter and Rochester

who was recruited to make the transactions.

Starting March 20th, 2008, Doherty began buying

National Lampoon stock in daily increments of 5,000 shares.

He spent about $10,000 a day in the first week,

the nearly 20,000 a day in the second.

The stock price barely budged.

Ed Rodriguez encouraged Doherty to keep buying.

We just need three big days, he wrote.

Doherty continued making purchases over the next two weeks,

but still, no movement.

With a fuck man,

Rodriguez complained,

listen, Doherty fired back.

I bought the shit out of National Lampoon

for what I was paid.

It wasn't enough.

On April 22nd, Ed Rodriguez suggested switching gears.

I know another guy.

He told the Lampoon boss a broker in Philadelphia.

This one, he promised.

At connections, the corrupt traders

who can make some real noise

his name was Kevin Walser.

Vanity Fair later described him as a quote,

by polar cocaine addict.

Perfect.

Blake and agreed to meet.

Walser accepted the same one for six deal,

but this time the orders were much larger.

$50,000 to start than a hundred.

Blake had even handed over non-public information

such as shareholder data

and planned to coordinate positive press releases with

the hefty purchases to make the surge look legitimate.

On May 20th, 2008,

Kevin Walser went to work.

16 separate trades,

more than $50,000 poured into the stock.

And still, nothing.

The share price never reached $3.

Damn, Lincoln was ready to throw in the towel.

He told Barski to make the final payment

to Ed Rodriguez.

Then Rodriguez paid Kevin Walser,

but Walser never saw a dime

because his cut went straight to a bank account

belonging to the FBI.

Kevin Walser had already flipped,

and was cooperating with federal agents

to reduce his sentence

for his participation in a separate $55 million stock fraud case

is involvement with National Lampoon.

They've been wired from the start.

The company was run by Daniel Lincoln of Indianapolis

until he was charged by the Securities

and Exchange Commission

with scheming to illegally jack up the price of Lampoon stocks.

The FBI knocked on the door of Daniel Lincoln Southern,

California home at 6.45 AM

on Monday, December 15, 2008.

The 46 year old CEO was charged with conspiracy

and securities fraud.

Trading of National Lampoon stock was halted for 10 days

when it resumed the price plummeted

to just 10 cents a share.

Also arrested were Dennis Barski, Tim Doherty

and Ed Rodriguez,

who had not only been implicated

in multiple other stock pumping schemes,

but also allegedly embezzled $400,000

from his own comedy club.

All four men eventually pleaded guilty.

Lincoln received the harshest penalty,

three years and nine months in prison,

plus a $100,000 fine.

Before he was sentenced,

Dan Lincoln met with the FBI in March 2009

and tried to trade information for leniency.

You know, Tim Durham, he asked.

National Lampoon's second largest shareholder,

the man who replaced him as CEO.

Yeah, his entire operation is a lie.

The giant mansion, all the cars, his yacht,

everything Tim owns was obtained with the other people's money.

He's basically running a massive Ponzi scheme.

Like usual, Dan Lincoln's pitch amounted to nothing

and there Tim no reward.

Not that the FBI didn't care.

It was just that they were already well aware

of Tim Durham.

The life and legacy of one of Indianapolis's

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on this episode of Swindled.

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I didn't come from a wealthy background.

My dad is a dentist, he, you know,

I think he drove a Honda for, I don't know, 15 years, you know.

And he said, this is good enough.

I can get my golf clubs in the bag

and that's really all you need to light.

And that was his philosophy.

He never had any aspirations for money to make money.

So I'm not sure actually where I got that desire from.

Because my mother really didn't either.

But I always did have an aspiration to do that.

As a kid, Tim Durham stood out

from the small town of Seymour, Indiana.

People remember him as the quiet, socially awkward,

trench coat wearing boy with a photographic memory

and the best math skills in class.

And he was also intensely ambitious, they say.

From an early age, Tim was stocking shelves

at a local grocery store, delivering newspapers,

even organizing marketing campaigns

for his school's choir performances.

Anyone who got close to Tim Durham

arrived at the same conclusion.

This kid was going to be rich someday.

At first, he intended to get there by practicing law.

Durham graduated at the top of his class

from Indiana University, past the bar

and quickly landed a position at Isomiller,

the state's largest legal firm.

But his trajectory shifted dramatically in 1989

when he married Joan Servas, the daughter of Bert Servas,

one of Indianapolis's wealthiest

and most well-connected entrepreneurs.

Bert, who built his fortune by acquiring

undervalued companies, quickly took his new son

and law under his wing.

And he basically sat me down one day and said,

you know, if you really want to do well in life

and make money, you need to get into equity.

You need to get into owning and managing companies

and that kind of thing, working for people,

doing the deals and do the deals yourself.

Over the next eight years,

Tim Durham immersed himself in the mechanics of deal making.

He learned the ins and outs of debt assumption,

stock for stock mergers and leveraged buyouts

until he felt ready to strike out on his own.

Tim had no other choice.

In 1998, he and Joan divorced.

All I had was my clothes and a 19-inch TV.

He later told Indianapolis monthly,

Tim said he let the mother of his children have everything

because he was confident he could rebuild from zero.

Within two years, he proved himself right.

Durham spotted an underperforming

Michigan auto parts manufacturer called Lake City Forge

that he believed had untapped potential.

He persuaded a group of Indianapolis investors

that contribute $10 million to buy the company.

Just 18 months later, he sold it for $30 million.

Tim says he personally took home $5 million

of the $15 million profit.

When I started, I bought a forging operation,

put a machine shop with it, did real well.

You know, I personally had no money.

So I borrowed everything and, you know,

I think I netted somewhere around 14, 15 million

on that first deal.

So that helps if your first deal works.

And so that propelled me into a lot of other ventures.

The following year, Tim Durham pocketed another $2 million

from the sale of two small manufacturing companies.

He purchased through leveraged buyouts.

That was a specialty.

Buy companies with borrowed money,

stabilize them just enough to service the debt

then flip them for profit.

He consolidated these deals under a parent company

called Obsidian Enterprises.

By 2001, Durham and his business partner, James Cochran,

were snapping up every manufacturing

and transportation business they could get their hands on

from a cargo trailer maker

to a rubber reclamation operation

to a bus leasing company called Pyramid Coach.

But Durham's most immediate and dramatic returns

came from his personal investments.

That's excluding his sizable stake in national lampoon,

which had been hemorrhaging money

since his initial investment in 2002.

That same year, however,

Tim made a far more calculated bet.

He purchased nearly half a million shares

of a struggling wireless phone wholesaler

called Brightpoint.

At Brightpoint, we thrive on the opportunities

created by the revolution.

Less than a year later, Brightpoint

reported surprisingly high earnings

and a stock price experienced an explosive rebound

from about 20 cents a share to $11 a share.

The math that's fuzzy, but in the end,

Tim Durham claims he netted about 30 million on the trade.

Maybe more.

It was just unreal.

It rebounded.

The company did well, came back four or five years later

and I made somewhere between 30 and 40 million on that deal.

For a million dollars investment, it was a good deal.

At the time, observers of Tim Durham's good fortune

were crying foul.

Brightpoint's founder and director was Bob Lakin,

the brother of Dan Lakin,

who sat on Obsidian's board

and was Durham's partner in National Ampune.

The connection raised eyebrows.

Two of the three largest buyers of Brightpoint stock

during that period were Durham himself

and Obsidian's vice president, Anthony Schlichti.

Funny enough, the third largest trader

was Bernard L. Madoff, but he was a legitimate broker.

For a while, at least,

unlike the two Obsidian guys

who appeared to be the beneficiaries

of inside information,

Tim Durham denied any wrongdoing.

He insisted there was, quote,

never a bit of evidence

and then threatened to sue

that in the Annapolis business journal

that they reported on it.

Three years later,

Tim Durham purchased a sizable stake

and a small Texas cell phone distributor

that Brightpoint was in the process

of confidentially acquiring another windfall,

another coincidence, Durham shrugged.

Don't hate the player, hate the game.

I didn't have the excess cash growing up,

Durham told the LA business journal,

reflecting on the financially harrowing experience

of being a dentist son.

I know how much money it takes to live

and you don't have to have a lot.

So anything I make beyond that is excess.

And if it's excess, it's a game, right?

And if you're in the game, Durham added,

I think you have a desire to be the best.

People ask me, why do you say that?

And I said, yeah, it's like,

I don't think Michael Jordan

ever went out in the basketball court

and said, man, I just hope I'm mediocre today.

You know, I don't think Tiger Woods tried to play

in a golf tournament where he said,

you know, I hope I come in in the middle of the pack.

The end of the day, when I breathed my last breath,

I'd like to be there worth more than anyone else

in the world.

Tim Durham was far from being the richest man in the world.

He wasn't even the richest man in Indianapolis,

though he certainly started living like he was.

In 2002, he relocated the city and headquarters

to the top floor of what was formerly known

as the bank one tower, the tallest building in Indiana,

21,000 square feet, $300,000 a month,

all the house, just 13 employees.

Durham said the office gave the company, quote,

instant credibility.

So did the custom suits and Rolex watches

he required his staff to wear.

And if that seems excessive,

wait until you see his house.

Hi, I'm Tim Durham.

Come on in and see where I hang out.

A 30,000 square foot lake front mansion

spread across five acres on Geist Reservoir,

eight bedrooms, two kitchens, three bars,

a home gym, a private theater, a tennis court,

a pole, and roughly 20 televisions,

including two embedded in his bathroom mirror.

Every room offered something to admire.

Check it out, there's one of Frank Sinatra's Grammys

sitting near original works by Picasso and Rainwater.

Tim appreciates art.

He loves the colors.

I love the colors.

Even commissioned a set of portraits of himself

from pop artist Peter Maxx.

This series is one that Peter sent me for my birthday.

These two chairs are for people to sit here

and just admire me for hours.

But not even that could compare to Tim's favorite detail.

Look up, you see that?

It's wallpaper.

And we wallpapered the ceiling, which

is another unusual treatment.

But you know, my decorator can do a lot

with an unlimited budget, unlimited budget, unlimited budget.

National Lampoon presents a smug asshole,

and here comes the sequel.

How many cars you have in here?

In here about 20, I've got 20 in this level,

and maybe 15 or 20 on the level below.

And then maybe 30 or 40 scattered around the country

and in restoration in certain museums and that kind of thing.

So almost 70 cars or something.

Right around 70, at least counts sometimes.

Tim Durham owned so many classic and exotic cars

that he couldn't even keep count.

The Lamborghini, an Aston Martin, a Bentley,

even a 1929 Ducenberg once driven by Elvis Presley.

Yet everything a car lover could want

and sure it's an expensive hobby.

But Tim insisted the collection was an investment,

just like his paintings.

Really the hardest part wasn't affording them.

It was deciding which one to drive.

A friend of mine is, I was telling you about Luciferous,

helping one day, so they always ask me every day,

one car a year, one car a year.

So it was rainy today, so I made a Bentley.

He goes, that's your rainy day car.

Ludicrous was just one of many celebrities.

Tim Durham referred to on a first name basis.

Indianapolis is most eligible bachelor

at the building network of Hollywood connections

through parties at the Playboy Mansion

and his involvement with the National Lampoon.

Tim also shmoosed with the Indiana GOP

for whom he was the state's largest donor.

It flies friends to Miami on one of his private jets.

Sometimes they eat at his restaurant,

sometimes they spend a weekend on a $7 million yacht

and more often than not, it's girlfriend at the time.

Playboy Playmate, Jamie Farrell,

was along for the ride.

I mean, I like material things, absolutely.

I think that's what drives American economy.

I think everybody's material in this day.

Over time, Tim's business ventures

began to mirror his material interest.

Obsidian picked up a cigar shop,

a plastic surgery center, a limousine company,

a second restaurant, a nightclub,

and even a car collector magazine.

But Durham's most important acquisition

was also one of his earliest.

It was far less glamorous than his most recent toys,

but it was the one that made everything else possible.

An Ohio company celebrating 75 years of service.

We have weathered the storm.

Together, we are Fair Finance.

Fair Finance was a small,

privately-owned consumer finance company

founded in Akron, Ohio in 1934.

For decades, it offered retirees

and working-class investors a stable,

reputable place to grow their nest eggs.

The appeal was easy to understand.

Fair short-term investment certificates while unsecured.

Historically, yielded higher interest

than a typical bank's certificates of deposit.

How the company could afford to do so

was the backbone of its business.

Fair Finance used investor funds

that purchase consumer receivables at a discount.

Things like gym memberships,

cell phone installment plans, time shares,

cable and internet contracts,

major appliance purchases,

essentially any agreement with an extended payment plan.

For the original businesses,

the trade was a no-brainer,

take slightly less money up front

and avoid the hassle and uncertainty of collecting payments.

For Fair Finance, the opposite was true.

They took on the collections

and every dollar collected

beyond the purchase price of the receivable was profit.

There was no reason to think this tried

and true model would change

when Donald Fair, son of the company's founder,

sold Fair Finance in January 2002,

but Tim Durham, who obtained the company

in a $23 million leveraged buyout at other ideas.

As CEO, Durham quickly took control

of the company's finances

and within days, according to colleagues,

entered as his upcoming moves.

Repurposing Fair Finance, he told them,

would be easy.

So easy that it would be like, quote,

taking candy from a baby.

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So what are you guys been doing tonight?

Party after party after party.

On the guest list,

Indy that with business man Tim Durham.

Party tonight called pure rush

and you're supposed to wear white.

And then tomorrow night is a,

it's called leather and laces.

Carmen Lesher is hosting it with Jenny McCarthy.

That'll be a nice event.

And then Saturday night is a big event

with John Travolta.

From the outside it wasn't obvious.

But in 2005,

Tim Durham's portfolio of companies was struggling.

In fact, every single one of them,

except maybe fair finance,

was losing money.

Mostly because of external factors,

according to Durham,

it wasn't concerned about it.

Quote,

I am not concerned about it.

The economy in general was the blame.

He told the Indianapolis business journal.

Even though most indicators suggested otherwise.

Last year was almost like the perfect storm,

Durham complained.

You couldn't catch a break anywhere you looked.

Still,

he insisted he wasn't concerned about the long term viability

of his company's quote.

I am not concerned about the long term viability

of my company's.

In fact, he said

2005 was looking a lot brighter.

It wasn't.

Neither was 2006 or 2007.

But Durham remained unbothered.

That year, he flew 10 friends,

including Kato Kalin,

to the Super Bowl in Miami.

He attended the MTV

Video Music Awards with his home,

he ludicrous,

and he hosted a lavish,

45th birthday party for himself,

at his Geist Mansion.

Tim posted photos from that event on his Myspace

that show him wearing silk pajamas,

making it rain cash from his balcony,

and getting a lap dance

from two of the 30 lingerie models

he had flown in for the occasion.

The locals in Indianapolis

were a gassed.

How could this Christian conservative

family values tooting Republican

act in such a way

he donated how much?

Oh, carry on then.

For a second there,

I thought I had principles.

Every time he tried to bring something

from somewhere else,

everybody freaks out.

Tim Durham said in defense of his

hedonism,

if I'm going to live here,

I try to at least have some fun.

By 2008,

Tim was having so much fun

that he and his self-reported

estimated net worth of $75 million

were profiled in a CNBC special

called Untold Wealth,

the rise of the super rich.

He told Indianapolis Monthly

that he agreed to appear in the program

because any publicity

was good publicity.

Quote, when this CNBC thing airs,

it's possible that I'll start to get

more national opportunities.

Every dealmaker in the world

is going to watch that show.

Perhaps that was a wishful thinking,

because nobody knew it at the time,

but Tim Durham needed a bell out.

He was on the verge of losing everything.

Meanwhile some sad news,

a tour bus crash,

has claimed the life of gospel singer

and songwriter Joyce Dottie Rambo.

Missouri Highway Patrol says

Rambo's tour bus ran off

of Interstate 44

and hit an embankment.

Seven other people were hospitalized.

In May 2008,

74-year-old,

Hall of Fame gospel singer Dottie Rambo,

was killed when her tour bus

veered off the road

and crashed on Interstate 44,

as she traveled

to a Mother's Day concert in Texas.

Later that year, her daughter filed

a lawsuit against the driver,

James Meadows,

as well as Pyramid Coach

and his parent company,

both owned by Tim Durham.

The case was eventually settled

out of court,

but between the settlement,

the negative publicity

and rising material costs.

Pyramid Coach filed for bankruptcy

within months.

The collapse capped off

another brutal year

for Durham's obsidian enterprises.

Nearly every company

in this portfolio

continued to bleed money.

U.S. rubber,

the limousine business,

the restaurants,

national lampoon.

Oof,

don't even get them started

on that one.

The legendary comedy brand

had recently attached its name

to multiple stinkers,

including a film starring

a delusional Howard Stern staffer,

known as Stuttering John.

Talk about circling the drain.

In reality,

things had always been this way.

Throughout obsidian

enterprises' entire history,

only one of its subsidiaries

had ever turned to profit,

United Express Line,

the trailer manufacturer,

and that was a once,

nearly seven years ago.

As things currently stood,

Tim Durham and Obsidian

were $30 million underwater,

effectively and secretly

solvent,

since at least 2002.

The only thing keeping

the lights on at Durham's

companies was a steady stream

of money borrowed from

Fair Finance.

Rather than using

Fair's investor proceeds

to purchase consumer

receivables contracts

as it had for more than 70 years,

Tim Durham immediately

began doling out the funds

to himself as friends

and as failing businesses

through related party loans.

In theory,

this could have been a

viable strategy for Fair Finance,

if those related parties

had repaid the loans

with interest as

is typical of such an arrangement.

But as an independent

outside auditor discovered

in April 2005,

that's not what was happening.

Tim Durham engaged

BGBC partners

to audit Fair's 2003

and 2004 financial statements,

which on paper seemed healthy.

Fair Finance had tens of

millions of dollars in assets

on its books,

and the form of

related party loans.

But a closer look

told a different story.

These loans have little

documentation,

minimal collateral,

amended maturity dates,

and no payments.

In other words,

these loans were less

like loans and more

like investments,

really poor investments,

that most likely

would never generate a return,

or be paid back

since the borrowing entities,

such as National Lampoon,

were essentially broke.

It was bad debt.

This should have been written

off as such

on Fair's books.

Instead, Fair Finance recorded

these amounts as rapidly

appreciating loan assets,

with inflated revenue

to match to account

for the accruing interest,

which again would never

be realized.

It properly reported,

as the auditor recommended.

Fair Finance would have been

at least 50 million dollars

in the red by 2005.

Tim Durham didn't think

implementing those recommendations

was a good idea,

so we fired that auditor,

and hired another one

who quickly found

many of the same issues,

so we fired them too.

After that,

Durham prepared the financials

in-house,

and for years,

continued to present

a version of Fair Finance,

that didn't actually exist.

It was the only way

to keep the illusion alive.

Durham needed Fair Finance

to appear healthy,

so it could keep raising money

from unsuspecting Ohioans,

by selling them investments

certificates that were,

by then, essentially worthless.

Worthless,

because Fair had long

since stopped purchasing

the consumer receivables

that backed them up.

Instead,

new investor money was being used

to pay off existing investors,

in other words,

a Ponzi scheme.

Durham basically admitted

as much,

in the series of 2008 emails

to his attorney.

He wrote that Fair Finance

have used more than

93% of new investments,

nearly 125 of 134 million dollars,

to quote,

repay,

expiring certificates.

As lawyer pushed back,

warning him that

he didn't make it that way

was dangerous.

Such a characterization

he replied,

would not be much different

than a pyramid scheme.

Yeah,

close enough.

Meanwhile,

Fair Finance's investors

were already

feeling the effects

of the institution's lack

of liquidity.

As early as 2005,

complaints surfaced

about delayed

or missing redemptions

and interest payments.

Issues that only worsened

in the years that followed,

as more investors tried

that cash out

during the unfolding recession.

And so,

his entire operation

on the brink of destruction,

and the prospect of thousands

of innocent investors

losing their life savings.

What did Tim Durham do?

He took more for himself,

naturally.

It's in that truck.

They're delivering the Bugatti.

A very special

million dollar delivery.

The neighbors are about to see

a Bugatti Vera.

And no one wants to see

the car more than the man

there in the middle.

He bought it.

Wow.

Tim Durham is a local

businessman and an

asset car collector.

In 2007,

on top of Tim's

usual distributions,

Fair Finance

wired $250,000

to remodel his garage.

The following year,

he added another $150

grand for a trip

to the casino.

An additional

$30,000 to cover

his American express bill.

Add $7,000 more

for a gift to his mother.

Then, in September 2008,

Durham threw a

playboy-themed party

that cost more than

$168,000.

Reality stars from

the girl's next door

were paid 10 grand

to each to attend.

Ludacris' record label

supplied the entertainment

for $60,000.

Fair Finance,

as always,

put it the bill.

James Cochran,

Durham's 50-50 partner,

who was well aware

of the company's

dire condition,

finally stepped in the

complaint.

But not about the fact

that Tim was

draining Fair Finance

and everything it was worth.

No, Mr. Cochran's concern

was that the payouts

were uneven.

Cochran suggested

raising his salary

to $1 million a year

to keep pace

with hundreds of thousands

Durham was pulling out

every month.

It was only fair,

after all.

Tim Durham and James Cochran

were not worried

about the company's

survival,

because as recent history

had proven,

there would always be

new money.

In fact, during this

period when Fair Finance

was struggling to

stay afloat,

Durham and Cochran

were actively

and aggressively

promoting the company

to new customers.

They even opened

a new office

in the heart of Ohio's

Amish country,

where they touted

Fair Finance

as a stable,

time-tested,

institution,

while offering

interest rates

three times higher

than local banks.

At the same time,

as if he needed

more on his plate,

Tim Durham added

a new title to his

email signature,

CEO of

National Lampoon.

After Dan Lincoln

was arrested

in late 2008,

for orchestrating

a stock-pumping

scheme,

Durham stepped in

and used the

opportunity to escape

from Indianapolis

to Los Angeles,

promising to

revive a brand

that was bleeding

roughly $6 million

a year.

Tim Durham cut

cost by laying

off half the staff,

downsizing its

offices, hiring

his new girlfriend,

Pint House

pet of the month

Erica Taylor,

as the Lampoon's

creative director,

and purchasing

a $3.9 million

house in the Hollywood

Hills for himself.

Not long after,

he upgraded

again and rented

another property

for $25,000 a month,

complete with a

dedicated bedroom

reserved for visits

from ludicrous.

National Lampoon

continued to struggle,

but at least Tim Durham

was living the dream.

But what he didn't

know was that it soon

faced a rude awakening.

Back in the Midwest,

an angry investor,

unable to withdraw

their money from

fair finance,

had filed a complaint

with the Securities

Exchange Commission,

and they weren't

the only ones

digging through the

receipts.

In the spring of 2009,

Greg Andrews,

the editor of the Indian

apolis Business

Journal, received an

anonymous tip alleging

that Tim Durham

was using fair finance

as his personal

piggy bank.

When Andrews

peered at the company's

filings,

those allegations

added up.

He found that

loans to Durham

as partners

and their affiliated

companies had ballooned

a year after year,

reaching $168 million.

At the same time,

liabilities to investors,

those holding

fair finance certificates

that climbed a $197 million.

While the company's

actual revenue generating

assets, its customer

finance contracts

had a withered

to just $24 million.

It doesn't take a

math quiz like

Tim Durham,

to realize that

this model was

unsustainable.

And anyone

invested in fair finance

was at risk

of losing it all.

Greg Andrews

said as much in the

IBJ article

published on October

22, 2009,

titled Related

Party Loans

Pile Up

at Durham-owned

Finance firm.

The story quoted

a former Chief

Council to Indiana

Securities Commissioner

who said,

I am incredulous

that Ohio continues

to register these

securities.

It was a good point,

like any firm

selling securities

in the state.

Fair finance had

to be recertified

by the Ohio

Division of Securities

on a periodic basis.

The process required

regulators to review

the company's

financial condition

and the structure

of its offerings

before allowing continued

sales.

Under Durham's control,

fair finance had

cleared that hurdle

multiple times,

including as recently

as July 2008,

when the Related

Party Loan

problem was already

very evident

in the company's

books.

There was one

one that dropped

to the ball.

But soon, regulators

would have another

opportunity to do their

job.

Just one month

after the

indie business

journal article ran,

fair finance was

up for renewal.

Again, this time,

Durham was seeking

approval to sell

another $250

million in certificates.

Capital

would be critical

to the company's

survival.

But the scrutiny

brought on by the

recent article wasn't

going to make it easy.

Tim Durham,

James Cochran,

DCFO Rick Snow,

scrambled to make

their books look

stronger.

At least on the

surface.

The FBI heard it all

play out on a

wire tap.

But what it basically

does is give us the

ability to ride off

and additional $25

million in debt.

A bad debt

loans that we don't

have to cover or worry

about.

They literally

disappear from the

balance sheet of the

distribution.

Good.

Durham and Cochran

solution,

was the ship to

$85 million in

non-performing loans

from another

affiliated company

on the Fair

Finance's

balance sheet.

The move

with the artificially

reduced the appearance

of related party debt.

While inflating

fairs reported assets

even more.

Making the company

look healthier.

Just in time for review.

I know.

It's complicated.

And that's exactly

what Durham and Cochran

were counting on.

My feeling is,

give them a

hit load

more information

that they

hit load

more information

so that there's

just so much

it overwhelms the

guy.

My guess is,

the guy at the

state of Ohio

was a

financial genius.

Yeah.

Nothing.

Right.

The duo

didn't think much

of their finances

investors either.

After the

indie business

journal article,

worried customers

flooded the company

with calls.

Many of them

desperate to

withdraw their

money.

Internally,

but also

closed-up.

The

debt was easy to

push out.

You can just tell

the executive

of the state, you

know, sorry,

you've got a way

to come war ranks.

I don't see that

as a big

fucking issue.

No.

They're not

going to read a

pilot with this

anyway.

So good issue.

Alright, agree.

As for those

investors,

still breathing.

It was up to James

Cochran to

run damage control.

And he had

And if you take the money and use it to your own benefit, our money, invest it as money.

Of course I said no.

And, you know, you're not buying houses and cars with this money.

And then I said no.

Okay.

Well, then we're okay.

Cochran assured investors.

The article had simply misrepresented fair finances business.

The company hadn't defaulted on a single investment in over 70 years he claimed.

There was $260 million on the books.

Everything was fine.

Nothing to worry about.

Cochran explained to one investor that the IBJ article was just another chapter in the long time viewed between Tim Durham and an executive at the paper.

Another was told that state regulators were temporarily preventing distributions.

But Cochran would arrange for half of the money owed to be paid anyway as a favor just between you and me.

Some Durham listened to his partner recount the excuses with the obvious delight.

You were good, Mr. Cochran.

You're just the best at this, he said.

Tim suggested using that regulator explanation on some of the other investors.

Just not too often, he warned.

Because it's not really true.

Tim and James were simply trying to buy themselves time until November 24th.

The state would decide whether their next round of certificates would be approved.

But as that date crept closer, doubt started to set in.

The things didn't go as planned.

Fair finance would combust in an instant.

And if that did happen well, at least the timing was convenient.

The current economic climate would give Tim Durham the opportunity to blame a familiar foe.

That's the other thing.

If they don't approve it, frankly, from our point of view, this is the perfect time.

Because we can just say, look, everything is collapsing.

Valuations on everything are falling.

And what was worth 200 million a year ago is now worth 50 million.

And there's frankly not a whole lot we could have done about it.

The fact that the world economy collapsed, who the fuck would have guessed that?

On November 24th, 2009, the Ohio Division of Securities denied Fair Finance's application to renew its securities offerings.

On the basis that it did not provide sufficient information to justify its exorbitant amount of related party loans.

As a result, Fair Finance was officially and utterly insolvent.

And only one question remained.

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And my mother at the time was looking for extra income, and she was faced with either a reverse mortgage or a fair finance.

And I'd been invested within for 20 years, and I said, mom, they've been in business since 1934.

Their solid is rocked. They're not going anywhere.

You know, I say, get that check every month. It's in my account.

So she ended up putting her life savings in there or the bulk of her cash, which was 125,000.

Donald Russell of Doyle's Town, Ohio never trusted the stock market.

He preferred a safer, more conservative approach to investing.

So in 1991, the summit county deputy sheriff began investing in fair finances, certificates.

The company had been around for as long as Donald could remember, and he had never heard a bad word about them.

Month after month, year after year, Donald Russell and his wife Lori scrimped and saved and poured nearly every spared dollar into the company.

By the time he retired, Russell had invested more than $350,000.

And for two decades, it seemed like he'd made the right choice.

The check came every month for 20 years. He told the Akron Beacon Journal.

That was probably making 2500 a month. It was a nice supplement to my retirement.

So when Donald's elderly mother Pearl asked him what she should do with her life savings, including a $50,000 inheritance from her parents, the recommendation was obvious.

Invest in fair finance. They've been around since 1934. They told her, they're solid as a rock.

Pearl followed her son's advice and purchased more than $100,000 of fairs investment certificates.

And for a while, it performed as a safe, secure investment should. Pearl was earning $11,000 in interest each year.

Then, over Thanksgiving in 2009, while visiting his son in Mississippi, Don received a phone call. He'd never forget. It was Pearl. She was frantic.

And she called and said, the FBI rated fair finance yesterday.

I remember thinking it was the worst feeling I'd ever had in my life.

No, no, that's got to be some kind of mistake. Don reassured his mother. It's not Donald. I just read about it in the newspaper. Look it up.

Sure enough, on November 24, 2009, around 2pm, the FBI had executed simultaneous raids at fair finance and Akron and obsidian enterprises in Indianapolis.

The news articles included photographs of agents removing computers and boxes of files from the offices.

The action took place on the same day, fair finances securities registration had expired.

Federal investigators were alleging that from 2002 to 2009, Tim Durham operated fair finance as a Ponzi scheme, raising approximately $200 million from at least $5,000 investors.

Virtually all of it had been siphoned off and spent. Everything the investors had put in was gone. There was nothing left.

Don Russell couldn't believe what he was reading. If it was true, this family had just lost $475,000. His and Lori's retirement, their grandchildren's college funds, his mother's peace of mind, destroyed in an instant.

She did not take that news well at all. Don said about his mom, Pearl. He said she started coughing and wheezing that day and couldn't stop.

So they rushed her to Barberton Citizen's Hospital, but the doctors couldn't quite pinpoint what was wrong.

29 days later, Pearl Russell was dead and one of the last things her family remembers her saying was, my money.

Retired cop Don Russell lost everything in fair finance. Everything and his mother, mom a portrait of health until the raid that night, she went to the hospital.

Where she stayed for 29 days and literally woold herself to death.

The official cause of death was respiratory failure, but Don believed there were other factors at play.

You can't prove she died from her money being stolen, he says, but she did. She just had no more will left to live.

The other victims were trying to hold on to theirs. When fair finance collapsed, the average investor lost more than $40,000. Nearly 700 people lost at least 100,000.

One investor had poured in over half a million. Most were elderly or at least of retirement age. It was an unforgivable act.

He was so obnoxious about it too, one victim told Cleveland.com. I can't believe Tim thought he could get away with it, especially with what he spent it on.

The most significant tangible assets that we have are the artwork and the vehicles.

As a result of fair finances in voluntary bankruptcy, Tim Durham's art and car collections were seized and auctioned.

Other assets such as this geist mansion and 100-foot yacht were voluntarily sold.

But the resulting proceeds were merely a drop in the bucket of what needed to be recouped.

Today we also learned some new numbers, all of Durham's artwork and vehicles that have voluntarily turned over. They've brought in $5.6 million, but that's hardly enough to cover the expenses that owed to all the investors.

To make matters worse, fair finances victims were often not even first in line to be repaid. Many of Tim Durham's affiliated companies carried secured debt with lenders holding priority claims on whatever assets remained.

Some of that collateral that turned out wasn't even honed by Durham at all. It was lease. In other words, there was nothing to recover, just another creditor taking their place in line.

Untangling at all became a forensic accounting nightmare. Thousands of transactions spread across a web of entities stitched together with incomplete or unreliable paperwork.

Those familiar with both cases said it was even more complex than made-offs. Despite the massive scale, Ernie largely operated through a single centralized account, Durham had used dozens.

And according to trustee Brian Bash, those dozens of accounts had already painted a bleak picture. There were no piles of money or pots of gold waiting to be found.

The road to recovery would be piecemilled and stretch on for years. And if that wasn't a bitter enough pill for victims to swallow, they also had to deal with the fact that Tim Durham was still partying it up as a free man.

Here's the kind of view Tim enjoys sitting in his home high in the Hollywood Hills. Tim Durham gave loans and gifts of at least $16 million to family and friends.

Spent nearly $3 million on resorts and gambling. Spent $14 million on real estate and his homes. Spent more than $10 million on motor vehicles. While Hoosiers are left holding the bag on thousands and bag taxes and fair finance investors are out more than $200 million.

All that now in Durham's rear view as he lives it up in LA.

After the raid, fair finance never reopened. Neither did obsidian's top floor office in Indianapolis. Gone were the mansions, the antique cars, the art collection, the nightclub, the restaurants, and Tim Durham.

He was lying low in Los Angeles, where a national lampoon and the unlikely survivor was keeping him busy.

Eventually, Tim resurfaced a year after the raid that publicly proclaimed his innocence as the criminal investigation remained ongoing. He gave an exclusive interview to WTHR in Indianapolis 2 and his words, set the record straight.

Durham said he felt terrible for the investors who lost their money, but he was a victim as well.

It's hard for any company to survive this kind of negative publicity, he said. Unfortunately, several of ours didn't. A lot of economic value has been lost. I probably will have lost virtually my entire net worth.

Nevertheless, Durham said he was confident that he hadn't committed any crimes and that the maid off of the Midwest nickname had been awarded was a bit premature.

Will you be vindicated? He was asked. Durham responded. Absolutely. Do you think this could end with you behind bars? Oh, Durham replied. I can't see that scenario.

My name is Timothy Morrison. I'm the attorney for the United States in this matter. Timothy has Durham, Los Angeles, California, James F. Cochran, and Rick D. Snow of Indianapolis, Indiana.

We're indicted yesterday by a federal grand jury sitting here in Indianapolis for their roles in a scheme to defraud 5,000 fair finance investors of more than $200 million.

The three men were charged in a 12 count indictment, charging conspiracy, a wire fraud, and securities fraud.

And if convicted on all counts, each man could face a maximum of five years in prison on the conspiracy and 20 years in prison for each of the wire fraud and securities fraud charges.

On March 15, 2011, a federal grand jury indictment was unsealed, charging 48-year-old Timothy S. Durham, his partner 55-year-old James Cochran and their company's 47-year-old CFO Rick Snow.

With 10 counts of wire fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud. All three were arrested the following day.

It was the culmination of an 18-month investigation. One of the first questions reporters asked the federal prosecutors was, what took so long?

We have to get this right. It takes a lot of days because you have more than 5,000 investors. You have more than $200 million.

And our responsibility is not just to describe what happened. Our responsibility is to prove it to 12 people beyond a reasonable doubt.

That responsibility would be put to the test more than a year later in June 2012. All three defendants were tried together.

For the next 15 days, one of the biggest fraud cases will unravel inside of a federal courtroom. Indianapolis Businessman Tim Durham and two partners are on trial.

What's this we hear about some of the potential jurors were confused about who Tim Durham was?

You know, that was the interesting thing. Some of them believe that he was Marcus Shrenker, the gentleman who attempted to fake his own death in a plane crash a couple of years ago by trying to avoid police and securities regulator.

Oh, thanks for the plug. That's windowed episode 59, the downfall, featuring Marcus Shrenker for those of you wondering.

Anyway, for a case with such a long buildup, the trial itself moved quickly. Tim Durham's defense argued that he had made mistakes while trying to save his companies.

But bad business judgment isn't fraud and mistakes aren't crimes. His co-defendants James Cochran and Rick Snow claim they were simply following orders.

None of the three men testified. In fact, the defense arrested after calling just a single witness.

The prosecution took the opposite approach over six days that U.S. Attorney's Office called a steady stream of witnesses and introduced thousands of pages of documents.

Several victims took the stand including a nun who had lost $125,000. Shame on you. She scolded them in while looking directly into their souls.

Donald Russell testified as well, reliving the loss that had defined his life. Each day he arrived in court clutching a framed photo of his mother, Pearl.

I wanted to have her testified through me, he later said, to put a face on someone who actually died as a result of this.

I wanted to lick them in the eye and let them know you ruined my life. I hope there's a special place in hell for people like this. I really do.

On June 20, 2012, after a 10-day trial, the jury deliberated for just seven hours before delivering its verdict for all three men. Guilty, guilty, guilty.

Indianapolis businessman Timothy Durham found guilty on all counts in what's being called the largest financial fraud case in Indiana history.

Durham and two business partners were accused of building thousands of investors out of more than $200 million.

Tim Durham was convicted on all 12 felony fraud counts. James Cochran was found guilty of eight. Rick Snow, five.

Durham and Cochran were taken into custody to await sentencing. Given the scale of the scheme, prosecutors sought the maximum sentence of up to 225 years.

At the November 30, 2012 hearing to determine that sentence, Durham gave a short, emotionless business-like presentation in which he took a little responsibility.

I'm not blind to how everybody has suffered Durham said. I probably wasn't as familiar with our investor base as I am now. I have regrets. I wish I would have tried harder to make some things clearer.

But by then, Tim Durham had become intimately familiar with fair finances and investor base. More than a thousand victim impact statements had been submitted.

Some described lives reduced to dependence on public assistance, unable to afford even basic necessities like eyeglasses, other spoke of a lifetime of work, erased.

One victim wrote that they could no longer afford assisted living and would die with nothing to pass on to their children.

Maria Kirk who survived the Nazi concentration camps thought she'd seen it all. She lost her retirement money, telling the court these terrible men took away my peace of mind.

US judge Jane Magnus Stinson said she found Tim Durham's lavish lifestyle sickening and that she had found no remorse from him that was sincere.

She said three words best described Tim Durham and his crimes. Deceit, greed, arrogance before sentencing him to 50 years.

The made-off of the Midwest is behind bars right now with a whole lot of time to get used to the longest prison sentence for fraud in Indiana State history.

Timothy Durham, the one-time CEO of National Lampoon, was convicted of defrauding investors of millions of dollars while at another company he partly controls.

James Cochran and Rick Snow received 25 and 10-year sentences respectively. All three men were ordered to collectively pay 208 million dollars in restitution.

But the likelihood of that happening was slim, seeing how Durham and Cochran would probably spend the rest of their lives in prison.

Outside the courthouse, US Attorney Joe Hoxett called it the longest white-collar fraud sentence in Indiana history and it was well deserved.

Throughout these proceedings, we have all heard Mr. Durham say that his failure was the fault of many other things.

The government's fault, the media's fault, our nation's economic gills were involved. Let me just say this.

Mr. Durham, it was not the government, it was not the media, it was not our nation's economic struggles.

It was you and we hope that today's decision does send a warning to others in Indiana that if you sacrifice truth in the name of greed, if you steal from another's dream to enhance your own, you will be caught.

And you will pay the significant price that Mr. Durham will now begin to pay.

Tim Durham's earliest possible release date is in 2055. He will be 93 years old in the meantime.

Dr. At the center of the Peyton Manning High Controversy has ties to Ponzi Screamer Tim Durham.

Guyer and Durham partnered together in 2005 to form a company called Guyer Durham LLC. Now Guyer Durham LLC was ordered to pay more than $260,000 as part of bankruptcy proceedings.

The effort to claw back Durham's ill-gotten gains dragged on.

Bankruptcy trustee Brian Bash cast a wide net by filing more than 140 lawsuits against anyone in Durham's orbit who had benefited from the scheme, his mother, his sister, the sister's husband, his ex-wife, and her biological son.

Then of course there was Kate O'Kalen, playmate Jamie Farrell, even Tim's interior designer who settled for a million.

Indianapolis Physician Leonard Dell Guyer, a business partner of Durham's alleged to have provided HGH to Peyton Manning, settled for $35,000.

And let's not forget about ludicrous, the rapper borrowed $170,000 from Durham to launch a social media website called MyGhetto.com, which I regret to report is not available for sale.

The trustee also targeted 85-year-old Don Fair, the former owner of Fair Finance, who was found to have become aware of the fraud but stayed silent to collect the remaining millions owed to him from the sale.

Mr. Fair agreed to pay back $3.5 million.

Dan Lacon, released from prison in 2012, also settled for $3.5 million. He briefly returned a national lampoon before it changed hands again.

The company's next chapter didn't go much better. Stop me if you've heard this one, the new president, former NBC University executive Evan Shapiro, was fired and later sued for allegedly funneling millions in his own companies.

The deepest pockets, bash pursued, belonged to the financial institutions that financed Durham's takeover of Fair.

After a prolonged legal fight, the trustee secured $35 million from fortress credit corporation.

Another target, Textron Inc., was cleared by a jury.

By 2020, a total of roughly $51 million had been recovered, but only $23 million had been returned to the victims.

The trustee's legal counsel kept more than half for itself and fees.

I'm extremely disappointed, one victim, James Coco, told the Indianapolis Business Journal, after all these years and expense, that this point we are basically left with the mere pennies on the dollar.

11 pennies on the dollar, to be exact. But hey, look at it this way, that's like at least 1000 shares of national lampoon stock at its current price.

You can't win if you don't play the game.

Swindled is written, researched, produced, and hosted by me, a concerned citizen, with original music by Trevor Howard, aka the former aka U.S. rubber.

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The devil knocked the left of the machine. Have my son.