Jury convicts Ind. financier in $200M fraud scheme

Tim Dunham is seen in a Sept. 15, 2004 photo in Indianapolis. Durham's trial on charges that he bilked investors out of more than $200 million opened Monday, June 11, 2012 in Indianapolis, with his attorney telling jurors that prosecutors were misrepresenting his attempts to save the company. Federal prosecutors say Durham, his business partner and his accountant used a Ponzi scheme to bilk about 5,000 mostly elderly investors at the Akron, Ohio-based Fair Finance Co.(AP Photo/The Indianapolis Star, Frank Espich)

Tim Dunham is seen in a Sept. 15, 2004 photo in Indianapolis. Durham's trial on charges that he bilked investors out of more than $200 million opened Monday, June 11, 2012 in Indianapolis, with his attorney telling jurors that prosecutors were misrepresenting his attempts to save the company. Federal prosecutors say Durham, his business partner and his accountant used a Ponzi scheme to bilk about 5,000 mostly elderly investors at the Akron, Ohio-based Fair Finance Co.(AP Photo/The Indianapolis Star, Frank Espich)

INDIANAPOLIS (AP) ? An Indianapolis businessman accused of looting an Ohio-based finance company after buying it and bilking about 5,000 mostly elderly investors out of more than $200 million was convicted Wednesday on all counts.

A federal jury found Tim Durham guilty of securities fraud, conspiracy and 10 counts of wire fraud. His business partners, James F. Cochran and accountant Rick D. Snow, also were convicted of conspiracy and securities fraud, and some wire fraud counts. When sentenced, the men could face decades in prison.

Durham's defense attorney had argued that the men simply made bad business decisions in the midst of the bewildering economic crisis of 2008. But prosecutors alleged that Durham and his partners pillaged Fair Finance to enrich themselves and their friends ? buying classic cars, houses and casino trips ? and to help Durham's other struggling businesses.

The three men were taken out of the courtroom in handcuffs and will be held in jail pending a hearing Monday in U.S. District Court in Indianapolis. Jurors began deliberations Wednesday morning after the judge denied a request from Durham's attorney for a mistrial.

Outside the courthouse, U.S. Attorney Joe Hogsett said the verdicts were "a powerful warning that if you sacrifice truth in the name of greed, if you steal from another's effort to carve out the American dream to enhance your own, you will be caught."

Hogsett said he hoped the jury's decision would bring some measure of justice to "the thousands of hardworking people whose financial wellbeing was destroyed at the hands of these men."

Durham's attorney, John Tompkins, said in an email Tuesday evening that his client plans to appeal. Durham maintains that he has done nothing wrong, and "the Durham family stands by Tim and continues to believe in his innocence," Tompkins wrote.

Phone messages seeking comment were left for Cochran's and Snow's attorneys.

Prosecutors claimed that after buying Akron, Ohio-based Fair Finance in 2002, Durham and his partners stripped it of its assets and tapped it to buy luxury items. The men also were accused of funneling funds from Fair Finance to Durham's Indianapolis-based holding company, Obsidian Enterprises, to keep its failing subsidiaries intact.

Prosecutors claimed the men operated an elaborate Ponzi scheme to hide Fair Finance's depleted condition from investors and regulators until the FBI raided Durham's office in November 2009. By then, the consumer finance company founded in 1934 was $200 million in debt.

Tompkins had argued that Durham and the others were caught off-guard by the economic crisis of 2008, and bewildered when regulators placed them under more strict scrutiny and investors made a run on the company.

Tompkins said the evidence didn't support the accusation of fraud because Durham stood to lose money if Fair Finance went under, claiming that Durham had sunk millions of dollars of his own money into Obsidian to keep it afloat.

All three men were found guilty on one count of conspiracy and one count of securities fraud. Each also faced 10 counts of wire fraud; Cochran was convicted on six of those counts and Snow on three.

Each of the wire fraud and securities fraud counts carries up to 20 years in prison, while the conspiracy charge carries up to a five-year prison sentence.

A federal grand jury in Indianapolis indicted Durham, Cochran and Snow in March 2010. The allegations against Durham ? a major Indiana Republican Party donor ? led several GOP politicians, including Indiana Gov. Mitch Daniels, to return hundreds of thousands of dollars in campaign contributions sought by Fair Finance's bankruptcy trustee.

___

Associated Press reporter Charles Wilson contributed to this report from Indianapolis.

Associated Press

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Al-Qaida in Yemen driven from 2 major strongholds

SANAA, Yemen (AP) ? Yemeni troops and armed tribesmen drove al-Qaida militants from two major strongholds in the south on Tuesday, a major victory in a U.S.-backed offensive to regain control of large swaths of territory from the terror network in the Arab world's most impoverished country.

The capture of Jaar and Zinjibar came after weeks of heavy bombardment and shelling of al-Qaida positions, with the help of dozens of U.S. troops stationed at a command center in an air base near the conflict zone deep in the southern desert. Troops also liberated a vital highway that links Jaar with the port city of Aden, according to the Yemeni Defense Ministry.

Al-Qaida in Yemen, which the U.S. considers the most dangerous offshoot of the terror network, had exploited the country's political turmoil that resulted from last year's uprising against the former leader Ali Abdullah Saleh to seize major population centers in the southern province of Abyan. That raised fears it could use the area as a foothold to launch more attacks on U.S. targets.

The latest strikes leave al-Qaida scattered in smaller towns, valleys, desert and mountainous areas ? similar to the group's situation before the revolt that ousted Saleh began in February 2011. SABA said most of the militants fled to the nearby coastal town of Shaqra, the last remaining major al-Qaida stronghold in Abyan province. Sleeper cells, officials say, will also be a major source of concerns to the Yemeni leadership.

The militant group said it had retreated from Zinjibar and Jaar to "spare bloodshed," but it also threatened to retaliate by attacking Yemen's capital, Sanaa. In an emailed statement, the group addressed the Yemeni leadership as "crusaders and American agents" and warned "we will chase you in your cities and palaces."

Yemeni troops and allied tribesmen swooped into Jaar in a surprise dawn attack after hours of heavy shelling by artillery and rockets from hilltop positions, military officials said. Pro-government fighters rode into town from three different fronts in trucks, while dozens of tanks were used to block the town's entry and exit points, they added.

Residents flocked to the town's center, firing guns in the air in celebration. Others looted warehouses filled with humanitarian supplies delivered by relief groups, Waleed Mohammed, a resident said in a telephone interview.

Gamal al-Aqil, the governor of Abyan province, says Yemeni troops had dealt "painful blows" to al-Qaida "in their biggest dens in Abyan."

"We called the operation the Golden Swords," he said.

Ministry of Defense spokesman Gen. Mohammed al-Quton told the Yemeni state-news agency SABA that 20 militants and four troops were killed in the fighting. Jaar is a gateway to the strategic port of Aden, through which Yemen exports more than 60 percent of its oil and controls the southern tip of the Red Sea.

The officials and witnesses said that some 500 al-Qaida militants, including foreigners, fled the town after spray painting walls and store shutters with slogans in red saying, "Al-Qaida has withdrawn. Al-Qaida was not defeated."

The defense ministry spokesman said al-Qaida's defenses collapsed a day after army troops seized an ammunition factory called Oct. 7 on a hilltop overlooking Jaar. Since then, Katyusha missiles and warplanes pounded positions of al-Qaida in the outskirts of Jaar, 400 kilometers (250 miles) southeast of Sanaa.

Jaar resident Khaled Mohsen, said that residents had lost hope that the military would be able to defeat al-Qaida.

"We thought it would take a year in order for the army to get rid of al-Qaida, but we were surprised when they swept into the town in no time," said Mohsen. "I have been hearing constant exchange of gunfire all night, then suddenly everything was quiet. I looked from the windows, and I saw soldiers in uniform in the center of the town."

The military already had taken control of much of Zinjibar, the provincial capital, and the fighting there was lighter because many of the al-Qaida militants had left to help their comrades in Jaar, officials said. Six soldiers were killed when land minds exploded in fields in northern Zinjibar, according to the officials, who spoke on condition of anonymity because they weren't authorized to release the information.

The victories capped weeks of fighting as Yemen's new President Abed Rabbo Mansour Hadi has pledged to uproot al-Qaida from the south with help from the United States as part of a new cooperation following the ouster of Ali Abdullah Saleh amid a popular uprising

The U.S., which considers al-Qaida's Yemen chapter the most dangerous offshoot of the terror network, is helping the Yemenis from a command center manned by dozens of U.S. troops in the al-Annad air base in the southern desert, about 65 kilometers (45 miles) from the main battle zones. The Americans are coordinating assaults and airstrikes, and providing information to Yemeni forces.

The militant group has been blamed for directing a string of unsuccessful bomb plots on U.S. soil from its hideouts in the impoverished country at the tip of the Arabian Peninsula. Most recently, this month it emerged that the CIA thwarted a plot to down a U.S.-bound airliner using a new, sophisticated explosive to be hidden in the bomber's underwear. But the planned bomber was actually a double agent who turned the device over to the U.S. government.

Al-Qaida retaliated last month with a suicide bombing by a soldier who blew himself up among troops rehearsing for a military parade in Sanaa, killing nearly 100 of them in one of the deadliest attacks in the capital in years.

Yemen's military has long been largely ineffectual in uprooting the militants. The force is ill-equipped, poorly trained with weak intelligence capabilities and is riven with conflicted loyalties, since some commanders remain close to Saleh.

Hadi also has shaken up the military by purging it from loyalists of Saleh, demoting his family members from their positions as commanders of army units and appointing new ones. He faced resistance as Saleh has been seen as trying to hold power strings from behind the scenes by keeping his loyalists in their positions. Saleh's son, Ahmed, is the top commander of the most powerful Republican Guards force.

Associated Press

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