The judge overseeing the 4-years-long Fair Finance Co. bankruptcy proceeding indicated she is not happy with the amount of money the trustee’s team has recovered for the estate.
The trustee has won judgments of more than $388 million in the complex case but the amount held in the estate’s money market fund was at $4.1 million as of Feb. 20. The estate has paid out millions of dollars to cover legal and professional fees but has yet to disburse funds to thousands of Ohio residents who lost more than $200 million investing in Akron-based Fair Finance.
“The gap between judgments and collections is enormous,” U.S. Bankruptcy Judge Marilyn Shea-Stonum said Tuesday during a regular monthly hearing. “Right now Fair Finance does not qualify as one of the most successful cases.”
The judge asked Trustee Brian Bash how he would explain the ongoing efforts to a claims holder.
Bash, a Cleveland lawyer, said he and his legal team at law firm Baker Hostetler, where he is a partner, continue to chase down money for the estate for eventual disbursement.
“We went after the trail of the money,” Bash said. “It’s unfortunate that such a large amount of money, almost $400 million, did not result in a lot of money [collected] to date.”
But Bash said he and his team are not giving up and that he still believes “we’ll still collect significant money.”
The case could close in the next 12 to 18 months, not counting appeals, Bash estimated.
Shea-Stonum at the end of December approved partial payments of $1.5 million for fees plus $463,900 for expenses to Baker Hostetler. She also approved fees and expenses for others.
Current efforts to collect money including seeking to have a receiver appointed for comedy movie maker National Lampoon Inc. in California. The company was run by Daniel Laikin, a former Fair Finance director who was convicted and imprisoned for trying to pump up National Lampoon’s stock price. While Laikin was in federal prison, Timothy Durham, co-owner of Fair Finance, ran National Lampoon. Durham and Laikin were friends and business partners.
Bash is suing National Lampoon for $9 million and is suing Laikin for $25 million.
Durham and James Cochran, both Indianapolis businessmen, bought Fair Finance in 2002 from Don Fair, whose father founded the Akron business in 1934. FBI raids in November 2009 shut down Fair Finance, which was forced into bankruptcy in February 2010.
Durham and Cochran in 2012 were convicted of bilking thousands of Ohio residents who bought $200 million in uninsured investment certificates from Fair Finance. Durham got 50 years in prison; Cochran was sentenced to 25 years. Rick Snow, a former Fair Finance executive, was also convicted and sent to federal prison.
The trustee also is seeking more than $72 million in a lawsuit against New York financial firm Fortress Credit Corp., which provided financing to Fair Finance.
Shea-Stonum noted that she is preparing to retire and that her likely successor is now undergoing a background check.
“I don’t think there will be any neat wrapping up of Fair Finance matters prior to my retirement,” she said.
In other matters, Indiana media recently reported that Durham’s nearly 11,000-square-foot Indianapolis-area mansion is going to be sold off March 6 in a sheriff’s auction.
The next monthly Fair Finance status hearing is scheduled for 9:30 a.m. March 25.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com