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Tim Durham With nicknames like Mid-west Madoff
and Playboy, you'd never think Tim Durham was shy and nerdy. However, you'd be wrong. According
to people that grew up with Durham in Seymour, Indiana, young Tim was quiet and loved academia.
One of his old middle school friends claims he had a highly accurate photographic memory, which
helped Durham excel in STEM subjects like math and science. However, Durham lacked people skills.
Durham's logical intelligence carried him to Indiana University,
where Durham met his future wife, Joann SerVaas. He didn't know it yet,
but meeting Joann would eventually launch Durham into his career of financial crime.
Changes Joann changed
Durham in many ways. The most significant way she changed him was by introducing him
to her father, Beurt SerVaas. Beurt was a successful Indiana-based entrepreneur
who owned a multi-million dollar investment firm called SerVaas inc.
He attended law school and spent a few years at a powerhouse law firm called Ice Miller.
In 1990, he began working for his father-in-law.
Durham's first job at SerVaas inc was to rehab a failing school bus manufacturer called Carpenter.
His job was to beef up the company's value and resell it for profit.
The pressure was on. Durham's father-in-law was not just an entrepreneur; he was an Indianapolis
council member. Disappointing him would not be a favorable start to Durham's career in business.
SerVaas Inc. bought Carpenter in 1990 and sold the company in 1998.
Durham worked on the deal for eight years, which proved to pay off after the Carpenter sold for
enough capital to yield a million-dollar profit. That same year, however, Durham divorced Joann,
leading to his departure from SerVaas Inc.
Though he no longer had a job, Durham still had the clout from his Carpenter deal,
meaning he could ride his brief success to other opportunities in the business world. And,
sure enough, an opportunity presented itself: a corporate takeover, specifically,
the takeover and sale of an auto parts manufacturer in Michigan.
Before he could execute the takeover, Durham needed cash. He convinced investors
to buy into the deal and sold the auto manufacturer for millions two years later,
pocketing $5 million for himself.
With the big deal completed in Michigan, Durham established himself as a trusting person to
give your money. Durham also discovered how easy it was to raise funds from investors
by waving around his law license and past successes. The seed had been planted,
and Durham continued to raise money for new deals, this time with a partner.
Obsidian Enter James Cochran,
whom Durham had met through the Carpenter deal. Cochran helped Durham secure several
new acquisitions for their new company: Obsidian. Obsidian pursued profitable deals,
often with investor capital, which the duo used to go on a corporate spending spree.
The first company they acquired was Danzer Industries. It resembled the last two companies
Durham bought in that they dealt in the transportation industry--cargo trailer
manufacturing, to be exact. After that, Durham and Cochran purchased a tire recycling company,
a business that leases busses, and another trailer-related
corporation to add to their portfolio. As the success compounded, so did Durham's ego.
Then, the shy middle schooler did something rather audacious: he took Obsidian public. The
only reason a CEO decides to take his organization public is to raise capital, and he did just that.
Obsidian grew loud and fast. Its share prices shocked everyone when
they started at 20 cents per share in the summer of 2002,
then skyrocketed to $11 per share in October 2003. That year, success flooded into Durham's head
but left just as quickly. Through the IPO, Durham had netted $30 million.
However, that wasn't enough. He needed more and started making some significant moves.
First, he moved Obsidian's offices to a penthouse in Chase Tower.
Then, Durham diversified the company's portfolio by acquiring two cell phone companies, a plastic
surgery center, and an Italian restaurant--two industries far more glamorous than trailers.
However, their purchases of National Lampoon, an entertainment company,
and the 90-year old Fair Finance, took Durham to new heights both as a partier and scammer.
Fair Finance has been called his personal ATM, though we prefer piggy bank.
National Lampoon But if Fair Finance was Durham's piggy bank,
then National Lampoon was his liquor store. Durham bought a direct pathway to Hollywood stars. The
LA company itself served as a holding enterprise for the dwindling comedy label of the same name.
But on the contrary, just months before the FBI raided his businesses,
Durham's celebrity partying was in high gear. Through National Lampoon, Durham personally
hosted a charity event set up by Ludicras' music and art education charity. Durham, along with Gene
Simmons, Ciara, and Khloe Kardashian, judged the 2010 Miss Malibu competition at the event.
A few months after that little get-together, Durham threw a massive Halloween party under
the corporate umbrella of National Lampoon. Durham literally turned his home into a Haunted
Mansion themed bash, where he dressed as the Mad Hatter from Tim Burton's Alice in Wonderland.
National Lampoon seemed to change Durham's entire personality. The glitz and glam attached to it
rubbed off on the shy kid from Seymour, Indiana, transforming him into the Playboy of Indiana.
Playboy of Indiana No self-respecting
American Playboy would be caught dead without a mansion.
And Durham was no exception. His brick and slate castle boasted three gated entrances
leading to a vast cobblestone courtyard where Durham's sports cars were on display.
In the CNBC documentary series "Untold Wealth," Durham claimed that he owned an Aston Martin,
a Bently, and a Lamborghini. He also had a thing for antique cars, his crown jewel a
1929 Duesenberg Phaeton. Elvis Presley drove this specific model in his 1966 film Spinout.
After you strolled past the multi-million dollar car collection in the courtyard,
you'd walk through the grand front door and enter what, at first glance,
looked like a tricked-out art/entertainment history museum.
The walls featured items such as a Grammy award won by Frank Sinatra alongside a Picasso,
which isn’t a painting you can buy in your typical neighborhood art gallery.
And when you got tired of admiring Durham's stuff, you could go outside
and play tennis on his private court. Or, instead, if you were feeling up to it,
you could spend the afternoon on Durham's $7 million yacht, aptly named the Obsidian.
Once you were done hanging out on the Obsidian, Durham might throw one of his famously wild
parties. Odds are this get-together would pale in comparison to the Playboy mansion party he threw
in 2007. To make the party authentically Playboy, Durham flew in 30 models from LA to Indianapolis.
He had them picked up in exotic European sports cars, which brought them to Durham's estate.
Durham, along with members of the Indianapolis Colts NFL football team
and other local celebrities, welcomed the models dressed in Hugh Hefner-like garb.
Several MySpace photos--later posted by Durham on his personal page--show
Durham decked out in a fluffy red Hefner robe enjoying a dance from one of his exotic models.
Durham's persona on social media was that of a Jordan Belfort type.
On the surface, even his employees assumed he was always making money.
One Obsidian employee describes seeing his extravagant lifestyle and, not even for a moment,
doubting Durham's capabilities as an investor and businessman. If anything, the cinematic sports
cars and multi-million dollar boats reinforced the notion Obsidian was a money-printing machine.
But behind all the fancy stuff and tv interviews, deep inside the closet, was Durham's piggy bank:
Fair Finance, a fragile bank he had smashed and tried to glue back together far too many times.
Fair Finance Fair Finance was founded in 1934
as a family-owned financial business. When Durham bought the company in 2002, the hotshot investor
used its reputation to sell uninsured investment certificates. In the early 2000s,
these financial products were handed out like free food samples at a suburban mall.
The certificates provided Durham with a consistent stream of money to withdraw from.
Durham would periodically tap into Fair Finances' pot of investor cash
and use their funds to loan money to friends, pay for his extravagant parties at his 30,000 square
foot Indianapolis chateau, and gamble at the casino. No matter what he did,
Durham made sure to "show off" how much money he was making. In reality, he was stone-cold broke.
Obsidian had been struggling for some time. Many of its businesses were struggling,
and Durham had been using the investors of Fair Finance to keep them afloat.
These investors were working-class people from Fair Finances' home state of Ohio.
They even helped sell investments to Mennonites and Amish communities. In other words,
Fair Finances clientele were not money gurus taking active roles in their investments.
Some of these individuals didn't even use computers. That is why Durham described them
as "babies" whom he could take candy from any time he wanted. Until 2007, that is.
2008 Crash The recession
unraveled Durham's scheme like a tangled ball of yarn covered in complicated financial crimes.
Upon investigating Fair finance, authorities dug up some very odd-looking loans to both Obsidian
and Durham. For example, Durham withdrew $250,000 to remodel his garage. On other occasions, Fair
Finance loaned out money to Obsidian. Authorities estimate the total to be around $200 million.
It took around three years for authorities to find enough evidence to charge Durham.
In addition to the strange-looking loans, investigators also unearthed the anatomy
of Durham's scheme, which needed the fresh blood of new investors to stay alive like
any other Ponzi scheme. This consistent supply ended in 2007. Almost every investor held on
to their cash during those difficult years, meaning Fair Finance wasn't
selling enough certificates to pay back the investors who had already bought them.
After 2007, some of the so-called "babies" weren't getting their candy back. Two years later,
the problem got worse, and the FBI was brought in to take a closer look at Obsidian and its owner.
Raided In 2009,
the FBI gathered enough evidence to raid Durham's businesses. They stormed into Obsidian,
seizing documents and any other evidence they felt was necessary. While those agents were raiding the
offices of Obsidian, another group of agents was knocking down the doors of Fair Finance,
where they found how horribly ironic the name had become since 2002.
Three years later--after a trial and conviction for running a $200 million Ponzi scheme--Durham
was sentenced to 50 years in federal prison. Any assets or cash he hadn't
blown was given back to Fair Finance investors. Durham had already spent most of his candy on
parties, casinos, and other luxuries he could not otherwise afford. The money analysts who looked
at Durham's accounts estimate he loaned himself $54 million from Fair Finance.
Overall, Obsidian and Durham owed Fair Finance investors $29 million.
Durham will most likely spend the rest of his life behind bars for these crimes.
His release date is supposed to be 2056 when Durham is 94 years old.
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And let us know in the comment section would you rather make 25 million dollars but in 15
years you have to give up all your money AND owe the government 3 million dollars,
or would you rather have whatever money you have now?