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Friday
Nov302012

50-Year Sentence For Indiana Man That Ran $200 Million Ponzi Scheme

An Indiana man was sentenced to serve the next fifty years in prison for operating a Ponzi scheme that defrauded victims out of over $200 million, with the presiding federal judge summing up his crimes in three words: "Deceit. Greed. Arrogance."  Timothy Durham, 50, received what will likely be a life sentence from United States District Judge Jane Magnus-Stinson following his conviction earlier this summer on twelve criminal counts.  While Durham offered a short statement expressing regret, he stopped short of extending an apology to his victims.  Along with Durham, Judge Magnus-Stinson also sentenced two of Durham's co-conspirators, Jim Cochran and Rick Snow, to 25-year and 10-year sentences, respectively.All three men have indicated they plan to appeal. 

The sentencing followed a contentious hearing earlier this morning in which Judge Magnus-Stinson largely sided with the government's estimates of total victims and losses, finding that 5,122 victims suffered collective losses of approximately $250 million.  Notably,Durham's attorney maintained that his company, Fair Finance Co., was not a Ponzi scheme and that the government raiding of the company was to blame for the elaborate losses - a defense JudgeMagnus-Stinson suggested was the 'it was the government's fault' defense.  The figures were in dispute due to the weight they carry in federal sentencing guidelines. Over 1,000 victims submitted letters to the court describing the impact of the scheme on their lives, and Judge Magnus-Stinson indicated she had read every single letter.  

Also notable was the disparity between the sentencing recommendations offered - prosecutors wanted a 225-year sentence, while Durham's attorneys argued that a five-year sentence was more appropriate. While prosecutors did not get the literal life sentence they had asked for, Judge Magnus-Stinson did acknowledge that the 50-year sentence would serve as an "effective" life sentence.  Similarly, while prosecutors had urged 145-year and 85-year sentences for Cochran and Snow, respectively, the 25-year and 10-year respective sentences handed down emphasized the lesser roles the men had played in the scheme and will likely allow them to return to society after serving at least 85% of their sentences.  

Durham's sentence ranks as one of the highest sentences handed down in the post-Madoff era.  Madoff's 150-year sentence for the largest Ponzi scheme in history continues to serve as a symbolic measuring stick for later offenses, as Allen Stanford - convicted of running the next largest scheme on that list - received a 110-year sentence. Durham's scheme is notable in that it is identical to the sentences handed down in the Rothstein and Petters schemes - each of which was on a considerably larger magnitude than Durham's scheme in terms of total pecuniary losses.  The lack of an explicit acknowledgement of guilt and the sheer number of victims may have played a role in Durham joining this infamous club.  Further reading on several of the top recent Ponzi schemes is available here.

According to United States attorney Joseph Hogsett, who prosecuted the case, Durham's sentence is the longest white collar fraud sentence in Indiana history.  

Further coverage of the Durham case is here.

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