Investment company Fair Finance Co, the Akron based company that has been closed since the FBI raided its offices in November last year is now confronted with a new crisis. It now faces a petition by three creditors to force it into bankruptcy to repay its debts. Its owner, Timothy Durham is accused of living a luxurious lifestyle funded by illegal earnings from a Ponzi scheme.

The three creditors filed their lawsuit alleging that Durham and his business partner, James Cochran took $176 million in the form of loans transferred from Fair Finance into Fair Holdings LLC and DC Investments LLC. This money was in turn used to fund another $220 million in further loans. This form of money spinning involved as many as 50 insider companies throughout the US and Canada.

All this money largely came out of the contributions of many individuals, many of whom are senior citizens who invested their entire life savings into Fair Finance. They hold millions of dollars worth of certificates that now cannot be redeemed. Prosecutors in the case say that Durham deceived the investors into thinking that their money was being invested in low risk, high yield consumer debts when in fact the money was spent to pay off interest and redemption payments to earlier victims of the investment scheme.

No one is certain as to the exact number of investors who were duped or the amount of investments lost. But lawyers representing 100 of such investors holding $6 million worth of certificates say that their clients come up to about a mere 5% of the total number of investors and value of investments.

In their November 24th filing, prosecutors sought to seize Durham’s assets including a 2008 Bugatti Veyron automobile. But they have since stopped pursuing the seizure of assets as they were assured that the assets will not be transferred.

Durham and two other directors of CLST Holdings Inc, a Dallas based company were subpoenaed by the US Securities and Exchange Commission (SEC) in the course of an SEC investigation into Fair Finance, according to a CLST report. US federal agents also searched Fair Finance’s office in Akron and that of Obsidian Enterprises Inc, another Durham owned company for records on Durham and the companies he controls.

Timothy Durham, a former corporate lawyer with Ice Miller LLP in Indianapolis has faced at least two other civil lawsuits in the past for fraud.