Appeals court overturns 2 of Tim Durham's wire fraud convictions

Tim Durham
Federal appeals judges overturned two convictions of wire fraud against former Indianapolis financier Tim Durham because of a mistake by federal prosecutors.

The court upheld ten other convictions of conspiracy, wire fraud and securities fraud against Durham. 

Read the ruling

In June 2012, Durham was convicted of running what prosecutors called a massive Ponzi scheme that caused more than $200 million in losses for thousands of people who invested with his Ohio-based company, Fair Finance. As the federal judges wrote, Durham and his associates quickly turned the company into "their personal piggy bank." 

WATCH: Tim Durham exclusive interview

Judges on the 7th Circuit Court of Appeals rejected nearly all of Durham's reasons why his convictions should be overturned.
However, they did agree that prosecutors did not provide enough evidence to support two of the wire fraud convictions. 
In their 31-page ruling, judges wrote, "The government failed to enter into the trial record key documentary evidence supporting two counts of wire fraud against Durham.  It was clearly an oversight, but the mistake leaves a crucial gap in the evidence."

The judges go on to explain that prosecutors apparently planned to submit large numbers of documents to prove that two different wire transfers were ultimately used for personal gain, but instead, they only entered the first pages of each exhibit. As a result, the evidence showed only that the transfer happened and not how the money was used. It was submitted as part of the appeal, but the judges said they could not consider it.

The court did note, "For what it's worth at this too-late stage of the case, the additional documentation show that the $250,000 wire transfer paid for a luxury garage and the $50,000 transfer was used to pay dues at a country club." 

Exactly what the decision means for Durham's 50-year prison sentence is unclear. The Court of Appeals ordered the case back to the Southern District Court in Indiana to be resentenced without the two wire fraud charges.

Originally, Durham received eight years for one of those charges and five years for the other. They are being served concurrently with a 10-year sentence for another wire fraud conviction that still stands.

Shortly after the decision was released, Durham's attorney, John Tompkins, told 13 Investigates that he had not had time to look at how the new sentence might work out with the federal sentencing guidelines. He said that he is "cautiously optimistic" and pleased to have an opportunity for resentencing.

The U.S. Attorney's office told 13 Investigates, "Our position will be that the this opinion will have a negligible effect on the final sentence."  Spokesman Tim Horty said, "We respect the court's opinion. Mr. Durham will be resentenced and we will continue to advocate for a sentence proportionate to the massive fraud for which he was convicted. " 

No time has been set yet for when Durham will be resentenced.

Durham's associates, James Cochran and Rick Snow were also convicted of conspiracy, wire fraud and securities fraud and appealed their convictions. The 7th Circuit Court of Appeals rejected both appeals and upheld their convictions. Cochran is now serving 25 years in federal prison and Snow is serving 10 years.

All three men had asked the Appeals Court for a new trials. In 644 pages, they raised issues about evidence and jury instructions, accusations of prosecutorial misconduct and concerns about sentencing guidelines.

This is case is the largest case of corporate fraud in Indiana history, with more than 5,000 victims.