WOOSTER — Investors met with lawyers and Ohio Securities and Exchange representatives Tuesday night for advice about Fair Finance Co., which is under investigation by the FBI for its possible involvement in a Ponzi scheme.
The Fisher Auditorium at the Ohio Agricultural Research and Development Center was filled past capacity for an informational meeting arranged by the office of U.S. Rep. John Boccieri, D-Alliance.
“I know many of you are frustrated and frightened of what’s at stake,” Boccieri said to the crowd. “My hope is that this meeting will help you.”
James Erne of Medina Township attends the informational meeting of Fair Finance investors in Wooster on Tuesday night. Erne invested about $100,000 with the company, which is under investigation by the FBI. (Lisa Hlavinka / Gazette)
Representatives from the FBI, scheduled to attend, backed out at the last minute, fearing their presence could compromise the investigation, Boccieri said.
However, representatives from the Ohio Securities Commission urged investors to report their experiences to assist in the investigation of Fair Finance.
Boccieri also encouraged them to detail their personal stories and to send them to his office.
Fair Finance has two locations in Medina County: one in Medina at 849 N. Court St., and in Wadsworth at 191 Great Oaks Trail. Like all its offices, the locations have been closed since Fair Finance headquarters in Akron and offices in Indianapolis were raided by the FBI on Nov. 24.
Since then, investors Harry A. and Kathleen A. Tipping, of Fairlawn, have filed a lawsuit in Summit County Common Pleas Court against the company. Suits also have been filed in Columbus, Wayne County and Indiana.
Columbus-based attorney Dave Meyer said Tuesday he is seeking a class-action lawsuit against Fair Finance.
James Erne, 70, of Medina Township, said he invested about $100,000 with Fair Finance.
The Foote Road resident said he “pinched and saved” during his career as a school bus driver and custodian to build up a retirement fund. After he retired, he wanted a little extra cash, so he began taking a portion of his money from his CD with a bank, which had low interest rates, and put it into investments with Fair Finance, which had a much higher interest rate.
“The bank’s percentage rate was 0.2 or 0.3 percent,” Erne said. “That wasn’t enough money for retirement.
After he retired, Erne worked part time with the Medina Township Fire Department. He retired on Nov. 29, his 70th birthday.
At the time he thought he had enough to live on, as well as some disposable income from his Fair Finance investments.
“Well, of course, I didn’t know that Fair Financial had been invaded by the FBI,” Erne said.
In the Summit County suit, Fair Finance is referred to as doing business as Fair Financial Services.
When Erne realized he most likely had lost his investments, he called Fair Finance and went to the Medina office, but his calls weren’t returned and the office was closed.
“I haven’t heard much from Fair Financial since,” he said.
Summit County court records show Fair Finance is accused of perpetuating a Ponzi scheme.
Among other allegations, the plaintiffs claim the firm used their funds to invest in high-risk insider loans with related third parties that were already in default, or in high risk for default, on other loans.
The company did this “rather than investing the funds in low risk, short term, high yield consumer debt,” the suit alleges.
The plaintiffs also allege that new owners of Fair Finance, Tim Durham and Jim Cochran, who took over the company in 2002, misrepresented how they were investing the money, telling the plaintiffs they were investing in low-risk loans, as the company had since its founding.
Some at the meeting said they were under the impression Fair Finance was still being run by the Fair family, which founded the business in 1934.
On Nov. 30, the Tippings rescinded their investment certificates and instructed Fair Finance to cancel them and return the principal due along with interest, however, nothing was returned, records indicate.
Overall, $200 million in investments from Ohioans could be lost, an amount that constitutes nearly 70 percent of Fair Finance’s assets, Boccieri said, quoting information from the Indiana Business Journal.
Boccieri said he has sent two requests to the U.S. District Attorney for Southern Indiana, who is responsible for investigating the case, to freeze Fair Finance assets and those of Durham and Cochran, he said.
“Durham said he doesn’t want to be known as the richest man in the world, he wants to be the richest man in the world,” Boccieri said. “That, to me, is egregious.”
Erne said he is one of the lucky ones because his investments were for extra money, but others were relying on the money invested in Fair Finance for their basic needs. Many of them are elderly, he said.
“I feel for people using that for their groceries, food, things like that,” Erne said. “This has hurt a lot of people.”
Contact Lisa Hlavinka at (330) 721-4048 or firstname.lastname@example.org.