In case you missed the Thanksgiving-time news of the FBI raiding Durham’s Indiana buyout shop, Obsidian Enterprises, here’s a quick rundown: Durham’s other firm, an Ohio firm called Fair Finance Services, is accused of running a Ponzi scheme and acting as Durham’s “personal bank” for seven years. The firm sold certificates intended for investments in small businesses, and while it used some of the money to invest in Obsidian companies, it passed the rest back to earlier investors, Ponzi-style, according to a civil complaint. Even worse, it created a vehicle to make personal loans to Durham and his partner.
So Durham’s offices were raided, and he’s cooperating, claiming he did nothing wrong. But once you read about Durham’s amazingly classy antics you can’t be that surprised the guy tried to skirt the rules.
For starters, there’s this Obsidian-approved profile of Durham in Indiana Monthly titled “Outrageous Fortune.” Alongside the article, published in January 2008, Durham is pictured posing in front of three paintings of a younger, more Kennedy-esque version of himself. If the phrase “Outrageous Fortune” seems tonedeaf, just read the the subtitle:
“Tim Durham, one of the city’s most successful financiers, is also one of its most notorious bachelors AND materialists. But Durham isn’t exactly ashamed of that. In fact, he wants you to know.”
I mean, this guy seriously (proudly, even) shoved his conspicuous consumption in our faces as the credit crunch was taking hold of his industry. It gets so, so much better.
He married was dating a former Playboy Bunny, which the profile emphasizes by her “sunbathing in 90 degree heat.” His Myspace page (now taken down) included images of a debaucherous birthday party complete with lapdancers and topless threesomes. He lives in a 30,000 square foot home, which CNBC toured for a series called “The New Super Rich.” His belongings include “more than 70 classic and exotic cars, three private jets, the yacht, numerous Picassos and Renoirs, two restaurants (Touch and, in Indy, Bella Vita), a nightclub (GELO Ultra Lounge in Castleton), two limousines, a magazine (Car Collector), a plastic-surgery center, a cigar store, and-most strangely-the storied comedy brand National Lampoon.”
He claims to afford all these things with money earned from LBOs, but an investigation from Indiana Business Journal reveals that he tapped his investment funds for personal loans. He created an entity called DC Investments, which borrowed $44 million from Fair Finance. Durham and his partner were allowed to borrow up to $38 million from DC Investments, and did so, using funds from the firm to buy artwork and real estate.
Not surprisingly, certain pieces in Durham’s Indiana empire, like Car Collector magazine and National Lampoon aren’t having an amazing go of it in the recession. Last December National Lampoon’s CEO was indicted for stock-manipulation; since then Durham has served as the company’s CEO.
And ironically enough, for all that showboating, Durham was only worth around $75 million in 2008. That’s a far from cry from industry peers that had actual outrageous fortunes. Fellow playboy Ron Perelman’s worth $10 billion, and even Steve Schwarzman, the guy who invented the filthy rich PE lifestyle, is worth $4.7 billion.