A settlement has finally been reached in the ongoing Fair Finance case. A bankruptcy judge in Cleveland recently approved a settlement between the Fair Finance trustee and Fortress Credit Corp. The parties reached the $35 million settlement in April and filed for approval with the court in May. The Trustee wants to use the settlement funds for interim distributions to satisfy thousands of claims by unsecured creditors.
The firm is accused of running a $205 million Ponzi scheme that affected more than 5,000 Ohio investors. The firm’s owners are currently in federal prison. To date, parties have not been repaid any of the money that they invested in Fair Finance by purchasing uninsured investment certificates. The settlement does not constitute an admission of liability by Fair Finance and amounts to approximately 17 cents for every dollar originally invested. The parties allege that Fair Fortress ignored the warning signs of the Ponzi scheme when it provided financing for Fair Finance. Fair Finance originally processed accounts receivables for other businesses but was sold by the Fair family to Durham and Chochran in 2002. The offices closed due to FBI raids in late 2009. The company entered bankruptcy in February 2010.
This settlement is not the only anticipated money to enter the estate. Actually, the moviemaker, National Lampoon, also reached an agreement to pay $3 million to the estate at the end of May. However, that agreement has not been officially entered and or approved yet.
Creditors have received letters offering to buy out their financial interests in the case called claims trade offers. The trustee is not allowed to advise people on what to do with regard to selling interests or allowed to endorse any of the claims traders. Claims trading is common in bankruptcy proceedings and anyone who receives a letter should carefully review the contract or have an attorney look at the offer. Accepting a claims trade offer can result in further liability for the investor.
Brian Lusardi is one of Miami Valley’s leading bankruptcy attorneys with extensive experience helping clients with the intricacies involved in bankruptcy filings and settlements. Contact him today at 937-502-1040 for a free consultation.