Judge won't dismiss charges in $200M fraud case

CHARLES WILSON Associated Press Published:

INDIANAPOLIS (AP) -- A federal judge refused to drop charges in a $200 million fraud case after a former Indiana businessman charged in the alleged scheme unsuccessfully argued that the FBI illegally wiretapped his cellphone before obtaining a court order.

U.S. District Court Judge Jane Magnus-Stinson ruled that Tim Durham's claims were unfounded, rejecting his argument that the FBI illegally installed the wiretap and tested it in November 2009 before receiving court authorization. The judge said federal law allows investigators to tap their own calls and the FBI had initiated the test call.

"FBI technicians can conduct as many audio tests using their own calls as they wish," Magnus-Stinson wrote in the Thursday ruling.

Durham and two other Indianapolis businessmen are accused of looting Fair Finance Co. and using a Ponzi scheme to defraud about 5,000 investors, most of them elderly Ohio residents, of more than $200 million. An indictment unsealed last year accused Durham, his partner and his accountant of raiding the Akron, Ohio-based company to finance their lavish lifestyles and unsuccessful businesses.

Durham had asked the judge to dismiss the indictment or suppress evidence obtained from the wiretaps. She refused, and also set aside Durham's allegation of "outrageous government misconduct," saying that wasn't legal grounds for dismissal.

"We respectfully disagree with the ruling and appreciate the court taking over two months to seriously consider it," Durham's attorney, John L. Tompkins, said Friday in an email to The Associated Press. "We have been and will continue to prepare to present our innocence defense in the June trial."

U.S. Attorney Joe Hogsett praised the ruling, saying prosecutors were pleased to move beyond the latest defense motions.

"Judge Magnus-Stinson's ruling clearly speaks for itself," Hogsett said. "Our office continues to focus on our thorough preparation for trial."

Durham remains under house arrest. His trial is scheduled to begin June 8.