DURHAM v. USA

Filing 150

MEMORANDUM AND ORDER - Mr. Durham hasn't shown entitlement to relief under either of the theories on which the evidentiary hearing was conducted, and the court previously dismissed his other claims. The court DENIES his petition for relief under 28 U.S.C. § 2255 (SEE ORDER FOR ADDITIONAL INFORMATION). Signed by Judge Robert L. Miller, Jr on 12/5/2022.(DWH)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
TIMOTHY S. DURHAM,
Petitioner
vs.
UNITED STATES OF AMERICA,
Defendant

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CAUSE NO. 1:17cv03590RLM-DML
Arising from:1:11cr00042(1)

MEMORANDUM AND ORDER

Timothy Durham is serving a 50-year sentence for conspiracy, wire
fraud, and securities fraud. A jury found him guilty after an eight-day trial in
2012; the court of appeals reversed the convictions of two counts and affirmed
on the other counts and issues, but things wound up essentially where they
started after the resentencing. Mr. Durham filed this petition for relief under 28
U.S.C. § 2255 in 2017. The court resolved most of Mr. Durham’s claims
without a hearing in 2019 but scheduled an evidentiary hearing to address two
of his claims. Following delays arising from the COVID-19 pandemic, the
complexity of the underlying case, and Mr. Durham’s difficulty in getting and
keeping counsel, the court heard evidence over four days in May and June
2022. Much of the evidentiary hearing was devoted to Mr. Durham’s testimony.
Written final arguments were filed on September 1, 2022.

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Mr.

Durham

hasn’t

shown

that

his

counsel’s

performance

was

constitutionally deficient under either of the theories he argues, so the court
denies his petition for habeas corpus relief under 28 U.S.C. § 2255.

I.

FACTS AND THE CRIMES OF CONVICTION

Timothy Durham bought Fair Finance, Inc., through a newly created
holding company called Fair Holdings, Inc., with James Cochran in 2001. Mr.
Durham already owned a private equity fund named Obsidian Enterprises. The
court of appeals summarized Fair Finance’s pre-acquisition business:
Before the events in this case transpired, Fair Finance was a
respectable company and had been in the business of providing financial
services since the Great Depression. By the early 2000s, the company
primarily focused on purchasing consumer receivables. Fair would
purchase installment contracts from businesses with a single, up-front
payment at a discounted rate. This arrangement provided working
capital for the business and a profit for Fair—the difference between
what it paid for the contract and what it ultimately collected on it.
Fair raised money to purchase these receivables by selling what it
called “investment certificates”—a form of subordinate debenture that
essentially functioned as a certificate of deposit without FDIC insurance.
Certificate holders were paid interest at regular intervals. When a
certificate came due, Fair sent a check to the holder for the interest
earned before maturity. At that point the holder could redeem the
original face value of the certificate or renew it, which involved redeeming
an old certificate and purchasing a new one. If a holder took no action at
expiration, the certificate would continue earning interest at a set rate.
Before 2002 most certificates were offered for a six-month term and were
no larger than $50,000 in value. The latter limitation was meant to
ensure that the company could redeem the certificates without
encountering liquidity problems.

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Certificates were sold exclusively to consumers in Ohio, and
authorization by the Ohio Department of Securities was required. With
each request for authorization, Fair needed to submit an offering circular
disclosing its financial status and the investment's risks. The circular
would then be distributed to potential investors once the new issuance
received regulatory approval. According to data gathered by Fair, a
majority of its investors were elderly and many lived on modest incomes.
By all accounts, Fair was a trusted Ohio financial institution.
United States v. Durham, 766 F.3d 672, 676 (7th Cir. 2014).
Mr. Durham and Mr. Cochran loosened Fair Finance’s operating rules,
expanding both its capital and its liabilities. Customers could purchase
certificates with longer terms, higher amounts, and higher interest rates. Fair
Finance’s outstanding certificate liabilities eventually doubled. The increased
capital funded loans to Mr. Durham and Mr. Cochran, their friends and
relatives, and related companies like Obsidian Enterprises, which Mr. Durham
owned before acquiring Fair Finance. These “loans” had few of the ordinary
hallmarks of commercial loans, and repayments were rare. Fair Finance began
to change accountants as they began to question financial statements and the
sufficiency of collateral for third party loans to “related parties,” meaning
entities with financial ties to Fair Finance. The financial crisis of 2008 helped
expose the principals’ activities when companies owned by Obsidian began
losing money, 1 impairing Obsidian’s ability to provide operating money to Fair
Finance, which in turn lost its ability to make timely payments to the certificate

The Obsidian companies in the relevant time were United Expressline,
Inc., U.S. Rubber Reclaiming, Inc., Classic Manufacturing, Inc., and Parma
CCG, Inc.
1

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holders. Fair Finance principals told its employees to lull investors with mostly
untrue explanations for delayed payments of interest and principal on
certificates.
The FBI started investigating and ultimately got wiretap authorization to
monitor phone calls. Many of those phone calls included inculpatory
statements, and a few involved physical threats. The FBI executed a search
warrant on Fair Finance’s offices on November 24, 2009 and seized the
computers, bringing Fair Finance’s business to a sudden stop. “Fair's
operations ceased, and it soon went into bankruptcy. More than 5,000
investors filed claims totaling approximately $215 million. The trustee
recovered only $5.6 million in assets.” United States v. Durham, 766 F.3d at
678.
Mr. Durham, Mr. Cochran, and Rick Snow were indicted and went to
trial. Mr. Durham reports that his attorney pursued a mens rea defense, opting
against avenues that were more likely to succeed. Mr. Durham was convicted of
one count of conspiracy to commit wire fraud and securities fraud, 18 U.S.C. §
371, ten counts of wire fraud, 18 U.S.C. § 1343, and one count of securities
fraud, 15 U.S.C. §§ 78j(b), 78ff; 17 C.F.R. § 240.10b–5. The court of appeals
reversed the convictions on two of the wire fraud counts. United States v.
Durham, 766 F.3d 672. Judge Jane Magnus-Stinson sentenced Mr. Durham to
50 years’ imprisonment following trial and again following remand.

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Indianapolis attorney John L. Tompkins represented Mr. Durham at the
2012 criminal trial. Mr. Tompkins testified at the § 2255 hearing that 95
percent of his practice in 2012 was criminal. A quarter to a third of his practice
consisted of traffic and drunk driving cases. Mr. Tompkins worked in the
county prosecutor’s office’s major felony division before going into private
practice. He had tried 25 to 50 cases to juries, including state Class A Felony
cases while with the prosecutor’s office; fewer than five of his trials had been in
federal court. Mr. Durham and Mr. Tompkins had known each other for several
years. Mr. Tompkins told Mr. Durham of his interest in taking on the defense.
He told Mr. Durham he had a good professional relationship with the federal
prosecutor handling the case. As Mr. Durham tells the story, Mr. Tompkins
can be said to have lobbied pretty hard for the job.
Mr. Durham testified at the § 2255 hearing that he first hired
Indianapolis attorney Larry Mackey to represent him in the criminal case and
that for reasons not in this record, Mr. Mackey told Mr. Durham to go with a
different law firm. Mr. Durham then retained Miami attorney Roy Black, but
couldn’t pay him because Mr. Black didn’t want to take money directly from
Mr. Durham. Mr. Durham then called Mr. Tompkins and retained him in May
2011. Mr. Durham and Mr. Tompkins dispute the terms of their agreement.

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II.

THE TIME LIMIT

An issue arose during the § 2255 hearing that must be discussed, and it
fits into this opinion nowhere better than here. When granting what became
Mr. Durham’s final motion to continue the evidentiary hearing, the court chose
the last possible date. The government’s attorney, Jason Covert, was scheduled
to leave his job with the United States Department of Justice at the close of
business on Friday, June 3, 2022. Backing up four days to reflect the time Mr.
Durham’s counsel believed the hearing would take, the court scheduled the
hearing to begin on Tuesday, May 31, the day after the Memorial Day holiday.
The hearing began on time each day.
At the end of the hearing’s second day, when only three of Mr. Durham’s
anticipated 25 witnesses had testified and with only two days remaining in the
government’s attorney’s Department of Justice career, the court met with
counsel in chambers to discuss how the hearing could be completed in its
allotted four days. It became apparent that without significant streamlining, an
adjournment of several months would be needed for a successor AUSA to
master the material in this case. The hearing’s first two days had led the court
to believe that significant streamlining was very possible. Rather than try to
dictate the method of streamlining itself, the court set 3:00 p.m. on the
hearing’s fourth day as the deadline for completion of the petitioner’s evidence,
leaving time for the government’s single anticipated witness to testify.

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Mr. Durham objected to that time limit the next day, and the court
overruled his objection. The hearing originally had been scheduled for two
days; at Mr. Durham’s request, the setting had been enlarged to four days even
as the court expressed the belief that it shouldn’t take more than three. The
government’s cross examinations had been proportional to the directs, briskly
conducted, and to the point. The court days had been full. The court intends
no criticism of Mr. Durham’s counsel, who appeared to be trying to accede to
the client’s wishes while serving pro bono, but if anyone bore responsibility for
inaccuracy in the time needed, it had to be the petitioner.
The judge conducting the hearing has no assigned courtroom in the
Birch Bayh Courthouse, so any adjournment would entail finding a courtroom
that would be available for a somewhat indefinite time. An adjournment would
require a new attorney for the government to get up to speed in a documentintensive case (Petitioner’s Exhibit 199 was admitted during the hearing’s third
day). All of this would, of course, divert taxpayer resources — no judge,
prosecutor, court reporter, courtroom deputy clerk, law clerk, or U.S. Marshals
sat idle lest Mr. Durham need a fifth or sixth day to go with the four he most
recently asked for. The evidentiary hearing already had been continued eight
times from it originally scheduled December 17, 2019; seven of those
continuances had been on Mr. Durham’s motion.
Given all these circumstances, the court overruled Mr. Durham’s
objection. Mr. Durham finished his evidence before 3:00 p.m. on June 3.

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III.

THE ISSUES AT THE EVIDENTIARY HEARING

Mr. Durham’s § 2255 petition raised several issues. The court’s October
2019 opinion and order (Doc. No. 31) pared them down considerably but left
two to be tried at the evidentiary hearing.
First, the October 2019 ruling reserved for hearing Mr. Durham’s claim
that his fee agreement with his trial counsel, John Tompkins, created an actual
conflict of interest for Mr. Tompkins. Mr. Durham contends that he gave Mr.
Tompkins $1 million, from which Mr. Tompkins was to pay the costs of the
defense and keep whatever was left over. In Mr. Durham’s view, that
arrangement made Mr. Tompkins choose between his own interest and Mr.
Durham’s interest: the less Mr. Tompkins spent on the case, the more there
would be for Mr. Tompkins’s wallet. As Mr. Durham sees it, Mr. Tompkins
didn’t use the money to hire experts to testify at trial, underscoring how the
conflict of interest harmed Mr. Durham.
Second, Mr. Durham came forth with enough evidence to justify a
hearing on his contention that Mr. Tompkins provided ineffective assistance of
counsel when he didn’t call several witnesses – Terry Whitesell, Don Lagrone,
Todd Bontrager, Ron Kaffen, Keith Schaffter, Rusty Riggenbach, Keith Kuczma,
Stephany Brogan, Jeff Birk, Erin Beesley, Keith Schaffter, Rusty Riggenbach,
and Jim Covert – to testify at trial, and failed to adequately cross examine
witnesses Ben Kimmerling and Anthony Schlichte.

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A. Mr. Durham’s Credibility
Resolution of the issues requires the court to evaluate the weight to be
given to the testimony of certain witnesses. As in any case, the court must base
those credibility determinations on the court’s observations of the witnesses as
they testified and the testimony’s overall reasonableness. Those determinations
can only be made on what the court saw and heard when the hearing was
conducted during week of Memorial Day 2022.
Mr. Durham was a witness of minimal credibility. That finding springs
from the substance of some, and the manner of most, of his testimony. The
bulk of Mr. Durham’s testimony on direct examination was devoted to
explaining evidence that made him look guilty at trial. Such explanations are
commonplace in fraud cases, but they consumed much of the hearing’s first
day because there was so much trial evidence for Mr. Durham to explain. Many
explanations were convoluted; several required sub-explanations to make sense
at any level. Mr. Durham’s credibility suffered as he piled explanations atop
explanations, all the while contending that his trial counsel should have called
witnesses to put forth each of the explanations.
Mr.

Durham’s

modest

credibility

collapsed

early

in

his

cross

examination. While Mr. Durham’s memory for dates and details on direct
examination was so impressive as to draw comment from his own attorney, it
would have received barely a passing grade during cross. His answers became
disjointed, with concessions occasionally sprinkled among denials so as to
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make answers like a slalom event, turning first one way and then another and
back again on the way to the answer’s end. For example, when asked whether
an offering circular disclosed that Mr. Durham was taking personal loans that
he used to benefit friends, Mr. Durham said that (1) Fair Finance wasn’t
funding his personal expenses, (2) but the disclosure said he was, (3) although
he wanted one of the contributors to the circular to be more clear so he added
“which has resulted in higher personal loan balances,” and (4) the circular also
said proceeds of the loans funded “certain related and nonrelated entities that
might not have enough collateral to maintain the loan,” (5) which Mr. Durham
thought should have been written a bit more clearly, (6) but also thought
disclosed the personal loan situation because nothing could produce a higher
loan balance unless there was a personal loan balance. (Doc. No. 7, at 221222).
At another point in the cross examination, one of Mr. Durham’s
explanations of a falsehood in paperwork exceeded the court’s ability to grasp:
A
The point of the truth is, I didn't have any personal loan
balance. Actually, I had paid the loan down. Once you add back in
the Lampoon receivable that Osler left out, I was owed 35 million
and had paid it down to 25. So I had paid in ten. Any personal loan
balance I had was –
THE COURT:
I don't think I understood at all what you said.
You said you were owed 35 and paid back ten so you had paid it
down to 25? This is you, Mr. Durham.
THE WITNESS:

Yes, personally.

THE COURT:

Owed to you at 35.

THE WITNESS:

Yes.

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THE COURT:
ten reduce it?

How you paid -- how did your paying another

THE WITNESS:
Well, okay. I had 35 in investments and
receivables. So let's say Fair upstreamed it to me, and then I
loaned it out. So I owe 35 million back normally, right? Well, I had
paid down that loan 10 million to 25. So I actually had more
receivables than payables to the company. Does that make sense?
THE COURT:
I don't think it has. I will return it to the
questioner, Mr. Covert.
THE WITNESS:

It is confusing.

(Doc. No. 127, at 222-223).

B. The Agreement Between Client and Attorney
Mr. Durham contends that his agreement with Mr. Tompkins created a
conflict of interest that was unconstitutional under Cuyler v. Sullivan, 446 U.S.
335 (1980). Mr. Durham contends that he gave Mr. Tompkins $1 million, from
which Mr. Tompkins was to pay litigation expenses (including those for expert
witnesses) and keep the change. This, Mr. Durham contends, created exactly
the sort of self-vs.-client situation condemned in cases descended from Cuyler.
The actual agreement between Mr. Durham and Mr. Tompkins wasn’t
quite what Mr. Durham describes: the amount to be spent on litigation
expenses was capped. This finding flows partly from credibility determination
and partly from simple logic.
The court already explained why Mr. Durham’s hearing testimony was
lightly credible. By contrast, Mr. Tompkins came across as quite credible. His

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memory of events from a decade earlier was reasonably good, but he conceded
when he couldn’t remember. He also agreed that witnesses who might have
been able to contribute something positive to the trial weren’t subpoenaed. He
gave sound, though occasionally imperfect, reasons for the decisions he made
at trial. Mr. Tompkins’s credibility far exceeded Mr. Durham’s.
Mr.

Tompkins

disagreed

with

Mr.

Durham

about

the

retention

agreement’s terms. The evidence supporting Mr. Tompkins’s testimony wasn’t
unassailable: the government presented an engagement letter with Mr.
Tompkins’s signature, but without Mr. Durham’s signature. But Mr. Durham
made no suggestion that negotiations toward retention had worked through
several drafts; Mr. Durham simply testified that the agreement was what he
said it was. Mr. Durham comes out on the short end of credibility disputes with
Mr. Tompkins.
Mr. Tompkins’s agreement with Mr. Durham, as shown by Government’s
Exhibit 9, was this:
•

Mr. Tompkins would represent Mr. Durham in the pending
criminal case for a flat fee.

•

Mr. Tompkins would also provide pre-indictment representation
for an entity known as Durham Technologies.

•

Mr. Durham would pay Mr. Tompkins $1 million for services up
to trial, with “trial” defined as the date the final witness list was
due, and another $500,000 for everything after that.
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•

Mr. Tompkins would advance expenses he and Mr. Durham
agreed to be necessary and appropriate, up to one-third of Mr.
Tompkins’s fee — presumably, $333,333.00 up to “trial,” and
another $166,667 once the “trial” began with the filing of the
final witness list.

•

The $1-1.5 million fee would apply, as well, to separately billed
services for Cell Star, an entity not otherwise identified in the
engagement letter (or in the record of the § 2255 hearing). Cell
Star’s fees would be calculated at $750 per hour, any
associate’s time would be billed at $250 per hour, and paralegal
time would be billed at $150 an hour.

•

Mr. Durham was to pay the $1 million within one week of
receipt of engagement letter, which was dated July 11, 2011.

The $1 million fee wouldn’t be “earned” until the date the defense’s final
witness list was due. Had Mr. Durham discharged Mr. Tompkins before that,
Mr. Tompkins would have had to refund whatever portion of the $1 million that
hadn’t been earned. Ind. R. Prof. Cond. 1.16(d) (“Upon termination of
representation, a lawyer shall take steps to the extent reasonably practicable to
protect a client's interests, such as … refunding any advance payment of fee or
expense that has not been earned or incurred.…”). Mr. Durham paid the $1
million, thereby accepting the engagement letter’s terms. But Mr. Tompkins
and he modified those terms almost immediately.

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Nearly all of Mr. Durham’s assets were in bankruptcy, except for $1
million that he had earned through a settlement with National Lampoon. Mr.
Durham had been living with his sister, whose husband was a potential
witness in Mr. Durham’s case. Presiding district judge Jane Magnus-Stinson
thought that a sub-optimal living arrangement and gave Mr. Durham a limited
array of housing choices. Mr. Durham opted for an apartment—apparently a
comfortable one—near Mr. Tompkins’s office. Having already given Mr.
Tompkins all his worldly assets, Mr. Durham needed money to pay rent. He
and Mr. Durham agreed that Mr. Tompkins would “advance” Mr. Durham’s
first year’s lease payments of $50,000. Mr. Tompkins’s expense sheet indicates
that Mr. Tompkins also paid $47,000 on the next year of Mr. Durham’s
apartment lease. Mr. Durham testified that he and Mr. Tompkins treated the
lease payments as litigation expenses. So shortly after the fee agreement
provided that up to a third of a million on litigation expenses, that fund was
reduced by $50,000, to $283,333.
In summary, the agreement between Mr. Durham and Mr. Tompkins
didn’t require Mr. Tompkins to pay unlimited litigation expenses out of the $1
million,

though

he

retained

his

ethical

duty

to

“provide

competent

representation to a client. Competent representation requires the legal
knowledge, skill, thoroughness and preparation reasonably necessary for the
representation.” Ind. R. Prof. Cond. 1.1. The agreement required Mr. Tompkins
to pay reasonably necessary litigation expenses up to a total of $333,333.33, or
$283,333 after he paid the first year of Mr. Durham’s residential lease.
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IV.

THE CUYLER CONFLICT OF INTEREST CLAIM

The conflict of interest argument draws its vitality from Cuyler v.
Sullivan, 446 U.S. 340 (1980), which establishes a separate test for certain
ineffective assistance of counsel claims. Mr. Durham makes arguments under
both Strickland and Cuyler. He says the failure to call certain witnesses and
the failure to effectively cross examine others presents a violation of the
standard established in Strickland, and that the financial issues that forced
Mr. Tompkins to choose between witnesses and his own compensation
presents a violation of the standard established in Cuyler.
Julian Cuyler was one of three separately tried murder defendants, all of
whom were represented by the same three attorneys. Mr. Cuyler was the only
one of the three to be convicted. The Supreme Court addressed Mr. Cuyler’s
contention that the attorneys’ joint representation of three defendants (joint
representation to which Mr. Cuyler hadn’t objected at trial) gave rise to an
actual conflict of interest among his attorneys, resulting in a denial of his Sixth
Amendment right to counsel. Cuyler v. Sullivan, 446 U.S. 340. Mr. Cuyler’s
attorneys had decided not to present a defense at his trial, in part because they
didn’t want the prosecutors to have a chance to cross examine witnesses who
might testify for the other defendants. The Supreme Court agreed that Mr.
Cuyler’s attorneys had an actual conflict of interest in trying to use witnesses
for one client but not another.

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Since the Cuyler decision, courts have identified many other scenarios in
which a criminal defense attorney might face an actual conflict of interest,
including when the client’s interest and the attorney’s personal interest
misalign. See, e.g., Daniels v. United States, 54 F.3d 290, 294 (7th Cir. 1995)
(claim that defendant pleaded guilty only because he couldn’t afford to pay the
rest of his attorney’s fee); Winkler v. Keane, 7 F.3d 304, 308 (2d Cir. 1993)
(contingent fee reliant on acquittal was disincentive to seeking plea bargain,
but no adverse effect shown). That, Mr. Durham says, is what we have here.
Mr. Tompkins had a basket of dollars from which he was to pay for the defense
and compensate himself; the less he spent on the defense, the more that would
be left to him. And that incentive, Mr. Durham thinks, is why Mr. Tompkins
spent too little on experts and investigation.
Perhaps because fee agreements such as this one in this case are
common, courts haven’t yet embraced Mr. Durham’s argument by holding that
a flat fee agreement alone creates the sort of conflict envisioned by Cuyler. See,
e.g., United States v. Walter-Eze, 869 F.3d 891, 902 (9th 2017) (dicta); Roy v.
United States, No. 17-C-5217, 2018 WL 6696598, at *16 (N.D. Ill. Dec. 20,
2018). The Ninth Circuit rejected Mr. Durham’s theory altogether. Williams v.
Calderon, 52 F.3d 1465, 1473 (9th Cir. 1995) (“All Williams alleges is the same
theoretical conflict that exists between an attorney's personal fisc and his
client's interests in any pro bono or underfunded appointment case. Such
arrangements, without more, do not require Sixth Amendment scrutiny.”).

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Our court of appeals counseled caution in a state habeas case when
facing a similar argument: “lawyers facing such incentives and choices are also
motivated by their sense of professional duty and pride, and an interest in their
professional reputations, to continue to do good work for a client even if no
more money will be paid in the particular case.” Reynolds v. Hepp, 902 F.3d
699, 709 (7th Cir. 2018).
Nonetheless, that no fee arrangement has been found to create a Cuyler
conflict doesn’t mean that none ever can, so the court won’t stop its analysis
with the caution in Reynolds v. Hepp, supra. To prevail on this claim, Mr.
Durham must show that Mr. Tompkins was operating under an actual conflict
of interest as defined by Cuyler and the cases that followed it, and that the
conflict of interest adversely affected Mr. Tompkins’s professional performance.
Hall v. United States, 371 F.3d 969, 973 (7th Cir. 2004). Mr. Durham hasn’t
made such a showing.
As the court understands it, Mr. Durham’s Cuyler argument addresses
the expert witnesses, who would have cost the defense thousands of dollars. At
one point in his closing brief, Mr. Durham suggests that witnesses went
unsubpoenaed because Mr. Tompkins would have had to spend money to bring
them to, and lodge them in, Indianapolis. Not even a whiff of evidence in this
record suggests that Mr. Tompkins pinched pennies to that extent. The court
will evaluate the Cuyler argument with respect to the expert witnesses, and the
Strickland argument with respect to all witnesses.

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Mr. Durham says he expected Mr. Tompkins to hire a variety of experts:
a wiretap expert to support a motion to suppress evidence from the wiretaps; a
valuation expert to explain that his companies had more value than the
government claimed; and a jury selection expert. It might be helpful to bear in
mind, as the court discusses the evidence relating to each of the proposed
expert witnesses, that Mr. Tompkins’s testified at the § 2255 hearing to his
general preferences as a criminal defense attorney: all things being equal, he
prefers explanations by lay witnesses (who aren’t seen as hired guns) to
explanations by expert witnesses, and if there must be expert testimony, he
prefers a local expert to experts from far away.

A. A Document Management Expert: Novus Law
After the government produced discovery on a hard drive, Mr. Durham
wanted Mr. Tompkins to hire someone to organize the computer files to make
them searchable. Given the formats in which the government provided
discovery to the defendants, Mr. Durham says he wanted Mr. Tompkins to hire
a firm that provided litigation services, including document and discovery
management. Novus Law, LLC, was such a firm. Mr. Tompkins met in August
2011 with Novus Law’s chief executive officer, Ray Bayley, to discuss the case
and the possible retention of Novus. But Mr. Durham had access to most of the
documents on his own computer, and client and attorney were able to search
and review that subset of documents. Mr. Tompkins thought they had access
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to what they needed and didn’t retain Novus. He testified that he was able to
work through the necessary documents and decided that Novus Law and its
six-figure fee weren’t necessary.
Mr. Durham suspects the discovery included exculpatory files that the
defense simply couldn’t unearth. For example, Mr. Durham thinks the decision
not to hire Novus Law left Mr. Tompkins unable to use documents to challenge
the testimony of Obsidian vice president and senior lender Anthony Schlichte
and the testimony of investor Kathleen Studebaker.
There is only speculation about what Novus Law might have found in the
discovery material. To hire Novus law would have meant devoting more than a
third of the remaining $283,333.00 budgeted for litigation expenses. Mr.
Durham hasn’t persuaded the court that Mr. Tompkins decided not to hire
Novus Law so that he could line his own pockets. There was nothing
unreasonable about deciding not to spend a third of the remaining budget to
see what might be under the un-turned stones.

B. A Wiretap Expert
Government experts monitored several phone lines during the Fair
Finance investigation. Those wiretaps, purportedly conducted pursuant to a
warrant, produced considerable inculpatory evidence and the search warrants
that brought the whole financial complex to a halt. Once the government

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produced the wiretap transcripts in discovery, something looked amiss to Mr.
Tompkins and Mr. Durham.
Ben Levitan was an expert in wiretapping. Mr. Tompkins retained him as
a consulting expert (and paid him $3,500 for the consultation), but not, as Mr.
Durham requested, as an expert witness. Mr. Levitan showed Mr. Tompkins
how the transcripts showed that the investigators had begun the wiretaps
before the warrant had been issued. Mr. Tompkins moved to suppress all of the
information from the electronic eavesdropping. As the proceedings developed,
the government agreed that it had jumped the gun and that a supporting
affidavit had been wrong.
Mr. Tompkins felt it was enough proof that the government admitted in
court filings that it had installed taps before the warrant had been issued –
which is what Mr. Levitan’s testimony would have been used to prove. That was
pertinent to Mr. Tompkins’s motion to suppress because the agents tapped
phones associated with Mr. Durham without a warrant. Judge Magnus-Stinson
denied the suppression motion despite the validity of the motion’s fundamental
premise; it was clear at the § 2255 hearing that Mr. Tompkins still hasn’t
accepted the justice of that ruling. Mr. Durham suspects, but can’t prove that
further investigation by Mr. Levitan would have disclosed not only that the
government began monitoring phone conversations before getting warrant, but
used an unauthorized electronic system, as well.

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After four days of evidence, more than a hundred exhibits, more than one
hundred pages of petition and briefs, and nearly two days of testimony from
Mr. Durham, the court isn’t quite sure why Mr. Durham thinks the government
used unauthorized equipment. Mr. Durham says he doesn’t have to prove what
Mr. Levitan would have found through deeper digging, because it’s enough
under Cuyler that Mr. Tompkins didn’t follow up because of his own financial
interest and that failure had an adverse effect on the defense and Mr.
Tompkins’s performance, citing Reynolds v. Hepp, 902 F.3d at 710. But
without something to support the proposition that paying Mr. Levitan as an
expert witness would have improved the defense’s position, the court can find
no adverse effect.
Mr. Tompkins got what he needed from his consultation with Mr.
Levitan. He was able to prove to the district court that the investigators had
conducted electronic surveillance without a warrant. Mr. Levitan’s testimony
wasn’t needed for that. This record doesn’t support an inference that Mr.
Tompkins passed up a useful expert witness to preserve his future share of the
money budgeted for litigation expenses.

C. Expert Accounting Testimony
1. Scott Risius Ross
Mr. Durham wanted Mr. Tompkins to retain investment banking firm
Stout Risius Ross to explain its valuations of the Obsidian companies. He
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wanted an expert to oppose the government’s contention that the Obsidian
companies were grossly overvalued. Mr. Durham had paid Stout Risius Ross
$25,000 to review the discounted cash flow valuations that had been prepared
by Goelzer Investment Bankers and Somerset CPA, 2 as well as the valuations
Mr. Durham and Mr. Snow prepared in November 2009. Mr. Tompkins testified
to seeing what he called a “red flag” in the Stout Risius Ross report: “I would
have to look at it to know for sure, tens of millions of dollars in losses.” (Doc.
No. 128, at 363).
Mr. Durham arranged for a conference call between the Stout Risius
Ross people, Mr. Tompkins, and himself, but the call never took place. Mr.
Tompkins told Mr. Durham that Stout Risius Ross discovered a conflict that
meant it couldn’t provide an expert. Even though Mr. Tompkins gave codefendant Rick Snow’s attorney the same reason for not calling anyone from
Stout Risius Ross, Mr. Durham doesn’t believe Mr. Tompkins; he thinks Mr.
Tompkins simply didn’t want to spend that much money because it would
reduce what Mr. Tompkins might make. The court disagrees with Mr.
Durham’s analysis. Mr. Durham’s suspicion doesn’t outweigh Mr. Tompkins’s
testimony that the Scott Risius Ross report had “red flags” of reported losses of
“tens of millions of dollars,” and that Scott Risius Ross presented a conflict
with the defense. The conflict explanation might have been more persuasive if

Somerset CPA prepared discounted cash flow valuations for the
Obsidian companies for the years 2003-2004. Its services were terminated
when it raised questions about the value of Obsidian’s loans to Mr. Durham,
Mr. Snow, and Obsidian.
2

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anyone could have identified the conflict for the court, but Mr. Tompkins told
Mr. Snow’s attorney the same thing at the time.
When Scott Risius Ross became unavailable, Mr. Tompkins said the
defense could simply have Chris Hirschfield testify about valuation. Mr.
Hirschfield, who was expected to testify for the government, worked for an
accounting firm called Goelzer Investment Bankers, which prepared discounted
cash flow valuations for the Obsidian companies for the year 2005. Mr.
Durham says he disagreed with using Mr. Hirschfield because Mr. Hirschfield
hadn’t been involved in the more important 2009 valuations. So Mr. Durham
went in search of another expert. Trial was about two months off by this point.

2. Jeff Birk
Mr. Durham’s next choice was Jeff Birk, who was Mr. Durham’s
accountant. Mr. Durham testified that Mr. Birk’s testimony that would have
been helpful in three or four different areas. For one thing, he said, Mr. Birk
could have testified to having advised Mr. Durham to personally assume the
related-party loans and write them off on his personal tax return. Mr. Birk
prepared financial statements for Mr. Durham, including what were admitted
into evidence at the § 2255 hearing as Petitioner’s Exhibits 57 (the 2007
financial statement) and 58 (the 2008 financial statement). Mr. Durham
conceded that those statements didn’t reflect, but should have reflected, the

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loans he assumed, but said the statements show that he had enough assets to
support the loans.
Mr. Birk wasn’t called to testify at trial. The § 2255 hearing record leaves
unclear just when Mr. Durham expressed a desire to have Mr. Birk testify. Mr.
Durham testified at the § 2255 hearing that Mr. Tompkins told him that: (a) he
had subpoenaed Mr. Birk but he didn’t appear; and (b) he didn’t think Mr. Birk
would be helpful. Mr. Tompkins testified that he didn’t subpoena Mr. Birk to
testify at trial, and couldn’t recall what issues Mr. Birk might have been able to
address.
Mr. Durham’s belief that Mr. Birk’s testimony would have been helpful is
puzzling. Mr. Birk’s firm sent Fair Holdings, Inc. two letters in 2005 about
(among other things) the related-party loans and their impact on impairment of
the companies’ loans and loss reserves. The letters recommended that Fair
Holdings retain outside counsel to advise on those issues. The government
introduced those letters into evidence at trial, and the letters would have made
it difficult for Mr. Birk to say many positive things about the related-party
loans that couldn’t be impeached on cross examination. Mr. Durham also
seemed to believe at the § 2255 hearing that Mr. Birk could have explained how
Fair’s “subordinate (mezzanine) debt” business model differed from more
familiar models, but Mr. Durham also said Mr. Birk’s firm didn’t understand
Fair Finance’s model and couldn’t quite grasp how Fair Finance was deciding

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to make the loans in the first place. Mr. Durham explained it this way at the
hearing:
A
Well, we always had a dispute about the approach. I mean,
he always was using the hard assets, and I understand that is a very
conservative approach. But I said, you know, we aren't making loans
based on assets when we make them. Why would we value them or, you
know, test them for reserves on a basis that we didn't use when we made
the loan to begin with?
Q

You are talking about reserves. What exactly are reserves?

A
Well, when you have a loan to a company, you have to
determine if you think the loan is collectible. And if to the extent you
don't think that loan is collectible, you need to typically reserve the loan
for that amount, giving it – use the example as a house. If you, you
know, you buy a house and you have an $80,000 mortgage, and when
you bought the house it was worth 100. And then, suddenly the economy
falls and it is worth 60, now you have an $80,000 loan covered by a
$60,000 asset.
So you technically should reserve that 20. It hasn't happened yet.
You haven't sold the house or missed a payment or anything like that
necessarily, but you should reserve on your balance sheet or take a
deduction for that amount.
(Doc. No. 127, at 128). When asked later whether Mr. Birk understood
subordinated debt and leveraged buyouts, Mr. Durham answered, “Not so
much.” (Doc. No. 128, at 246). That evidence, combined with Mr. Birk’s
absence as a witness, a deponent, or even an affiant, at the § 2255 hearing,
leaves the court unable to infer that Mr. Birk’s trial testimony would have been
helpful to Mr. Durham. That, in turn, makes it quite unlikely that Mr.
Tompkins decided against calling Mr. Birk so he could claim Mr. Birk’s expert
fee for himself – especially since Mr. Tompkins was willing to pay for the next
accounting expert Mr. Durham nominated.

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3. Houlihan Valuation Advisors: Rob Schlegel
Mr. Durham’s search for a valuation expert eventually led to Rob
Schlegel of the Houlihan Valuation Advisers firm, and the day before
disclosures were due in the criminal case, the defense hired Houlihan. The
government objected to the Schlegel designation, but Judge Magnus-Stinson
overruled the objection. Houlihan prepared a report on the Fair Finance
subsidiaries. That report turned Mr. Durham against having Mr. Schlegel
testify: while the report contained many things Mr. Durham liked, he thought
the report was incomplete and disagreed with its comments about valuation.
Mr. Tompkins testified at the § 2255 hearing that valuation was going to be a
difficult issue for the defense, and that he didn’t think the Mr. Schlegel’s report
provided a solid basis to counter the government’s valuation evidence. For
whatever reason, Mr. Hirshfield became the witness who would provide some
evidence that otherwise might have come from an expert witness. There were
several points that Mr. Tompkins couldn’t make through Mr. Hirschfield,
though.
Mr. Tompkins paid Houlihan nearly $30,000 for Mr. Schlegel’s work on
the case. It might not have been Mr. Durham’s objection that kept Mr. Schlegel
from testifying for him, but had Mr. Schlegel testified, he would have done so
over Mr. Durham’s wishes. This record doesn’t allow a finding that Mr.
Tompkins declined to call Mr. Schlegel as a witness to shift money from his
litigation expenses pocket to the pocket in which he kept his own money. Even

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if Mr. Tompkins suffered from a Cuyler-like conflict, it didn’t affect decisions
about Mr. Schlegel.

D. Expert Testimony About Fair Financial: Jim Covert
Jim Covert is a businessman who has had a remarkable career in and
around government, but isn’t an accountant. Mr. Covert had looked over Mr.
Durham’s books after an informal conversation with Mr. Durham after meeting
him at a car show. Mr. Durham asked him to look over the books in connection
with a refinancing of his company. Mr. Covert was satisfied by what he saw.
Mr. Covert was shocked when Mr. Durham was indicted and called Mr.
Durham to offer any help he could provide. Mr. Durham told Mr. Covert that he
had retained a famous valuation company and followed its directions. At Mr.
Durham’s request, Mr. Covert came to Indianapolis and met with Mr.
Tompkins, who told Mr. Covert that he wanted Mr. Covert to testify at Mr.
Durham’s trial. But Mr. Covert never heard from Mr. Tompkins again.
Mr. Tompkins agreed at the § 2255 hearing that Mr. Covert could have
told the jury about important matters such as subordinated debt, restrictions
on interest payments, extensions of junior debt, and mezzanine debt. But
government’s trial witness, Anthony Schlichte, discussed all of those matters
when Mr. Tompkins cross examined him at trial. Mr. Tompkins explained that
he prefers to have fact witnesses explain complicated matters because a
retained expert carries the stigma of having been hired by a party for his
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opinion. When asked specifically why he didn’t call Mr. Covert as a witness, Mr.
Tompkins said the defense was structured to explore two veins of reasonable
doubt: (1) there were bad assets, but there were enough good ones to make the
investment okay, and (2) Mr. Durham and his associates reasonably believed
there were enough good assets even if their belief was mistaken. Mr. Covert’s
testimony wouldn’t have advanced either of those lines of argument. Mr.
Tompkins testified that he didn’t think expert testimony on leveraged buyouts
would have been helpful to the jury.
Other than Mr. Durham’s use of financing different from what Mr. Covert
used, something in the books caught Mr. Covert’s attention: the front of the
Fair Finance offering circular made reference to cross-investment but didn’t
give the amount. Mr. Covert asked Mr. Durham about it, and he recounted Mr.
Durham’s answer at the § 2255 hearing:
I asked Tim about what the reference was, you know, to, to the
financing. And Tim had told me that he was not directly allowed to talk
about it, that he had some attorneys that I could call directly if I had
questions, and I asked him why. And he said they wanted to make sure
that only proper information was given out, and that he didn't want his
employees of the company answering.
***
THE WITNESS: He, he -- I am sorry. He -- Tim had told me that he
did not want his employees to answer those questions directly with
people because in the past they had made errors in presenting it
correctly. And so he told me that he had the name and number I should
call if I wanted to talk about it, which I didn't. I never talked to them. But
just so you know, that was his position. And that is what I told Mr.
Tompkins.
(Doc. No. 129, at 469).

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Mr. Tompkins had many good reasons not to call Mr. Covert to testify,3
perhaps most significant among which was Mr. Durham’s telling him that even
he wasn’t allowed to answer Mr. Covert’s question about something on the
offering circular. And nothing apart from the simple fact of the fee agreement
supports the slightest inference that Mr. Tompkins decided not call Mr. Covert
because doing so would have reduced his fee.

E. Conclusion on the Cuyler Claim.
As this review of the decisions not to call any of the experts Mr. Durham
proposed shows, there is no evidence (apart from the fee agreement itself) that
those decisions were based on anything other than strategy and the best
interests of Mr. Durham’s case. Not every potential financial edge to an
attorney amounts to the sort of actual conflict identified in Cuyler. See Mickens
v. Taylor, 545 U.S. 162 (2002). Mr. Durham is right that a fee agreement such
The government’s post-hearing brief offers other reasons a reasonable
defense attorney might have chosen not to call Mr. Covert as an expert defense
witness. The government’s post hoc reasons for not calling Mr. Covert are that
while Mr. Covert has a stunning resume, he’s not a college graduate, has no
special training in the field of finance, has little experience in fields other than
his own businesses, concedes that he isn’t a “great accountant” and relies on
“good financial people” in his businesses. Finally, Mr. Durham’s petition
described Mr. Covert as “a good friend.” Mr. Tompkins cited none of these
reasons for his decision, but the government points out that a court applying
the test of Strickland v. Washington must decide whether an attorney’s
performance was objectively sub-standard. But this isn’t an analysis under
Strickland; this is an analysis of whether the fee agreement in this case created
an actual conflict for Mr. Tompkins by making him overly frugal with money
that would be his if he didn’t spend it.
3

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as this might influence an unethical attorney. But as explained in Reynolds v.
Hepp, 902 F.3d 699, 709 (7th Cir. 2018), courts can’t presume from a fee
agreement alone that Mr. Tompkins presented a nickel-and-dime defense to
preserve the $1 million dollar fee.
Nothing about the fee arrangement between Mr. Durham and Mr.
Tompkins suggests anything sinister. Mr. Durham agreed to pay $1 million up
front, understanding that (a) Mr. Tompkins would spend up to a third of it on
expenses, including witness expenses, and (b) once the trial started, Mr.
Durham was to pay another $500,000. There was nothing unethical about the
fee arrangement. See Ind. R. Prof. Cond. 1.8(e)(1). The agreement admits of no
interpretation that Mr. Durham would be entitled to a partial refund if the
expenses fell below a third of a million dollars. Mr. Durham suggests that Mr.
Tompkins must have known the additional $500,000 fee was illusory, because
the first payment used up all the money Mr. Durham had. Mr. Durham cites
no law to support the proposition that a client’s expectation of shortchanging
his lawyer alters the lawyer’s constitutional obligations to the client. And as the
government points out, neither of Mr. Durham’s co-defendants presented
expert testimony, either.
The court rejects Mr. Durham’s argument that a conflict of interest
caused his trial lawyer to not call expert witnesses, and turns to Mr. Durham’s
more traditional ineffective assistance of counsel claim under Strickland v.
Washington, 466 U.S. 668, 688, 694 (1984).

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V.

THE STRICKLAND INEFFECTIVE ASSISTANCE CLAIM

To succeed on an ineffective assistance claim, a petitioner must show
both that his attorney’s performance “fell below an objective standard of
reasonableness” and “that there is a reasonable probability that, but for
counsel’s unprofessional errors, the result of the proceeding would have been
different.” Strickland v. Washington, 466 U.S. 668, 688, 694 (1984). This is a
difficult standard to meet. Mr. Durham must show both “that counsel made
errors so serious that counsel was not functioning as the ‘counsel’ guaranteed
the defendant by the Sixth Amendment” and “that counsel’s errors were so
serious as to deprive [Mr. Durham] of a fair [result].” Id. at 687. “Stated another
way, under the Strickland test, the defendant must show that his counsel's
actions were not supported by a reasonable strategy, and that the error was
prejudicial.” Richardson v. United States, 2021 WL 1165122 at *4 (S.D. Ill.
March 26, 2021) (citing Massaro v. United States, 538 U.S. 500, 501 (2003)).
An insufficient showing as to either prong is fatal to a petitioner’s claim.
Id. at 697; McDaniel v. Polley, 847 F.3d 887, 893 (7th Cir. 2017). The court is
required to “indulge a strong presumption that counsel’s conduct falls within
the

wide

range

of

reasonable

professional

assistance.”

Strickland

v.

Washington, 466 U.S. at 689. “Strickland does not guarantee perfect
representation, only a ‘reasonably competent attorney.’” Harrington v. Richter,
562 U.S. 86, 109 (2011).

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An attorney’s constitutional obligation extends to her pretrial work,
including reasonable preparation. A failure to do more than minimal pretrial
investigation can amount to ineffective assistance of counsel. Failure to
investigate more than minimally can amount to deficient performance. Andrus
v. Texas, ___ U.S. ___, ___, 140 S. Ct. 1875, 1881-1886 (2020). The attorney
must “make reasonable investigations to make a reasonable decision that
makes particular investigations unnecessary.” Strickland v. Washington, 466
U.S. at 690–691; Meyers v. Gomez, 50 F.4th 628, 642 (7th Cir. 2022) (“without
interviewing a witness and determining what precisely she would say on the
stand, an attorney cannot assess the witness's strengths and vulnerabilities
and make a reasonable professional judgment about the likely impact of the
witness's testimony.”).
As

long

as

the

attorney’s

trial

preparation

meets

or

exceeds

constitutional standards, it’s generally the attorney’s task to decide on the gist
of the defense, which witnesses to call, and what cross examination questions
are to be asked. Olvera v. Gomez, 2 F.4th 659, 669 (7th Cir. 2021) (“When
counsel makes a ‘thorough [pretrial] investigation of [the] law and facts,’
counsel’s trial strategy is ‘virtually unchallengeable.’”) (quoting Strickland v.
Washington, 466 U.S. at 690); Meyers v. Gomez, 50 F.4th at 642 (“When an
attorney has looked into a potential defense witness and yet has made a
deliberate decision not to present that individual's testimony, then his decision
is likely a strategic decision that warrants the greatest degree of deference from

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a court.”). The attorney’s strategic decisions are “not subject to Mondaymorning quarterbacking.” Atkins v. Zenk, 667 F.3d 939, 945 (7th Cir. 2012).
“The benchmark for judging any claim of ineffectiveness must be whether
counsel's conduct so undermined the proper functioning of the adversarial
process that the trial cannot be relied on as having produced a just result.”
Strickland v. Washington, 466 U.S. at 686.

A. Fundamental Strategic Disagreements; Witness Erin Beesley
Mr. Durham expected Mr. Tompkins to reduce his caseload to free up
time to work on the Durham case, but saw no evidence of Mr. Tompkins having
done so. Mr. Tompkins testified at the § 2255 hearing that while he took no
fewer new cases, he took less complicated cases to free up time. Mr. Durham
simply hasn’t proven that Mr. Tompkins’ other clients interfered with his ability
to prepare Mr. Durham’s defense and to prepare for the trial. This record
doesn’t support a finding that Mr. Tompkins spent less time preparing the
case, whether because of other clients or any other reason, than other
reasonably competent attorneys would have spent.
Mr. Durham says Mr. Tompkins presented a mens rea defense at trial.
Mr. Tompkins testified at the § 2255 hearing that there was more than mens
rea to the defense. He explained that the defense argued a mens rea theory –
that there was no intent to defraud – but also presented evidence that the

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Obsidian companies had enough value to support the loans it was making. Mr.
Tompkins’s opening and closing statements support that explanation.
In his opening statement, Mr. Tompkins characterized what was
happening at Fair Finance in 2009 as not a massive fraud but rather a massive
panic because the Ohio Department of Securities was threatening to smother
Fair Finance’s business. He said that mistakes were made, but mistakes aren’t
crimes, and neither is pouring one’s entire fortune into businesses during
terrible financial times. He asked the jury to listen to the wiretap evidence with
an ear out for the panic in the voices. Mr. Tompkins’s closing argument began
by challenging the logic behind the allegations of fraud. Logic would have led to
the closing of the Obsidian businesses that were losing money. He spoke of bad
decisions not being criminal. Mr. Tompkins argued that the bad decisions and
mistakes flowed not from fraud, but from friction between frightened people
trying to figure out how to save Fair Finance. He discussed Mr. Durham’s use
of the depreciated cash flow measure of valuation (noting that Chris Hirschfield
called that an accepted valuation method), while the Ohio Department of
Securities was using the asset method.
The “assets-were-sufficient” thread of the defense was secondary to the
“no-intent-to-defraud” thread. But it was there.
Mr. Durham thinks his defense should have been different, that it should
have featured a range of experts and company officers and employees to
challenge the very foundation of the government’s case by proving that
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everything Fair Finance and he were doing was on the up-and-up. Any such
defense would have taken jurors on a dizzying trip from one explanation to
another.
A good example is found in the testimony Mr. Durham says Mr.
Tompkins should have presented through Erin Beesley, who didn’t testify at his
trial. Ms. Beesley was Obsidian’s controller from 2004 to 2007. She prepared a
memorandum about how to increase collateral in 2007 (Petitioner’s Hearing
Exhibit 46) based on information she got from Mr. Durham (through his
financial statements) and Mr. Snow. The memorandum reported a shortfall of
$8.7 million.
Mr. Durham says he wanted Ms. Beesley as a witness at his trial. 4 In
addition to the 2007 memorandum, she prepared a memorandum in May 2006
with a step-by-step approach to reducing the 2005 shortfall. She could have
testified that those steps were taken, Mr. Durham says, and that there was no
2005 shortfall by the end of 2006. As Mr. Durham understands it, the
companies wouldn’t have needed any reserve at all if there was no 2005
shortfall. In reaching her conclusion that the 2005 shortfall could be
eliminated in 2006, Ms. Beesley had used elements of Mr. Durham’s personal
financial statements; on cross examination at the § 2255 hearing, Mr. Durham
Mr. Durham says he told Mr. Tompkins that he wanted Ms. Beesley to
testify at trial, but he doesn’t think Mr. Tompkins served her with a subpoena.
Mr. Tompkins didn’t remember whether the defense spoke to her. Ms. Beesley
testified at the § 2255 hearing that she wasn’t subpoenaed to testify at Mr.
Durham’s criminal trial.
4

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conceded that those statements contained what he called “a mistake,” (Doc. No.
127, at 1-195) but it was a doozy of a mistake: the statements omitted $15-20
million in liabilities. It appears that all of Mr. Durham’s personal financial
statements from that era contained errors.
Ms. Beesley testified at the § 2255 hearing that it was Mr. Durham who
told her what shortfall-reducing steps she should put in her memorandum and
that she just compiled the information.
Ms.

Beesley’s

proposed

testimony

highlights

a

related

strategic

disagreement between counsel and client. It seems from the § 2255 hearing
that Mr. Durham believed that Mr. Tompkins should call every witness that
had something helpful to the defense. Mr. Tompkins testified with respect to
several witnesses that on balance, the risk of one witness or another
outweighed (in his judgment) any help the witness could provide.
Had Mr. Tompkins put Ms. Beesley on the stand in the criminal trial to
elicit testimony about the lack of a shortfall at the end of 2006, the cross
examination would have disclosed the role Mr. Durham’s inaccurate personal
financial statements played in the putative lack of a shortfall, giving the
government more fodder for argument that Mr. Durham’s untrue statements
infected all things Fair Finance. Mr. Durham posited explanations about his
financial statements at the § 2255 hearing, but it’s unclear how Mr. Tompkins
might have neutralized the Beesley cross examination at the criminal trial. It

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seems far-fetched that a jury would see the omission of more than $15 million
of liabilities as “a mistake.”
Mr. Tompkins’s decision not to put Ms. Beesley on the witness stand falls
well within professional norms. Since Mr. Durham told Mr. Tompkins what he
wanted Ms. Beesley to testify to, any failure to interview falls within the wide
range of reasonable professional assistance. Given the risk of calling Ms.
Beesley as a witness, the decision not to call her didn’t prejudice the defense
case. The failure to call Erin Beesley as trial witness doesn’t amount to
ineffective assistance of counsel.

B. Other Witnesses Who Were Not Called
1. Terry Whitesell
Terry Whitesell 5 succeeded Mr. Durham as Fair Finance’s vice-president
of sales and served as Obsidian’s president and chief executive officer. When
Fair Finance would take over a company, Mr. Whitesell would be assigned to
an operations team.

Mr. Durham testified at the § 2255 hearing that Mr. Tompkins told him
that the government was threatening Mr. Whitesell as well as prospective
witnesses Lagrone, Bontrager, Kuzma, Riggenbach, Brogan, and Schaffter. Mr.
Durham’s testimony on that point isn’t credible, and the court doesn’t believe
it. It’s apparent from a letter Mr. Tompkins wrote in relation to Mr. Durham’s
subsequent disbarment proceedings that Mr. Durham thought witness
intimidation was occurring. But this record doesn’t persuade the court that Mr.
Tompkins made such statements to Mr. Durham.
5

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Mr. Tompkins testified that he sent an investigator to interview Mr.
Whitesell, but that Mr. Whitesell wouldn’t talk to the investigator. Mr.
Tompkins was sure he reviewed the FBI “302” reports about government
interviews with Mr. Whitesell, but couldn’t remember at the § 2255 hearing
what those reports revealed. Mr. Whitesell denied ever speaking with an
investigator. He testified that he only spoke with Mr. Tompkins after the guilty
verdict, and then about testifying for Mr. Durham at the sentencing. Mr.
Whitesell had signed a proffer agreement with the FBI, but wasn’t called as a
sentencing witness by either side.
Mr. Durham wanted Mr. Whitesell to testify that the Obsidian
businesses, contrary to the government’s proof, were doing well enough in
2008-2009 to justify a “really positive” outlook. But Mr. Whitesell also testified
at the § 2255 hearing that statements in the Fair offering circular admitted at
trial as Government’s Exhibit 201 were false, that he had told the FBI that he
had been concerned about Obsidian’s prospects, that he had stated in another
document that business in general was horrible, and that neither he nor a
concern called “Durham, Whitesell & Associates” had never received the loan
Mr. Durham listed in a document filed with the Ohio Department of Securities
as an account receivable of Fair Finance. Mr. Durham couldn’t remember,
when questioned about at the § 2255 hearing, why “Durham, Whitesell &
Associates” was listed as a creditor.

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Whether to call a witness generally is a strategic decision left to the
attorney. Meyers v. Gomez, 50 F.4th at 642. Given the significant risks to the
defense that Mr. Whitesell would have posed if called to testify, Mr. Tompkins’s
decision not to call him didn’t fall below constitutional standards. Nor did the
failure to interview him; between Mr. Durham and the FBI “302,” Mr. Tompkins
knew what he might say.

2. Don Lagrone
U.S. Rubber Reclaiming was one of Obsidian’s companies. Don Lagrone
was U.S. Rubber’s president of when the company closed as part of the Fair
bankruptcy proceedings. At that point, U.S. Rubber had an eight-figure debt to
Fair Finance–at least $11 million. Mr. Durham thought Mr. Lagrone could
testify “that, although U.S. Rubber had P&L losses, it didn't have cash flow
losses and help explain what that was about. Plus, he could explain the new
product we introduced, a crumb rubber product. And he had sent me several emails in November of '09 about lots of different things that were happening
from a positive point of view at U.S. Rubber.” (Doc. No. 127, at 112-113).
Mr. Lagrone didn’t testify at Mr. Durham’s trial. Mr. Durham asked Mr.
Tompkins to call Mr. Lagrone as a witness. Mr. Tompkins recalled speaking to
Mr. Lagrone early on, when Mr. Tompkins represented Obsidian. Mr. Lagrone
remembered speaking with Mr. Tompkins twice, but couldn’t remember
specifically what they discussed. Mr. Tompkins recalled that Mr. Lagrone could
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testify to some good things, but didn’t subpoena him because he viewed Mr.
Lagrone as a mixed witness at best. Mr. Tompkins was sure he reviewed the
FBI “302”s about interviews with Mr. Lagrone, but couldn’t remember at the §
2255 hearing what those reports revealed. Mr. Durham testified at the § 2255
hearing that he had the impression that the government had threatened Mr.
Lagrone so that he couldn’t testify.
Mr. Lagrone testified at the § 2255 hearing that U.S. Rubber occasionally
had trouble with cash flow and secured additional funding from Obsidian,
which would obtain the funding from Fair Finance. In 2009, U.S. Rubber was
making progress in sales of rubber mulch, but it owed Fair Finance as much as
$11 million in late 2008. Mr. Tompkins’s performance didn’t fall below
constitutional standards when he chose not to present a witness to testify to
rosy rubber mulch prospects in the face of an eight-figure company debt. That
was a “virtually unchallengeable” strategic decision. Olivera v. Gomez, 2 F.4th
at 669 (7th Cir. 2021).

3. Todd Bontrager
Todd Bontrager was president of United Express, another of the Obsidian
companies. Mr. Durham wanted Mr. Bontrager to testify that United Express
had positive future prospects in 2009. Mr. Bontrager testified at the § 2255
hearing that United Express’s financial condition worsened in 2008, improved
a little bit in 2009, and collapsed when the FBI raided Fair. Mr. Bontrager was
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uncertain at the § 2255 hearing whether United Express could service its debt
to Fair Finance before the collapse, but he told the FBI that United Express
couldn’t service its debt to Fair Finance in the 2007-2009 period. Mr.
Tompkins testified that he didn’t recall what Mr. Bontrager could have testified
to; he agrees that he didn’t subpoena Mr. Bontrager.
Mr. Bontrager could have testified that every month in 2009 got a little
bit better for United Express, but he had already told the FBI that even so,
United Express couldn’t service its debt to Fair Finance. Mr. Tompkins’s
decision not to call Mr. Bontrager didn’t fall outside the wide range of
professional assistance; the decision was strategic to the defense.

4. Ron Kaffen
Ron Kaffen was Fair Finance’s securities counsel. Mr. Durham told Mr.
Tompkins he wanted Mr. Kaffen to testify as to how the Fair Finance
investment representatives were trained. Mr. Durham recalls Mr. Tompkins
telling him that Mr. Kaffen couldn’t testify because he would be in Europe. Mr.
Tompkins recalls speaking with Mr. Kaffen by phone once or twice and
concluding that Mr. Kaffen wouldn’t have positive things to say if he were
called as a witness. Mr. Tompkins doesn’t recall telling Mr. Durham that Mr.
Kaffen would be in Europe during the trial and, given the general credibility of
Mr. Durham and Mr. Tompkins, the court doesn’t believe that Mr. Tompkins
told Mr. Durham that.
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Mr. Durham didn’t call Mr. Kaffen to testify at the § 2255 hearing, but
it’s apparent from Mr. Durham’s testimony at the hearing that Mr. Kaffen
might have cost the defense a great deal had he been called as witness. In Fair
Finance’s waning days, Mr. Durham wanted Fair Finance to start using a
security he devised and called a “temporary certificate.” The wiretaps caught
Mr. Durham’s discussions with Mr. Kaffen about the temporary certificates,
which Mr. Kaffen opposed at first, and the trial jury heard at least some of
those conversations. Mr. Kaffen also drafted a letter Mr. Durham signed for use
as an offering circular; the circular was admitted into evidence at trial, and the
best Mr. Durham could call it at the § 2255 hearing was “substantially
accurate.”
Mr. Kaffen’s presence on the witness stand at trial would have offered
more benefit to the government than to Mr. Durham, and calling Mr. Kaffen as
a witness would likely open the door to other damaging evidence that would
undermine the defense. Mr. Tompkins’s decision not to call Mr. Kaffen to the
stand didn’t fall below Sixth Amendment standards.

5. Keith Kuczma
Keith Kuczma testified at the § 2255 hearing that he joined Fair Finance
in June 2009 in sales, and became the investor relations manager, overseeing
the people who sold investor certificates to investors and provided investors
with offering circulars that explained the certificates and the program. He said
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Mr. Durham had no input into investor representative training while Mr.
Kuczma worked at Fair Finance. Mr. Kuczma denied that investor reps were
ever told to hide the contents of the offering circular.
Mr. Durham wanted Mr. Kuczma to testify at his trial that no one told
him to conceal the truth from investors, and that he was to provide investors
with the offering circular. Mr. Kuczma testified that he and the investor reps
were told in the autumn of 2009 that the State of Ohio’s authorization for Fair
Finance’s offering was expiring at the end of November. Mr. Kuczma and the
investors reps assumed the authorization would be renewed. The main Fair
Finance offices were raided near the end of November, before the authorization
was renewed, so the offices closed.
Mr. Durham told his lawyer that Mr. Kuczma could testify to what
investor representatives were and weren’t told to say, and that his testimony
would show that he and Fair Finance weren’t hiding anything. Mr. Kuczma’s
testimony at the § 2255 hearing didn’t quite reach that far: he denied knowing
of anyone at Fair Finance telling investor representatives to lie to investors or
potential investors. Mr. Kuczma also invested in Fair Finance. Despite his own
investment and his reviewing the investment circular with actual and potential
investors, Mr. Kuczma didn’t know that Mr. Durham was borrowing investor
money to pay for his personal expenses.
Mr. Kuczma didn’t remember speaking to Mr. Tompkins and wasn’t
subpoenaed to testify at Mr. Durham’s trial. At the § 2255 hearing, Mr.
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Tompkins couldn’t remember who Mr. Kuczma was, other than that he worked
in Ohio.
Had Mr. Kuczma testified at Mr. Durham’s criminal trial, he might have
been helpful by denying that he never told any investor reps to lie. But the
value of that testimony might have been limited by inquiry into how many
investor reps Mr. Kuczma actually spoke to. More significantly, he would have
testified that he, the person who trained investor reps about what to say about
the offering circular and an investor himself, didn’t know that Mr. Durham was
taking investor money for personal use. That testimony would have badly
damaged the defense contention that everything was on the up and up because
it was fully disclosed to investors. The decision not to call Mr. Kuczma as a
witness falls comfortably within the range of performance of constitutionally
competent criminal defense attorneys, and if not, can’t be said to have “so
undermined the proper functioning of the adversarial process that the trial
cannot be relied on as having produced a just result.” Strickland v.
Washington, 466 U.S. at 686.

6. Stephany Brogan
Stephany Brogan was a level above Mr. Kuczma on the Fair Finance
organizational chart. Mr. Durham testified at the § 2255 hearing that he
wanted Ms. Brogan to testify because an undercover FBI agent had discussed
Fair Finance’s liquidity problems with her in an interview recorded on video.
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Mr. Durham also thought she could testify about how the investor reps were
trained–specifically, that they weren’t told to hide anything.
The FBI agent testified about the videorecorded conversation at trial. The
government also called Fair Finance investor relations rep Matt Ogden to testify
about instructions given to the reps. Mr. Tompkins testified that Mr. Ogden
covered what Mr. Durham hoped to prove through Ms. Brogan. Mr. Tompkins
also testified that he and other counsel discussed the Brogan video but thought
the risks of unwanted doors being opened outweighed the benefits. Ms. Brogan
declined to testify at the § 2255 hearing, leaving the court unwilling to infer
that her trial testimony would have been helpful to Mr. Durham.
Mr. Tompkins weighed the risks and benefits of presenting Ms. Brogan
as a witness, and decided not to take the risks. Both of the other defendants’
attorneys made the same decision. The decision not to call Ms. Brogan to the
stand at trial fell well within professional standards.

7. Keith Schaffter and Rusty Riggenbach
The court’s 2019 ruling allowed Mr. Durham to proceed on his claims
that Mr. Tompkins provided constitutionally inadequate representation by not
calling Keith Schaffter and Rusty Riggenbach as trial witnesses. The material
concerning those witnesses in Mr. Durham’s § 2255 petition was less detailed
than his description of most witnesses, but in light of the allegations about
other witnesses who weren’t called, the court gave Mr. Durham a chance to
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prove his entitlement to relief based on those witnesses. Mr. Durham didn’t
meet that burden.
Keith Schaffter was Fair Finance’s president. He didn’t testify at trial.
According to Mr. Durham’s § 2255 petition, Mr. Schaffter was involved in email
discussions with Keith Kuczma and Mr. Durham about what to do when the
Ohio authorization expired. Mr. Schaffter, according to the petition, proposed a
statement to be sent to investors explaining the temporary steps Fair Finance
would be taking when the authorizations expired. (Doc. 1-7, at 58-59).
Rusty Riggenbach, as Mr. Durham remembers things, preceded Mr. Kuczma
as Fair Finance’s investor relations manager. In his § 2255 petition, Mr.
Durham alleged that Mr. Riggenbach (and Mr. Schaffter) could confirm that
none of the defendants – Mr. Durham, Mr. Snow, or Mr. Cochran – told
investors not to discuss anything in the investment circular. Mr. Riggenbach
reportedly had told the F.B.I. that Mr. Durham and Mr. Cochran weren’t
involved in the bi-weekly phone calls with the investor representatives. But in
the same paragraph of his § 2255 petition, Mr. Durham alleges that Mr.
Riggenbach and Mr. Schaffter would have testified that the investor
representatives had been trained not to discuss details in the offering circular,
and to redirect specific questions to Mr. Riggenbach and Mr. Schaffter. He also
alleged that Mr. Riggenbach and Mr. Schaffter could have testified to what
investor representatives were told to say about the anticipation end of Fair
Finance’s authorization. (Doc. 1-7, at 97-98). Mr. Tompkins didn’t call Mr.

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Riggenbach as a trial witness, and couldn’t remember Mr. Riggenbach at all
while testifying at the § 2255 hearing.
Mr. Schaffter passed away between the trial and the § 2255 hearing. Mr.
Riggenbach didn’t testify at the § 2255 hearing. Mr. Durham testified at the §
2255 hearing that he wanted four Fair Finance employees to testify at his trial:
I told them that Keith Kuczma, who was head of investor relations during
the November time frame when we were trying to get our renewed
authorization, and he would have been important to, you know, about
what the investor reps that worked for him were told to do and not to do
because he did it and that we weren't concealing anything. And then,
Rusty Riggenbach was the investor relations manager prior to Keith, and
he could have also disclosed that we actually were not hiding the fact
that Fair was having liquidity challenges during the recession. And then,
the third one that I really wanted him to get was Stephanie Brogan
because she was interviewed by an FBI agent, and she literally is on
video talking about the liquidity problems.
Q

And Mr. Schaffter?

A
Yeah. He was president of Fair at the time too, and he could have,
of course, addressed the same time frames and the same issues.
(Doc. 127 at 116). Mr. Durham testified that Mr. Tompkins told him they didn’t
testify because the government was intimidating them. As already noted, see
note 5 supra, the court doesn’t credit Mr. Durham’s testimony about Mr.
Tompkins saying the government was intimidating potential witnesses. Mr.
Tompkins had no recollection of either Mr. Riggenbach or Mr. Schaffter when
he testified at the § 2255 hearing. Mr. Kuczma had no recollection of Mr.
Schaffter in his testimony, either.
As was discussed in relation to Mr. Kuczma’s potential testimony, Mr.
Riggenbach and Mr. Schaffter could have testified to what they told (or didn’t

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tell) the investor representatives, but what anyone else might have told them
would be outside their personal knowledge. Mr. Durham’s thin showing of what
Mr. Riggenbach and Mr. Schaffter might have contributed as witnesses doesn’t
establish that Mr. Tompkins’s decisions not to call either fell below an objective
standard of reasonableness. Similarly, Mr. Durham’s thin showing with respect
to these two potential witnesses doesn’t persuade the court that the decision
not to call either had any impact on the outcome of the trial.

C. Cross Examination of Government Witnesses
1. Anthony Schlichte
Anthony Schlichte was Obsidian’s chief financial officer, vice president in
charge of corporate finance, and senior lender. He worked in commercial
banking for 25 years and ran U.S. Rubber for a time. Mr. Schlichte was a
government witness at the criminal trial. Mr. Durham believes Mr. Tompkins’s
cross examination of Mr. Schlichte fell below the standard set in Strickland.
At the criminal trial, Mr. Schlichte explained the corporate connections
and identified the officers of Obsidian and Fair Finance and the subsidiary
corporations. He explained how the money would go from Fair Finance to Fair
Holdings to Obsidian (sometimes going to Obsidian through DC Investments)
and on to subsidiaries by way of transactions that looked something like loans.
Mr. Schlichte testified that Fair Finance would continue to fund Obsidian and
subsidiaries even when loan repayments weren’t made. He explained that
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although Fair Finance had submitted an evaluation of Obsidian subsidiary
Classic Manufacturing to the Ohio Department of Securities on November 1,
2009, showing a valuation of $4.9 million, Classic had ceased operations by
that date and the senior lender hadn’t been paid in full.
Mr. Schlichte testified to having sent Mr. Durham and Mr. Whitesell
what he called a “sobering assessment” of U.S. Rubber’s viability in August
2006, in which he recommended consideration of a quick shutdown and/or
liquidation. Mr. Schlichte testified that he got no response from Mr. Durham.
He went on to relate receipt of an offer for U.S. Rubber from Indian business in
September 2009 (by which time U.S. Rubber’s condition hadn’t improved
much). Mr. Schlichte had tried to solicit an offer from the Indian business, and
got an offer to buy “the complete business and assets of” U.S. Rubber for $1.5
million plus an undetermined amount for its working capital, though no debt
would be assumed. (1:11-cr-00042, Doc. No. 372, at 136). Mr. Schlichte
testified that, at that point, U.S. Rubber owed Fair Finance more than $10
million and owed bank loans of three to four million dollars. Mr. Schlichte
testified that in a November 1, 2009 submission to the Ohio Department of
Securities, Fair Finance reported that U.S. Rubber’s equipment value was
$14,552,470, a figure with which Mr. Schlichte disagreed. That submission
reported an enterprise value of $20,283,000 and an enterprise equity value
(after subtracting debt) of $2,462,000. Mr. Schlichte conceded from the witness
stand that he, too, had received loans from Mr. Durham and DC Investments.
He said he stopped making payments on the loans in May 2008.
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Mr. Tompkins remembered Mr. Schlichte as an important witness for the
government. Mr. Tompkins impeached Mr. Schlichte with his prior statements
(as reported by the FBI in a “302”) about U.S. Rubber’s profitability and cash
flow, and used Mr. Schlichte’s cross examination to bring out some of the
things Mr. Durham wanted Mr. Covert to testify to, such as explanations of
junior lenders and mezzanine debt. The cross examination also explained that
at some time – maybe when Fair Finances made its representations to the Ohio
Department of Securities, consideration was being given to merging Classic
with United.
Mr. Schlichte testified at the § 2255 hearing that Petitioner’s Exhibit 71,
which purported to show that Obsidian and each of the related companies had
positive “EBITDAs” 6 in 2005 and 2006, weren’t a complete picture because they
didn’t reflect money owed to the senior lenders.
Mr. Durham contends that Mr. Tompkins provided ineffective assistance
of counsel when cross examining Mr. Schlichte. As Mr. Durham recalls it, Mr.
Schlichte testified at trial that the offer to purchase U.S. Rubber was for $1.5
million. Mr. Durham says the offer was actually $1.5 million, plus “working
capital,” which consists of accounts receivable, inventory, and cash on hand.
He says U.S. Rubber’s working capital amounted to $8-9 million, so the offer

“EBIDTA” stands for earnings before interest, taxes. depreciation and
amortization. It produces a measure of a company’s financial condition and
cash-generating ability.
6

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was really $10.5 million. Mr. Durham says he told Mr. Tompkins about the
omission at trial.
The trial transcript doesn’t fully support Mr. Durham’s memory that Mr.
Schlichte’s trial testimony elided the offer for the working capital. At the
government’s direction, Mr. Schlichte read from Government’s Trial Exhibit
427, the operative part of the offer to the jury and into the record:
A
We have had the opportunity to peruse all the data that was sent
to us, and based on our internal deliberations and analysis, we shall, at
best, be able to offer Obsidian U.S. dollars, one and a half million dollars
for the complete business and assets of United States Rubber. We shall
also offer value for the working capital, which we believe shall be
appropriate for the level of business which we shall ascertain after due
diligence. We would not take over any debt, and as indicated by you,
except that there shall not be any retirement or other liabilities which
shall potentially reduce the offer price to that extent.
Q
And so, why is it – could you tell us the amount? What amount are
they offering to purchase U.S. Rubber for?
A

A million and a half dollars.

(1:11-cr-00042, Doc. No. 372, at 135-136).
Mr. Durham also says that Mr. Tompkins should have established on
cross examination that the government threatened to prosecute Mr. Schlichte if
he didn’t testify against Mr. Durham. But at the § 2255 hearing, Mr. Schlichte
denied fearing prosecution for not testifying.
Mr. Tompkins’s performance in cross examining Mr. Schlichte didn’t fall
below what would be expected of a competent criminal attorney. Had Mr.
Tompkins engaged Mr. Schlichte on the offer for U.S. Rubber, he would have
enabled Mr. Schlichte to opine that U.S. Rubber’s working capital, which had
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no dollar value in the offer, was far less than the $8-9 million that Mr. Durham
assigns. Mr. Durham’s attorneys didn’t ask Mr. Schlichte for such an opinion
at the § 2255 hearing. And in any event, the “working capital” component of
the Indian business’s offer was in evidence (and had been read to the jury), so
if it acquired any particular significance, Mr. Tompkins could have pointed it
out during final argument. There was no reason to ask a cross examination
question about the dollar value of the offer.

2. Ben Kimmerling
Fair Holdings hired Somerset CPA in 2005 to conduct an audit of Fair
Financial for the years 2003-2004. Somerset’s predecessor accounting firm had
concluded that there was a need for additional reserve on Fair Finance’s loans.
Ben Kimmerling, Somerset’s president, 7 testified at trial for the government
that Somerset completed its audits for 2003 and 2004, but never completed the
2005 audit because of there was too little documentation and information
about, among things, analysis of loan collateral and related party loans. Mr.
Durham had pledged his personal assets to make up any shortfall in the loan
collateral, but Somerset thought he was using up those assets by repaying
others’ loans. In 2006, Somerset found a shortfall of $22.7 million after
accounting for the companies’ collateral and what Mr. Durham could add.
Somerset also calculated the related parties’ loans at $88 million.
Mr. Durham seemed to refer to Mr. Kimmerling and Somerset
interchangeably in the § 2255 proceedings.
7

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Given the issues about the collateral, the reserves, and the related party
loans, Somerset concluded that it couldn’t issue an audit report for the
calendar year 2005 that would comply with accounting principles. Unless Fair
Holdings set aside another $20 million reserve to cover the reported party loans
and consolidating Obsidian and perhaps other entities with substantial loans
into the Fair Holdings audit 8 (which would require past audits of the
consolidated entities). Discussions of a consolidation of Fair Holdings, Fair
Finance and DC Investments into a single audit indicated that the four entities
together – including Obsidian – were losing more $20 million. That information
led Somerset to revoke its consent for Fair Holdings’ further use of Somerset’s
2003 and 2004 audit reports.
On cross examination, Mr. Tompkins questioned Mr. Kimmerling about
Somerset’s discussions with Fair Holdings’ previous accountant. His cross
examination established that Somerset found no signs of fraud, that the 2003
and 2004 audit report was unqualified, that Mr. Durham agreed to provide
more collateral when he was asked to, that the Somerset firm didn’t use a cash
flow method rather than looking just at hard assets in its audit (though that is
a valid method), and that Fair Holdings did nothing improper in its response to
Somerset’s request for past audits of the entities to be consolidated.
Mr. Durham says that Mr. Tompkins should have asked on cross
examination about “the discounted cash flows [Somerset did] for us in ’06, ’07,
This was considered necessary due to then-new adoption of an
accounting standard call “FIN 46” at the trial and the § 2255 hearing.
8

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and ’08 for several of the companies” (Doc. No. 127, at 130) and explain
noncash, nonrecurring losses which, Mr. Durham believed, would have put the
associated companies’ financial situations in a better light. When he explained
the need for Mr. Kimmerling’s testimony at the § 2255 hearing, Mr. Durham
said that Somerset’s use of an accounting standard called “FIN 46” would have
required the consolidation of many of Fair Holding’s subsidiaries. That would
require audits of companies that hadn’t needed auditing before, making a
historical audit difficult and expensive. Mr. Durham said that no audit was
done because the issue arose around the same time as “the other collateral
issue they brought up.” (Doc. No. 127, at 133).
The jury saw and heard the correspondence between (among others) Mr.
Kimmerling and Mr. Snow that discussed what would be required for a
consolidated audit and why Fair Holdings decided against it. Mr. Kimmerling
wasn’t asked at the § 2255 hearing about discounted cash flows or noncash,
nonrecurring losses, so the court can’t know what Mr. Kimmerling might have
said had Mr. Tompkins raised the issues on cross examination at trial. Without
that information, no court could conclude that Mr. Tompkins’s cross
examination of Mr. Kimmerling fell outside the wide range of professional
conduct that passes constitutional muster.

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D. Conclusion on Strickland Claim
Mr. Durham hasn’t shown that Mr. Tompkins’s performance fell below
constitutional standards at any point in the trial or the time leading up to trial
with respect to contacting, interviewing, questioning, calling to testify, or cross
examining witnesses.

VI.

CONCLUSION ON § 2255 PETITION

Mr. Durham hasn’t shown entitlement to relief under either of the theories on
which the evidentiary hearing was conducted, and the court previously dismissed his
other claims. The court DENIES his petition for relief under 28 U.S.C. § 2255.
SO ORDERED.
ENTERED: December 5, 2022

/s/ Robert L. Miller, Jr.
Robert L. Miller, Jr., Judge
United States District Court

Distribution to all counsel of record via CM/ECF

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