Classic Duesenberg caught in long legal fight

FORT WAYNE, Ind. (AP) -- In September 2009, a Virginia man thought he bought a 1930 Duesenberg automobile that once belonged to William Randolph Hearst.

And while James Scott paid nearly $3 million in what a judge called a rigged auction for the car, he never received the title to the vehicle. After trying for a few months to secure the title, Scott sued a number of people and businesses in connection with the sale of the car, including a Missouri car dealer, Mark Hyman; a Dowagiac, Mich., couple, Donald and Joan Lyons; Kruse International and the Auburn Cord Duesenberg Automobile Museum.

Scott also sued now-convicted Indianapolis businessman Timothy Durham, a former board member of the museum currently serving a 50-year federal prison sentence for wire fraud.

Durham and his partners, James F. Cochran and Rick D. Snow, were accused of running a Ponzi scheme to defraud about 5,000 investors in Fair Finance Co. of more than $200 million to fund other businesses and support a lavish lifestyle.

Now, two years later, all that remains of Scott's civil lawsuit is Durham as the defendant, with Kruse International having been dismissed. The Lyonses have settled with Scott and the museum and are now taking up Scott's claims against Durham, The Journal Gazette reported.

In September, U.S. District Chief Judge Philip P. Simon ruled in favor of Scott and the Lyonses and against Durham - finding Durham violated the terms of the auction contract.

Simon also ruled a jury will decide whether Durham committed fraud in the auction of the classic car.

According to court documents, the Hearst Duesenberg was to be auctioned at a special event at the museum, placed up for sale by Durham, who claimed ownership of the car and had it on display at the museum. The Lyonses saw the car and offered a million dollars for it before the auction, court records said.

But Durham wanted to keep the car in the auction, with the knowledge of the museum. The Lyonses were to pose as unsuspecting winning bidders. However, Scott appeared on the scene, bidding nearly $3 million for the car by telephone. As the bids climbed, Durham and the Lyonses agreed to split the profits of the auction, court records said.

"So the auction was planned to be a sham, and everyone seemed to know it," Judge Simon wrote in his opinion. "As the bidding neared $3 million, the whole scheme unraveled."

Scott won the auction and the museum shipped the car, but when it came time for Durham to deliver the title, he was unable to do so, having put the vehicle up as collateral for a loan to one of his companies, court records said.

Durham claimed he was not aware that a lending institution held the title to the vehicle. And whenever he was asked in depositions about the title and what he'd done to try to obtain it, Durham asserted his Fifth Amendment rights against self-incrimination, according to court documents.

The judge ruled Durham's actions brought about financial harm. The Lyonses, Hyman and the museum have returned $2.13 million to Scott, but $1 million in proceeds is still in Durham's possession, according to court documents.

The case is on hold for the time being -- awaiting a status hearing while Durham starts his prison sentence. Durham is no longer on the board at the ACD Museum, but the museum had to pay $30,000 to the trustee of an Ohio company embroiled in one of Durham's schemes.

This month, Durham claimed he was broke. A federal judge in his criminal case ordered Durham to pay $202.8 million in restitution, though he received credit for $6 million that already has been recovered.

No trial date has yet been set in the case of the Hearst Duesenberg. Durham was placed temporarily in a federal prison in Kentucky, to be transferred to a more permanent placement sometime between November and January, according to court documents.

Information from: The Journal Gazette, http://www.journalgazette.net