Auctioneer on trial for bad checks in Warren, Forrest

Published 12:00 am Thursday, April 1, 2010

HATTIESBURG — It’s a tale of two Jim Durhams — at least, that’s how it was presented Wednesday in Forrest County Circuit Court.

The former vice president of Durham Auctions is on trial for writing more than $225,000 in bad checks for various types of equipment not delivered to multiple customers, with the Warren County Board of Supervisors being duped the most, according to the Forrest County prosecutors.

Durham co-owned Durham Auctions with his father, Don Durham. Richard Winans, Warren County road manager, testified the county had worked with Durham Auctions since the mid-1980s and had sold millions of dollars in equipment through the company.

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The first problem was in 2008 when the county received a check for $125,000, the selling price of a surplus motor grader, and it bounced, said Vicksburg attorney Kenneth Rector who was hired to investigate the matter.

“The $125,000 belongs to the taxpayers, so it was my duty to see what I could do to refund the money or prosecute the person who caused the county not to have these funds,” he testified.

Durham’s signature was on the check and the responsibility his to make sure payment was made, according to prosecutors. Rector said the funds owed to the county were supposed to be in an escrow account, but the account was overdrawn.

“I can think of several reasons why the money is not there, and none of them are good,” Rector testified. “If I’m supposed to have a client’s money in escrow, and it’s not there, then I’m going to have a lot of trouble.”

Durham is charged with four counts of felony bad checks dating to May 2008. DeCarlo Hood, Forrest County assistant district attorney, said Warren County is the largest payee. 

Defense attorney Richard Diamond said the case against Durham does not make common sense or business sense. He said the Warren County Board of Supervisors was in business with Durham for more than 20 years with no problems.

“You don’t steal from a 25- or 30-year customer after doing millions of dollars worth of business,” he said. “And you don’t steal a portion of their pocketbook.”

Prosecutors tried to paint Durham, former vice president of Durham Auctions, as a man who defrauded multiple customers of thousands of dollars with bad checks.

Durham’s defense insisted he was just a horrible businessman who made multiple mistakes leading to the bankruptcy of his personal life and family business.

The other three counts involved Southeastern Concrete, Mad Dawg Inc. and Quin-Co Inc. Equipment was sold at auction, a check sent and insufficient funds stamped on the check and returned to the customer.

Durham admitted collecting money at auction, writing the bad checks and receiving the notices of insufficient funds. He said there was no intent to defraud his customers, however.

“In no way, when I sent out checks, did I know that some of them weren’t going to be paid,” he said.

Durham also said money put into escrow accounts from auction revenues were not used for paying salaries, utility bills or travel.

The prosecution accused Durham of paying loans out of the escrow account, which he admitted.

“We paid people from the escrow account who sold items at auction, and we also paid people who we had borrowed money from, and then turn around and borrow more money,” he said.

The auction company and Durham both filed for Chapter 7 bankruptcy in 2008, according to Durham. Diamond revealed that Durham Inc. and Durham collectively owe approximately $15 million to banks and investors — including $8 million owed to private investors.

One of those investors was businessman Marvin Clark, of Olathe, Kan. Clark won a default judgment in the amount of $405,000 on July 1, 2008.

Up until that point, Durham testified, Community Bank had agreed to cover any overdrafts from the company’s escrow account for a fee. However, seven days after the Clark judgment, the bank started sending back checks with insufficient funds, according to Durham.

The prosecution rested in the bad checks case Wednesday. The defense is expected to conclude with a forensic accountant today.

Court will reconvene at 9:30 a.m. under Judge Bob Helfrich.

Ben Piper writes for The Hattiesburg American