Federal filing lists another link between Brizzi, Durham

Another business tie has surfaced between Marion County Prosecutor Carl Brizzi and embattled Indianapolis financier Tim
Durham.

A federal financial-disclosure statement Brizzi submitted in May in connection with his possible run
for Congress lists the politician as an investor in Red Rock Pictures Holdings Inc., a small and struggling film-development
firm based in Los Angeles.

Securities and Exchange Commission filings from 2007 list Durham as a Red Rock shareholder.
In addition, Durham serves as CEO of Los Angeles National Lampoon Inc., which is an investor and financial partner of Red
Rock. The firms operate out of adjacent Sunset Boulevard offices and teamed on the 2008 movie “National Lampoon’s
Bagboy.”

The disclosure statement, which Brizzi submitted because he has contemplated running for the 5th
District U.S. House seat now held by Dan Burton, lists Brizzi owning three individual stocks—Nokia, Red Rock and CLST
Holdings Inc., a Dallas firm where Durham is chairman and a major shareholder.

At least four Durham-affiliated
firms—National Lampoon, Red Rock, CLST and Akron, Ohio-based Fair Finance Co.—have drawn the scrutiny of federal
investigators in recent months.

Brizzi

In September, former Lampoon CEO Dan Laikin pleaded guilty to attempting to manipulate the stock
price of the entertainment company. Under the former Carmel resident’s plea deal, “the government agrees that
it will not bring any criminal charges against the defendant for conduct relating to any attempt to manipulate the stock price
of Red Rock Pictures Holdings Inc.,” court papers say.

On Dec. 1, CLST disclosed it had received an SEC
subpoena seeking a mountain of information, including paperwork related to CLST’s purchase of finance contracts from
Fair.

Brizzi, 41, has not been accused of doing anything improper regarding the Durham-related investments. He
also has parted ways with Fair Finance after agreeing this summer to serve as a board member.

But Brizzi’s
friendship and business connections with Durham, the largest contributor to his 2006 re-election campaign,
have caused increasing headaches for the Republican politician since Nov. 24, when FBI agents raided Durham’s
Indianapolis office and Fair’s Akron headquarters.

The U.S. Attorney’s Office disclosed in court
papers the same day that it believes Durham operated Fair like a Ponzi scheme, using money raised by selling investment certificates
to Ohioans to pay earlier rounds of investors.

Brizzi acknowledged last month that he began a term on Fair’s
board in September but backed out in October after Durham informed him IBJ was publishing an unflattering story about
the company’s business practices.

The story questioned whether Fair, which purchases customer-finance contracts
from retailers and other firms, had the financial wherewithal to repay more than $200 million owed to purchasers of investment
certificates.

It also reported that, since he bought Fair Finance from Donald Fair in 2002, Durham had used it
almost like a personal bank to fund a range of business interests, some of them unsuccessful. The story noted that he and
related parties owed Fair more than $168 million.

Durham, 47, has not been charged with a crime. In a recent
interview with Abdul-Hakim Shabazz on WXNT-AM 1430, Brizzi said he has spoken with Durham, who doesn’t believe he has
done wrong.

“He has explained to me that if this is some sort of Ponzi scheme, then every bank in America
is some sort of Ponzi scheme,” Brizzi said on the show.

Brizzi declined IBJ’s requests for
an interview about his investments. In an e-mail exchange, he initially said he did not think he owned stock in Red Rock.
When presented with the disclosure, he said he thought he had sold it since the filing.

It’s not clear
what led Brizzi to either Red Rock or CLST. In a letter to supporters he posted on his Facebook page Dec. 7, Brizzi said he
began buying CLST in 2005 “after discussing the investment, as well as other companies, with friends and financial advisers
as part of my overall investment planning.”

In that letter, Brizzi said, “To the best of my knowledge,
there are no other businesses, stocks, or investments in which Durham and I both have an interest.” He stood by that
statement after being presented with the Red Rock disclosure but didn’t respond to further inquiries.

The
number of shares Brizzi owned in Red Rock wasn’t clear. Stock in the struggling business trades for less than a penny,
leaving even large holdings nearly worthless. The filing listed the value of his stake at between zero and $1,000.

Details of Brizzi’s CLST investment also are sketchy. His purchases began the same year a Durham-led investment group
began scarfing up shares of the firm. SEC filings don’t list Brizzi as part of that group.

In his letter
to supporters, Brizzi said his current CLST stake is worth about $7,500, based on the stock price of about 10 cents a share.
That indicates he owns about 75,000 shares. Purchasing that quantity in 2005 would have cost $24,000 at the stock’s
low for the year and $340,500 at the stock’s high. Yet in his WXNT interview, Brizzi said he spent less than $10,000
to buy the shares.

When Brizzi acquired his stake, the company was known as CellStar Corp. and was in the cell-phone
distribution business. It later sold off those operations to locally based Brightpoint Inc. and other firms and distributed
$2.10 per share in cash dividends to stockholders.

CLST was in wind-down mode until about a year ago, when it
suddenly began purchasing customer-finance receivables, including some from Fair Finance. Fair filings with Ohio securities
regulators show that, at the time, Fair was strained for cash and was seeking money to repay purchasers of its investment
certificates.

Brizzi’s disclosure statements dating to 2001 never have listed ownership of more than five
individual stocks in a single year, though the federal filing from this year shows him owning more than a half dozen mutual
funds, each with between $1,000 and $15,000 in assets.

Brizzi earns $125,000 a year as prosecutor and doesn’t
have extensive assets. The federal filing shows he owes between $100,000 and $250,000 on a loan he took out to buy ownership
interests in the local restaurant Harry & Izzy’s. The filing shows he still is paying off student loans.

Papers filed in connection with his divorce, which was finalized in February, showed he and his wife had three residences,
but with first and second mortgages on all of them.•