Durham-backed firm to halt trading, dissolve

CLST Holdings Inc., a Dallas-based public firm of which embattled local businessman Tim Durham is chairman and a major
shareholder, announced Tuesday afternoon that it will cease trading on Feb. 26 and
dissolve.

The company—which was known as CellStar and distributed
cell phones before selling off those operations three years ago—has struggled, and its shares trade
for a mere 9 cents apiece. It’s not clear what, if any, money will be available to distribute to
stockholders.

Durham won election to CLST’s board soon after the asset sales, in part
by pledging to dissolve the company quickly and give shareholders remaining cash. But about a
year ago, CLST reversed course and began buying consumer finance contracts, including millions of dollars
from Fair Finance Co., an Akron, Ohio, firm that Durham leads and co-owns.

That insider transaction
outraged CLST board member Manoj Rajegowda, who resigned in protest. A letter that Rajegowda’s attorney sent the company
said he "was not informed of this transaction and most strenuously objects to it."

The purchase also
dragged CLST into the ongoing federal probe of Fair Finance. FBI agents on Nov. 24 raided Fair’s office, and the same
day the U.S. Attorney’s Office filed court papers alleging Durham was operating it as a Ponzi scheme.

The
following week, CLST acknowledged that the U.S. Securities and Exchange Commission was investigating financial dealings between
it and Fair, and said the agency had subpoenaed a mountain of information.

Fair raised capital by selling investment
certificates to Ohio residents. IBJ reported in October that Durham had used the business almost like a personal
bank since buying it in 2002. The story said that he, his associates and related firms rang up more than $168 million in insider
loans—debt that might imperil Fair’s ability to repay the Ohio investors, who are owed more than $200 million.

In Tuesday’s statement, CLST said, “The company’s plan of dissolution contemplates an orderly wind-down
of its business and operations, the satisfaction of or provision for its liabilities, and the distribution of any net
assets to stockholders. The timing of any distributions to stockholders cannot be determined.”

CLST, whose
shares trade thinly on the "pink sheets," attracted several other Indianapolis investors in recent years, including
Jim Cochran, co-owner of Fair Finance, and Carl Brizzi, Marion County’s prosecutor.