The Outrageous Fortune of Tim Durham
For the moment, all is quiet on Tim Durham’s 100-foot-long yacht. Britney Spears has stopped calling about buying the Indianapolis financier’s Beverly Hills home, and hip-hop artist Ludacris and Marion County prosecutor Carl Brizzi have already phoned in, unable to make it to southern Florida for a cruise. Standing barefoot on the lower deck, Durham admires a shoreline of palm trees swaying in the breeze. A few flags snap back and forth on boats docked nearby, water lapping gently against their hulls. Otherwise, the harbor is as still as a painting. On the upper deck of the Obsidian, Durham’s sinewy girlfriend, Jami Ferrell—a former Playboy Playmate—sunbathes in the 90-degree heat. Lounging in the living room below, David Tornek, his partner in the South Beach restaurant Touch, watches VH-1 celebrity profiles on a flatscreen television. The ocean is calm, the afternoon humidity almost unbearable. With an empty glass in hand, Durham heads inside to tell the captain it is time to set sail.
In the air-conditioned luxury of the cabin, Durham’s laptop sits open on the bar. Opportunities to buy companies have been pouring in via e-mail, but at the moment none tempts him quite as much as another Dom Perignon mimosa. A pretty girl in short shorts serves one in a champagne flute. Tornek motions to a stack of papers awaiting Durham’s signature, documents that will finalize their purchase of a steakhouse. He will get to those later. The yacht’s captain fires up the engines, and the boat propels into open water. The Miami skyline looms in the distance.
See a photo gallery from our visit to Durham’s home and yacht.
Filming all of this is a CNBC crew that has been following Durham all week. Anchorman David Faber has flown here to record a segment for a program tentatively titled The New Rich, scheduled to air in early 2008. Two cameramen trail Durham around the boat, occasionally asking him to walk back across the room again for another take. He is happy to oblige. Now seated in front of his computer as the yacht moves farther from shore, Durham divides his attention between the stock quotes scrolling across the screen and the CNBC crew that has been asking some mildly discomfiting questions.
“They asked me how I justify all this,” Durham says in an off-camera moment. “They asked me if I consider myself a materialist. I said, ‘Without a doubt! Look around.’ Does anyone not consider himself a materialist? Who doesn’t want stuff? This country is founded on the idea of people wanting stuff.”
Few people have been better at acquiring “stuff” than Durham. The 45-year-old founder of Obsidian Enterprises, a leveraged-buyout firm in Indianapolis, he claims to be worth $75 million. At last count, he owned or co-owned more than 70 classic and exotic cars, three private jets, the yacht, numerous Picassos and Renoirs, two restaurants (Touch and, in Indy, Bella Vita), a nightclub (GELO Ultra Lounge in Castleton), two limousines, a magazine (Car Collector), a plastic-surgery center, a cigar store, and—most strangely—the storied comedy brand National Lampoon. That’s to say nothing of the profitable but less glamorous manufacturing companies that fall under the umbrella of Obsidian.
Though Durham is far from being the richest man in town, it would be difficult to find someone flashier. More than 1,000 people attended his birthday party last summer at his 30,000-square-foot estate in Fortville, enjoying the investor’s hospitality while girls from Penthouse strolled around half-naked and celebrities from Jermaine O’Neal to Kato Kaelin hung out by the pool. Durham frequents Hugh Hefner’s Playboy parties in L.A., and he says he tries to bring a little of that “magic” to Indianapolis. Whether or not Indy is ready for it is the question. When photos of the birthday bash emerged on Durham’s MySpace page this September (including those of topless girls groping each other and him getting a lap dance), Indianapolis Star columnist Matthew Tulley wrote a piece connecting the host of the bawdy event to the governor and other politicians whom Durham supports heavily. “Every time you try to bring something from somewhere else, everybody freaks out,” the financier says. “If I’m going to live here, I try to at least have some fun.”
For a man fast becoming famous for debauchery, however, Durham can be disarmingly decent. Even in the midst of this lazy afternoon soiree on the yacht, he is on the phone with his ex-wife, Joan SerVaas, helping her work through some issues with her aging mother. And he tends to be quiet around crowds—sometimes painfully so. “I get nervous,” he says. “I clam up and don’t interact well. But I like the energy. I guess I’m a quiet guy who likes to go to parties.” Durham’s relationship with the press is complicated, too. Although the Star column was less than flattering and the Indianapolis Business Journal’s coverage of him has been so scathing that he has contacted his lawyer, Durham continues to welcome reporters with open arms.
As the cameras circle him on the yacht this afternoon and he fields questions about the rumors (whispered among Indy executives) that he is overleveraged, the investor just lounges back in a deck chair, sipping his mimosa. The jittery Tim Durham is nowhere to be found. Now gliding through the water at 20 knots, the Obsidian—purchased for $7 million—motors out to sea. Although he is currently on his sixth cocktail and continues to address a miniature media circus in the blistering heat, Durham remains composed. Pretending to be engaged in a conversation with Tornek, he smiles for the cameras. When they avert their gaze, Durham explains why he cooperates so readily.
“I’m not afraid of the press,” he says. “It can help to have a degree of visibility—you get the opportunity to look at deals. When this CNBC thing airs, it’s possible that I’ll start to get more national opportunities. Every dealmaker in the world is going to watch that show.”
Staring out the window of his office on the top floor of the Chase Tower, the highest point in Indiana, Durham looks back in time. Even without the aid of the telescope in his foyer, he identifies landmarks as far as 50 miles away in every direction—Senator Richard Lugar’s office, where he worked after college; the IUPUI building, where he went to law school; the law firm Ice Miller, where he served as a young attorney; the Waterway Boulevard office, where his former father-in-law, Beurt SerVaas, taught him the game of leveraged buyouts. Clouds obscure the horizon on this October day, but on a clear morning he can even see the hills of Southern Indiana, where he grew up in Seymour.
The son of a small-town dentist, Durham was raised middle class. Stocking shelves at a local grocery, he also worked six newspaper routes to earn money to buy cars. Exhibiting an early taste for luxury items, Durham demonstrated his business sense as a teenager, too. At Seymour High School, where he sang in the choir, the future financier quickly became a producer and launched a marketing campaign that made the choir performances profitable for the first time.
But it wasn’t until after law school, when he met Joan SerVaas, daughter of Indianapolis investor Beurt SerVaas, that Durham discovered his calling. In addition to serving as president of the city council for almost 40 years, Beurt had amassed a fortune buying and selling companies. When Durham and Joan married in 1989, the elder businessman took his new son-in-law under his wing, employing him at his investment firm. Durham identified a bus manufacturer called Carpenter Body Works that they could buy essentially for free—doing nothing more than assuming the company’s debt. Beurt green-lighted the purchase, and Durham added a financing wing to Carpenter and sold it for a tidy $1 million profit. While Beurt admired his protege’s talent for identifying undervalued companies, their personal styles clashed. “My father and Tim are a little different,” Joan says. “They have different passions. My father likes infrastructure. Tim likes to collect cars.”
Joan had three young children from a previous marriage, and with the father not in the picture, Durham raised them as his own. The couple also had a son, Timothy, who is now 17. Cracks began to form in the marriage, however, and the two separated in 1998. Durham decided it was time to strike out on his own.
“When I got divorced, I gave Joan everything and just bought a mattress and rented an apartment,” he says. “All I had was my clothes and a 19-inch TV. I decided I was going to start over. I thought, if I fail, I fail. When I was in college and poor, I was happy. So I’ll be okay either way.”
Having examined the balance sheet of an auto-parts maker called Lake City Forge in Michigan, Durham saw his first play. With no capital of his own to invest, he convinced a handful of local financiers to pool $10 million and buy the company. Eighteen months and a few adjustments later, he arranged the sale of Lake City Forge for $30 million. Durham’s cut for arranging the whole thing was $5 million. Suddenly, he was a rich man.
Using that seed money, Durham began growing his empire. He gobbled up manufacturing companies at first—a trailer maker and a rubber-reclaiming business. In 2002, he bought 430,000 shares of the cell-phone distributor Brightpoint at $1.50 each. A year later, he sold many of them for $27 per share. Durham’s quick windfall ($40 million) led to allegations that he had inside information. “A reporter at the IBJ called me and said, ‘About this rumor that you insider traded,’” he says. “I said, ‘If you print that, I will sue your ass. I will sue Mickey Maurer’s ass and I will own the IBJ.’ It’s not true, and there was never a bit of evidence.”
With his personal finances secure, Durham set about acquiring businesses more reflective of his increasingly extravagant tastes—Car Collector magazine, Indy Men’s Magazine, Touch restaurant, GELO Ultra Lounge, The Aesthetic Surgery Center in Carmel, Speedster Motorcars in Florida, Chairman’s Fine Cigars in Indianapolis. As a group, they comprised an unconventional, even risky portfolio. But Durham found them more fun than his manufacturing concerns. And his rising profile as a venture capitalist started to attract pitches from the public. Durham remembers one potential entrepreneur who arrived at his office wanting to market glow-in-the-dark tombstones. “This sweet old guy came in with a miniature grandfather clock strung with fiber-optic lights and a piece of paper taped to it that said ‘Here lies Mom,’” he says. “I thought to myself, ‘I’m not taking these meetings anymore.’”
Obsidian Enterprises made its public debut as the umbrella company for all of Durham’s ventures in 2001, then went private in 2006 amid complaints that the company was hemorrhaging money. In the two years leading up to going private, Obsidian lost more than $10 million. And while he claims profit is up more than 300 percent in the two years since, now no one knows for sure except Tim Durham.
“There are people who wonder, ‘Is Tim the real deal? Can he back this stuff up?’” says Todd Tobias, Durham’s partner in the now-defunct Indy Men’s Magazine. “You hear rumors that he’s overleveraged, that he can’t afford the life he lives. All I know is, if you’ve been in that garage of his and seen those cars, you know he has assets. Obviously he has some cash.”
And he has the confidence of many powerful people. Scott Jones, inventor of voicemail and perhaps the only investor in town with a chancier portfolio, considers him one of the entrepreneurial giants of the city. “I often talk to him about my own business ideas,” Jones says. “He asks some of the best questions. He drills deep.” Bruce Kidd, a director at the Indiana Economic Development Corporation, sees past the flashy persona to an undeniably savvy businessman who is essential to the growth of Indianapolis. “It’s not my style personally, but I admire anybody who’s able to raise the profile of the city the way he has,” Kidd says. “I’m willing to look for the silver lining here as long as he’s living within the law.”
A lot of people are. As head of fundraising for the Marion County Republican Party, Durham is the top individual donor for both Governor Mitch Daniels ($50,000) and Prosecutor Carl Brizzi ($160,000), and remains a popular source of revenue for those on the campaign trail. “You know, that article ran about my R-rated MySpace page, and somehow I still get a lot of politicians wanting my money,” he says. “Apparently, they didn’t see it. I’m going to give it to them as they come through the door now. ‘Didn’t you see this? I’m not someone you want to be associated with! I’m not a good influence!’”
In the column Tully wrote for The Star in September, headlined “GOP donor flaunts R-rated pics on MySpace,” both Daniels and Brizzi found their names dragged through the mud of Durham’s raunchy birthday party, even though neither attended. A few weeks later, at a private campaign fundraiser co-hosted by Durham, Daniels was visibly annoyed at being asked about their connection. The governor would only say that he didn’t know too many people in Indiana who have done more for the party in terms of fundraising than Durham. “When he decides something is a good cause,” Daniels said, “he’s very generous.”
Brizzi, on the other hand, makes no attempt to dodge his friendship with the financier. The two regularly have drinks at Harry & Izzy’s. When the Star column appeared, Durham called the prosecutor and both laughed about it. “Carl takes some heat because of me,” he says, “and his attitude is, ‘Who cares?’” Some of the same qualities that make Durham successful in business—especially his connections with wealthy local executives—make him a great fundraiser. And Brizzi feels no guilt by association. He remembers a lesson Durham taught him early in their friendship that has stayed with him over the years. “You don’t want to be caught being something you’re not,” the prosecutor says. “Don’t pretend to have a Pollyannaish image if you can’t live up to it.”
“That being said, my mom gave me a hard time about Tim’s gathering,” Brizzi adds. “She said, ‘What’s your friend Tim doing? What is he thinking?’ Needless to say, I’m glad I didn’t go to that party.”
For all his wealth and swagger, Durham is most famous for a short quote in a 2004 IBJ article that he says has haunted him ever since: “On the day I die, I want to be the richest man in the world.” Actually, “haunted” may be a stretch. Durham continues to use the phrase in conversation and frequently rehashes it in the press. He tries to dissociate himself from the statement in one breath and can’t help throwing in “Why is that wrong?” in another.
Everything about his style screams that he longs for it to be true. Seated in his office atop the Chase Tower, Durham wears a white silk shirt and custom wool slacks. Dark mahogany walls and heavy curtains surround him. Behind his desk, a four-foot-long replica of his yacht rests on a shelf alongside Frank Sinatra’s Grammy for “Strangers in the Night,” a trinket Durham picked up at a private sale for $65,000. Framed newspaper stories about his exploits hang here and there. While answering phone calls (some 200 come in each day), Durham sorts through a dozen stacks of paper on his desk—some business, some pleasure. Glancing over new business proposals, a fundraising hitlist that includes the names Steve Hilbert and Scott Jones, and invitations to private car auctions, he pulls out a freshly printed brochure advertising his jets available for corporate lease. “Looks good,” he says to himself, admiring the photos of leather interior and polished conference tables.
A television near his desk is tuned to CNBC, and despite the low volume, the noise carries. In Obsidian’s 21,000-square-foot office, only 13 people show up for work every day. Durham spared no expense outfitting his little investment group with the trappings of a much larger firm. Calling it “instant credibility,” he is quick to note that he got the space for a song. When Chase Bank executives out of Chicago took over what had been the Bank One Tower, the bank’s executives vacated the floor. With no competitive bidders for such an enormous space, Durham grabbed the offices for a mere $14 per square foot—less than he was paying on the 36th floor. His close friend Hilbert called it the best real-estate deal in town.
After a day of analyzing balance sheets, Durham drives his BMW Z8 home to Fortville, where his accommodations are no less ostentatious. Stepping inside the garage, he wears a mischievous smile that seems to say, “Wait until you see this.” The $30 million collection of classic and exotic cars does not disappoint. On the ground level, he weaves his way past restored Duesenbergs and Mercedes, noting their provenance as he goes. “That one belonged to William Randolph Hearst,” Durham explains. “And Elvis rode in that one.” Descending a flight of stairs to the lower level, he shows off the modern collection: Ferrari, Lotus, Lamborghini, Porsche, and DeLorean. Durham sells the cars occasionally, and they appreciate, which for him justifies the obsession. “People say, ‘Oh, you collect cars. How frivolous,’” he says, walking to the main part of the home. “Well, I make money in that garage.”
Continuing on a tour he has given many times, Durham moves from painting to painting in his house like a museum guide. He points out a Joan Miro just inside the front door, then a Renoir above the nearby fireplace. Six Pop Art portraits of Durham by Peter Max (“once almost as big as Warhol”) hang side-by-side in an upstairs hallway, not far from the bar where he keeps a realistic little portrait of a clown painted by Frank Sinatra.
Durham’s taste for the extravagant has widened his circle of friends lately. He pauses the tour at a photograph of him and Ludacris, rapper and star of the 2004 film Crash. “Luda” stopped by one of Durham’s lavish parties before the Indianapolis 500 last year, and the two instantly became pals. Durham sees nothing strange about a relationship between a rapper and a Hoosier investor, and the feeling is mutual. “Tim can kick it in my crew anytime and blend right in,” Ludacris said by phone from his Atlanta estate this fall. “He knows how to have fun, and we share a lot of the same interests as far as cars and expensive tastes.” Ludacris invited Durham to the 2007 MTV Music Video Awards, where they sat with Paris Hilton and Pamela Anderson. Durham’s regular trips to hang out at the Playboy Mansion with Hugh Hefner have led to a few Hollywood friendships as well. “Hef is a smart guy, a real trendsetter,” he says. “He blazes a lot of trails—a lot like I feel I’m blazing here in Indiana.” Durham should know. His current girlfriend, Jami Ferrell, was Miss January 1997 and dated Hefner (and Jack Nicholson) before making it back to her New Castle home.
Perhaps none of Durham’s activities, though, has led to as many entertainment-industry friends as purchasing National Lampoon in 1999. Founded in 1970 by a group of Harvard graduates, the comedy team published a monthly magazine of the same name that quickly became the gold standard in humor writing. Venturing into film, Lampoon reached its zenith with the Vacation movies and Animal House. But the company languished like an old joke in the late ’80s, and by the time Durham and fellow Indy investors Dan Laikin and Paul Skjodt found it, Lampoon was little more than four full-time employees and a brand name. While the group had licensed its name to a couple of schlocky teen comedies in the ’90s, it hadn’t actually produced a film in 18 years. The trio of investors pooled $10 million to rebuild Lampoon. For the first time since the 1980s, the group began making movies. National Lampoon’s Bag Boy, a comedy starring Brooke Shields, debuts later this year, and film is already rolling on another movie starring Kevin Dillon (Johnny Chase on Entourage). Durham spent last August at his home in L.A., troubleshooting at the company’s offices and rubbing elbows with the stars.
The rubbing can occasionally cause friction. In 2004, Anna Nicole Smith, along with Howard Stern and an E! television crew, was staying at Steve Hilbert’s house in the Caribbean. The former Conseco CEO wanted them out and had a friend phone Durham, who invited the gang to his home on Geist Reservoir, where they lounged around for two weeks. In the final stages of brokering a deal with a local bank, Durham claims that news of his houseguests leaked out and the bank withdrew from the deal. “They said, ‘We don’t want to do business with someone who associates with Anna Nicole Smith,’” he says. “I couldn’t believe it.”
So the obvious question for Tim Durham is, why stay? Why not live in a city on one of the coasts, where his style might be considered mild? The answer, he says, is not because he is a big fish in a small pond—although that is unquestionably what he has become. Instead, he points to his infrastructure: his accountants, lawyers, and dealmakers within a mile of that Chase Tower office. The minute he doesn’t want to be here, he hops on one of his jets and heads for Miami or Las Vegas. And Durham isn’t the first flashy iconoclast this city has ever known. Consider his friend Hilbert. “Steve has been burned by the media here, and to a certain extent, so have I,” Durham says. “As soon as someone gets built up here, they can’t wait to take a potshot at them. What good does that do?”
Although the materialism, parties, and celebrity-worship attract criticism, plenty of people rush to Durham’s defense as well. From Todd Tobias, his former business partner: “Sure, his lifestyle is unusual for this town. But his lifestyle is a little unusual for any town. He’s as normal as a multimillionaire can be.” From Bruce Kidd at the IEDC: “Some people may say, ‘This guy is a little showy for me.’ But the net of it is this: He has an exciting life, he entertains well, and it can’t hurt.” From his girlfriend, Jami Ferrell: “The guy who gets all the flack for being the party animal is the one in bed at 10:30 p.m.” And from Carl Brizzi: “This is still Indiana, and it’s still a very conservative state. So Tim is an oddity. But let me tell you, he’s worth it.”
As for Durham’s knack for being photographed with girls wearing bikinis or less, his ex-wife, Joan—who says the two don’t judge each other—defends even that. “He’s been successful, and he’s become a magnet for young women in bikinis,” she says. “And women in business suits for that matter. He’s just enjoying life.”
It is Thursday night at Durham’s South Beach restaurant, Touch. A pair of women play on an enormous swing near his table, mist spews from the bar surrounded by live palm trees, and techno music pounds from the corner of the joint, giving the place the feel of a loud, lewd circus. But Durham just sits quietly in a booth along the wall. Dining with Ferrell and David Tornek, he peruses the menu and gently holds Ferrell’s hand. There is an undeniable warmth about him that Tornek doesn’t share. (In a private moment, when speaking about how pricey living the luxe life can be, Tornek says this: “If it floats, flies, or f—ks, it’s expensive. Better to rent than own.”) When Durham’s son Timothy calls wanting a location to film for a contest, Durham phones the co-owner of Bella Vita to arrange that space. When the chef comes out to see how everything is, the financier gives him an approving smile and a nod. How the Tim Durham of lingerie-party fame can be reconciled with the mild-mannered guy currently sitting at this Miami restaurant baffles even his friends back home.
“Tim is kind of a paradox,” Brizzi says. “He’s naturally introverted, but in the right setting he can be very entertaining.”
Indianapolis executives who know Durham often describe him as a wallflower, even strangely quiet. One company president, who preferred to remain nameless, recalls a dinner with Durham in which the financier didn’t say a word all night. SerVaas maintains that the perception of her ex-husband doesn’t match the reality. “His reputation has changed, but I don’t think his personality has,” she says. “Tim is pretty serious. Always has been.”
And she notes that Durham has always been a great father to his four boys. He advised them, attended their soccer games, introduced them to powerful people who could help their careers. For years after the divorce, Durham took SerVaas and the kids on vacations in the hopes of reconciling. His youngest son, Timothy, grows weary of seeing his dad portrayed as a miscreant in the press. “He took in my brothers like they were his own kids,” he says. “He’s always been generous with us. His image lately has been negative. People assume that he had to have loose morals to come from nowhere and be where he is. But he isn’t like that at all. It’s just people who don’t know him assuming things.”
What’s more, Indy counts Durham among its most generous philanthropists. He donates large sums to the Leukemia & Lymphoma Society, the Cystic Fibrosis Foundation, and the Indianapolis Symphony Orchestra. Supporting the local business community with particular fervor, he claims to be a soft touch for those in search of funding. When Bruce Kidd at the Indiana Economic Development Corporation wanted to put together a “Venture Idol” competition to showcase the next generation of entrepreneurs, he knew exactly whom to hit up first.
“We went to Tim and asked him to be the lead sponsor,” Kidd says. “It didn’t take him two minutes to say yes. He said, ‘How much do you want?’ He was even going to walk some of his Picassos over to the Historical Society for the presentation. We said, ‘Jeez … that’s a nice offer, Tim. But I don’t know if we want to take that kind of risk.’ He didn’t think a thing of it.”
Back on the yacht, Durham and company drain the last of the Dom Perignon. After a marina employee secures the boat to the dock, the financier slips him one of the many $100 bills in his wallet. The CNBC cameramen pack up their equipment and lug it into the sunset. Miami’s sweltering autumn heat finally breaks, and Jami covers up with a little cotton dress, descending to the bedrooms below for a nap before hitting South Beach for dinner. David Tornek heads over to Touch to prepare for the nightly onslaught of diners. Durham is momentarily alone. Tomorrow he will hop on his private jet and fly home, where, after only two days away, a mountain of potential business deals, fundraising updates, and balance sheets awaits.
And yet he is eager to return. Durham’s financial situation may be the subject of speculation and his private life a source of contempt, but when asked if there is anything he would change about Indianapolis, he makes a joke rather than retaliating at a city that hasn’t always embraced him.
“I’d put it on an ocean and keep the temperature at 75 degrees all year,” he says, grinning. “And gambling. Let’s have casinos downtown. I like blackjack, but I have it down to a science lately, so it’s a little boring. And what do you do when a game gets boring? You raise the stakes. I won $130,000 on a hand once, but I never play more than I can lose—I know how quickly fortunes can go up and down. It’s a game of endurance, really. If you have enough money and time, you can play through any low.”
Photo by Tony Valainis
This article appeared in the January 2008 issue.