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Nature of Suit Code: 555
Nature of Suit: Prisoner - Prison Condition
Cause of Action: 

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United States Court of Appeals 

For the Seventh Circuit 

Chicago, Illinois 60604 

Submitted April 2, 2020*

Decided April 6, 2020 

Before 

DIANE P. WOOD, Chief Judge 

JOEL M. FLAUM, Circuit Judge 

AMY C. BARRETT, Circuit Judge

No. 19-1653 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff-Appellee, 

v. 

TIMOTHY S. DURHAM, 

 Defendant-Appellant.

 Appeal from the United States District 

Court for the Southern District of Indiana, 

Indianapolis Division. 

No. 1:11-cv-00370-JMS-TAB 

Jane Magnus-Stinson, 

Chief Judge. 

O R D E R 

Based on Timothy Durham’s criminal convictions for violating the Securities 

Exchange Acts of 1933 and 1934, a judge found him civilly liable for those violations as 

well. Durham does not dispute the existence of the criminal judgment. Rather, he 

argues that this judgment is nonfinal, and thus has no preclusive force, because of his 

*

 We have agreed to decide the case without oral argument because the briefs and 

record adequately present the facts and legal arguments, and oral argument would not 

significantly aid the court. FED. R. APP. P. 34(a)(2)(C). 

NONPRECEDENTIAL DISPOSITION 

To be cited only in accordance with Fed. R. App. P. 32.1 

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No. 19-1653 Page 2 

pending collateral attack on his convictions. We affirm because a criminal conviction is 

a final judgment with preclusive effect, despite any pending, post-judgment challenges. 

Between 2002 and 2009, Durham and co-conspirators perpetuated a widespread 

financial fraud involving the sale of investment certificates, which are classified as 

“securities” under the Securities Acts. 15 U.S.C. § 78c(a)(10). The victims, many of 

whom were elderly and living on modest incomes, lost over $200 million. A jury found 

Durham guilty of securities fraud, and he received a sentence of 50 years in prison. 

15 U.S.C. §§ 78j(b), 78ff; 17 C.F.R. § 240.10b-5. We affirmed his conviction and sentence. 

See United States v. Durham, 630 F. App'x 634 (7th Cir. 2016) (sentence); United States 

v. Durham, 766 F.3d 672 (7th Cir. 2014) (conviction). His collateral attack under 28 U.S.C. 

§ 2255 (for ineffective assistance of counsel) is still pending. 

While Durham’s criminal trial was pending, the Securities and Exchange 

Commission filed a civil suit against him based on the events underlying the criminal 

prosecution. The district court stayed the civil suit pending resolution of the criminal 

charges. After we affirmed Durham’s convictions and sentence, the Commission moved 

for summary judgment, arguing that the jury’s factual finding of Durham’s criminal 

guilt required the court to find that he was civilly liable also. 

Before the district judge ruled on summary judgment, Durham moved for her 

recusal. He argued that her friendships with community leaders whom Durham 

considered his enemies biased her against him in the civil case. The judge—Jane 

Magnus-Stinson, who also had presided over the criminal trial without any recusal 

request—referred the matter to Judge Tanya Walton Pratt. In the referral order, Judge 

Mangus-Stinson stated that she was friendly with the people Durham had named, but 

she did not know of any personal conflicts they had with Durham. Judge Pratt credited 

Judge Magnus-Stinson’s statement, found that the friendships alone did not actually 

bias her, and referred the motion back to Judge Magnus-Stinson. Relying on Judge 

Pratt’s finding, Judge Magnus-Stinson determined that a reasonable observer could not 

conclude that she appeared biased and denied the recusal motion. 

The district court then entered summary judgment for the Commission. The 

court reasoned that the statutes governing the criminal and civil charges were 

substantially similar; therefore, as a matter of collateral estoppel, the jury’s findings of 

guilt under the criminal provisions were conclusive of Durham’s civil liability. The 

court further ordered Durham to pay just over $620,000 in disgorgement. It relied on 

trial evidence showing that Durham received this sum in three payments from his 

fraudulent company and then transferred roughly those amounts to others. 

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On appeal, Durham first argues that the district court erred by applying the 

doctrine of collateral estoppel. He concedes that a final criminal judgment would 

support a finding of civil liability, but he contends that the criminal judgment is not 

final because his collateral attack on his conviction under 28 U.S.C. § 2255 is pending. 

We disagree. Durham suggests a distinction between § 2255 motions premised 

on claims of ineffective assistance of counsel and those premised on other grounds that 

has no basis in the law. Regardless, in criminal cases, “[f]inal judgment ... means 

sentence. The sentence is the judgment.” Berman v. United States, 302 U.S. 211, 212 

(1937). And “a judgment's preclusive effect is generally immediate, notwithstanding 

any appeal.” Coleman v. Tollefson, 135 S. Ct. 1759, 1764 (2015); Williams v. C.I.R., 1 F.3d 

502, 504 (7th Cir. 1993) (“[A] judgment final in the trial court may have collateral 

estoppel effect even though the loser has not exhausted his appellate remedies.”). This 

norm is even stronger in the context of a collateral attack, because the direct appeals are 

finished. See Webb v. Voirol, 773 F.2d 208, 211 (8th Cir. 1985) (state-law collateral attack 

on conviction did not render it non-final for preclusion purposes). The district court, 

therefore, rightly applied preclusion principles on summary judgment. 

Durham next contends that the disgorgement—based on the three payments the 

Commission identified—is invalid because he did not personally benefit from those 

payments. We review for abuse of discretion the disgorgement calculation. See Kokesh 

v. S.E.C., 137 S. Ct. 1635, 1642–43 (2017); S.E.C. v. Williky, 942 F.3d 389, 393 (7th Cir. 

2019). But even under de novo review, Durham’s contention that the district court 

needed to find that he personally used the funds is unfounded. Disgorgement is 

measured by the defendant’s wrongful gain. Kokesh, 137 S. Ct. at 1640. To calculate 

disgorgement, courts focus on the sum derived through the fraud, not on how the 

fraudster used the money. See, e.g., S.E.C. v. Koenig, 557 F.3d 736, 745 (7th Cir. 2009) 

(“pecuniary gain” for defendant’s disgorgement calculation was “amount he obtained 

by his fraudulent accounting”). The trial evidence showed that Durham received three 

payments totaling around $620,000 from his fraudulent company; it does not matter 

that he transferred those funds to others. 

Durham replies that these transfers were legitimate business expenses. But he 

offers nothing to show—as he must to challenge the district court’s calculation—that the 

transferred funds came from a source other than the ill-gotten gains from his fraud. 

See S.E.C. v. Monterosso, 756 F.3d 1326, 1337 (11th Cir. 2014) (“Once the SEC has 

produced a reasonable approximation of the defendant's unlawfully acquired assets, the 

burden shifts to the defendant to demonstrate the SEC's estimate is not reasonable.”); 

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S.E.C. v. CMKM Diamonds, Inc., 729 F.3d 1248, 1261–62 (9th Cir. 2013) (same). Therefore, 

the order to disgorge the funds was proper. 

Last, Durham challenges the denial of his recusal motion. He argues that, in 

ruling that Judge Magnus-Stinson was not biased against him in this case, Judge Pratt 

improperly credited Judge Magnus-Stinson’s statement that she did not know of his 

conflicts with her friends. To show that the judge did know about the conflicts, he points 

to a witness from the criminal trial, whose testimony Judge Magnus-Stinson heard. The 

witness said that “Durham made between 15 and 20 million” in profit from a hostile 

takeover of a company owned by one of Judge Magnus-Stinson’s friends. (He also notes 

that local news media reported on the takeover.) But this evidence is about a business 

deal; it does not show that Judge Pratt clearly erred in finding that Judge MagnusStinson did not know about any personal hostilities. See FED. R. CIV. P. 52(a)(6). So, a 

reasonable observer would not question Judge Magnus-Stinson’s impartiality. See In re 

City of Milwaukee, 788 F.3d 717, 719–20 (7th Cir. 2015). In any event, we have reviewed 

Judge Magnus-Stinson’s merits rulings de novo, so Durham has received an impartial 

decision. See Williamson v. Indiana Univ., 345 F.3d 459, 464-65 (7th Cir. 2003). The other 

grounds Durham raises as evidence of bias—adverse rulings in both the criminal and 

civil cases—cannot support a finding of bias either. See Liteky v. United States, 510 U.S. 

540, 556 (1994). 

AFFIRMED 

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