Derek Coburn’s introduction to Oakdale came through the nefarious James Stenbeck. At the time, James’ son, Paul Ryan, was desperate for money and was referred to Derek, a loan shark, by a friend of a friend. Derek was happy to oblige and gave Paul thirty days to pay back the loan. However, mere days later, Derek learned that Paul's development deal was on the verge of falling through, Realizing that Paul would most lucky not be able to pay back the loan on time, Derek demanded the money back within 24 hours. Having learned that Paul’s wife, Meg, was pregnant, Derek made a thinly veiled threat to Paul, warning him not to do anything that might upset Meg or Paul’s mother. With nowhere left to turn, Paul was forced to accept James' help in finding the money to repay Derek. Unfortunately, Derek’s introduction to Paul had been set up by James in the hopes that Paul would need his father’s help, At the same time, Henry Coleman, the man who unknowingly recommended Derek to Paul, realized that Derek was not the loan shark that his friend recommended. Confused, he followed Derek to Paul’s mansion, Fairwinds, and came face to face with the infamous James. Fearful that he’d ruin the plan, James ordered Derek to lock Henry in the wine cellar at Fairwinds. Not long after, Henry’s lover, Vienna, enlisted Bonnie McKechnie’s help in finding Henry. By this point, Derek, who passed him himself off as a respectable businessman, had begun dating Bonnie. Having heard Henry warn Bonnie that Derek was not a god man, Vienna sought his help in locating Henry since she believed that he was at a card game in a seedy part of town. Trying to get the women out of the way, Derek led them to an abandoned warehouse and locked them inside.
Meanwhile, James had Derek throw Paul into the reservoir with a cinderblock tied to his feet, but Paul managed to survive. Not long after, James ordered Derek to release Henry and the women. After releasing Henry, Derek took him to the locked warehouse and left it to Henry to get them out. Soon after he left, Derek heard an explosion in the vicinity of the warehouse. Derek returned to the scene and although Henry succeeded in freeing the ladies, he was injured in the explosion. Derek immediately got Henry medical attention. After they arrived at the hospital, Derek took Bonnie aside and said he couldn't stay. He apologized for getting Bonnie involved in the whole situation and told her he hadn't had a choice. Soon after, Derek learned that Paul was trapped in a hole after trying to save Meg’s young nephew who had fallen in. Luckily, Derek used a tunnel that James had dug earlier and showed Paul a way out. With Bonnie’s help, Derek was apprehended by the police. Though Derek asked her to represent him in court, she refused but later agreed when Paul asked her to in the hope it would help them locate Meg—who had been kidnapped by James. Derek asked for full immunity in return for everything he knew about James and his plans. Later, since both Vienna and Henry to agree not to press charges against Derek, he was released from custody and imprisoned by James. Luckily, he was found by Bonnie and told her where Meg was being held. In the end, Paul rescued Meg and killed his father. Several weeks later, Derek approached Bonnie at Metro and finally explained his connection to Stenbeck. Derek spoke about how he had met James Stenbeck in prison, and James had blackmailed him when they both got out. He told Bonnie she deserved someone better, and she agreed. Derek appeared sad and walked out. However, at the end of the day, Derek asked Bonnie for a second chance and, surprisingly, she gave it.
Several months later, Derek met Lily Snyder and mistook her for an old lover named Rose D’Angelo. Lily was Rose’s twin sister and informed Derek that Rose had died a few years earlier. When Derek revealed that he and Rose had had an intimate relationship twenty years earlier, Lily wondered if Derek could be the father of Rose’s daughter, Jade. Though Derek insisted that it wasn’t likely but Lily was convinced that he was Jade’s father. Soon after, when Jade was arrested on robbery charge, Lily persuaded a reluctant Derek to try to help her by searching for the man who had actually committed the armed crime. Soon, Derek located Robby Sanchez, the young man who committed the armed robbery for which Jade was being held, and took him to the Oakdale police. Though he was instrumental in helping Jade, he refused ot acknowledge that he could be her father. Though Bonnie tried to get him to see that it was a possibility, Derek refused to get a DNA test since he felt that he wasn’t worthy to be anyone’s father. Afterwards, Sanchez returned to town and held Derek and Jade at gunpoint but was subdued. Soon after, Derek agreed to the DNA test and it was discovered that was Jade's father. However, the news did not improve their relationship.