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Lampoon paid for Durham’s defense, trustee alleges

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Comedic film producer National Lampoon Inc. paid for convicted Ponzi schemer Tim Durham’s legal defense, a court document alleges—a revelation that may strengthen an Ohio trustee's $9 million lawsuit against the company.

Durham, the former CEO of National Lampoon, was sentenced in November to 50 years in federal prison on securities fraud and other convictions in the collapse of Akron, Ohio-based Fair Finance Co. He also was ordered to pay $202.8 million in restitution to thousands of victims.

Earlier this month, a federal judge deemed Durham penniless and awarded the former Indianapolis businessman free counsel to appeal his sentence.

Fair Finance bankruptcy trustee Brian Bash, charged with recovering funds for Fair investors, alleged in the Friday court filing that National Lampoon funded Durham’s defense. The discovery "has significantly changed the posture of the case," he said, and prompted him to request a delay in the court case against National Lampoon. The court granted a continuance until December.

“The trustee recently discovered that National Lampoon possesses a significant volume of data and documents that National Lampoon previously contended were missing,” Bash said in court documents.

When reached by phone Wednesday morning, Durham’s trial lawyer, John Tompkins, said "I don’t think it’s accurate that Lampoon funded his defense. Beyond that, I don’t have anything to say."

Durham, who served as CEO of Fair before its collapse in 2009, was CEO at National Lampoon from 2008 until stepping down in January 2012. Bash is suing the Los Angeles-based company and is seeking to recover $9 million that Durham provided it over the past decade.

The suit filed in U.S. District Court for the Central District of California alleges that Durham funneled the money from Fair over the years to cover the ailing National Lampoon’s losses.

Bash said in the court document that National Lampoon’s lawyers have been cooperative with respect to the additional discovery and intend to explore alternatives to a trial to resolve the claims.

A federal jury in June found Durham guilty on all 12 counts stemming from the collapse of Fair. Prosecutors charged that Durham looted the company to fund a lavish lifestyle and support other failing businesses he owned.

Fair co-owner Jim Cochran, who was convicted on eight of 12 counts, received a 25-year sentence, and Rick Snow, the chief financial officer, received 10 years.

Money for the scheme came from 5,000 Ohio investors who purchased unsecured notes from Fair boasting interest rates as high as 9 percent.

Bash has been trying to recover money for the investors for nearly three years, but so far has been unable to make a distribution.

Bash sued Fair for more than $150 million and wrested a proposed $3.55 million settlement from former owner Donald Fair.

If a federal judge approves the settlement with Donald Fair, the pool of funds set to be disbursed to investors will grow from $1.8 million to nearly $5.4 million.

All of IBJ's coverage of Tim Durham and Fair Finance can be found here.





 


 

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  • Somewhere in the middle
    I agree that Bash is doing the job the court hired him to do and he deserves to be paid. I do wonder, however, whether he is chasing down every foxhole (and billing for it) when he probably realizes by now there is nothing there. The money Durham stole is GONE. It was blown by him and his flunkies on parties and trips and ridiculous businesses that had no chance of succeeding (anyone remember Vapour Lounge?). It's sad for the Ohio investors, but I bet Mr Bash is going to recover just enough to pay his massive legal bills, leaving the investors with next to nothing.
  • Why a Crook
    Bill - no money has been paid out to the investors because this is still an ongoing process, that is how it works. You cannot pay $5 to each investor now, then another $25 to each investor next month, etc., etc. You wait until it is done, you pay the bill of the trustee and attorney's then you pay the investors. Why don't you volunteer to be the trustee for free? Oh, because you are not an attorney, nor did any other attorney volunteer to do this for free. Why? Because people get paid to do their job. Is Bash going to make a nice payday from this? Sure he is. Does he deserve it? He's doing his job right? Should he do it for less? I don't know what his billable rate is, but my guess is that it is an industry standard. If you want talented people, then you need to pay them. He's stuck his fangs into anyone who ever uttered Durham's name, I suppose that is what the investors want so something can be recouped. Quit judging a man you know nothing about simply because he is doing what he was hired to do. He is successful and will profit from his job, get over it.
  • Crook??
    Someone should ask about all the money and property that Brian Bash has stolen and why there is no money going to the investors. His office is getting paid very well for doing what it takes to make them famous and not concerned with the investors at all!
    • Xjr you're delusional
      Seriously XJR, it's time to face the truth that Durham was a scam artist. His prospectuses did not say "I'm going to spend your money on trips to Vegas". He admitted that 90% of new cert money went to pay off old ones (he never disclosed the extent of this in the prospectus). So if you're investing $100 and you knew $90 was going to pay off other investors (ie, has ZERO chance of returning a profit, like flushing it down the toilet), would you have invested? And you're saying the investors had all the info they needed to make informed decisions about investing with Fair, and it's just their tough luck? Please...
    • doubtful xjr
      No, his prospectus did not say "the money from these securities is going to be lent to me and my wife's sister to run her hair salon that brings in $0 per year and so I can buy another Ferrari". What it said was "loans and other investment yields from diligently sourced and qualified businesses, etc., etc.". Don't be a jackleg and try to pretend that he was open and honest about how he planned to spend the investment. That makes you seem more ignorant than he was.
    • Totally Agree!
      Tim Durham was a scam artist with an huge ego and high opinion of himself. He used to say he was going to be the next Warren Buffett...lol! I sat close to him at a stockholder's meetings of a locally owned company and felt like a snake was in the room! He had and still has no conscious!
    • Comments
      Your comments clearly show the shallowness of your thought process about what Durham and his buddies to the investors in Fair Finance.
    • But..
      You leave out one key thing in your example. If apple included this in the annual report/prospectus, and I didn't do my due diligence, then it's 100 percent my fault. Tim's prospectus told investors where the money was going....no suprises!!
      • to XJR
        A large portion of this country purchases uninsured investments every day. You might even own some in your 401k or IRA if you have one. So you are telling me that if someone buys stock in Apple, then Tim Cook loans his brother-in-law a crap load of money for gambling and lavish vacations, then Apple goes under because of this, making their stock worthless............. you are saying that the person who bought the now worthless stock in Apple made a stupid investment and nothing was "stolen"? Smart.
        • Investments?
          The stories all say that money was "borrowed" from Fair Finance to buy cars, boats, parties, ect.
        • Really
          The whole thing is pretty crazy if you ask me. Who in their right mind buys investment certificates that aren't insured??...SERIOUSLY. The main reason these guys went to jail is because of the political agenda of the people in office. Lets be real, no money was really "stolen", what happened is there guys made unwise investments that failed.
          • Donald Fair?
            Why is Donald Fair responsible?

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