Comedy film producer National Lampoon Inc. is suing Indianapolis financier Tim Durham for allegedly transferring $1 million from the company to his defense attorney.
Durham, the former CEO of National Lampoon, was sentenced in November to 50 years in federal prison on securities fraud and other crimes related to the collapse of Akron, Ohio-based Fair Finance Co.
The lawsuit, filed Thursday in a state court in Los Angeles, where National Lampoon is headquartered, follows a similar allegation made in January by the bankruptcy trustee for Fair Finance.
National Lampoon has also sued Indianapolis attorney John Tompkins, who represented Durham unsuccessfully in the Fair Finance case, and unknown individuals it says helped make the wire transfer possible.
National Lampoon claims that one week after agreeing to a settlement with Warner Bros. over the distribution of the National Lampoon’s "Vacation" series of movies—a deal that paid National Lampoon $2.7 million—Durham transferred $1 million of that money into the bank account of Tompkins’ Indianapolis law firm, Brown Tompkins Lory & Mastrian.
The lawsuit also claims that Tompkins was listed as the beneficiary of that transfer, which allegedly occurred on July 28, 2011. Durham covered his tracks, the lawsuit alleges, with "false, fraudulent and deceptive entries in the business records of National Lampoon." The company claims it did not discover the $1 million transfer until April 2012.
Durham resigned as CEO of National Lampoon in January 2012 after leading the company for three years.
A call to Tompkins Monday morning was not immediately returned. In January, when Fair Finance trustree Brian Bash claimed that National Lampoon had financed Durham’s defense, Tompkins gave a brief statement to IBJ.
"I don’t think it’s accurate that Lampoon funded his defense,” he said on Jan. 23. “Beyond that, I don’t have anything to say."
Tompkins is no longer representing Durham. Instead, James H. Mutchnik, a white-collar criminal defense attorney at Chicago-based Kirkland & Ellis, has agreed to represent Durham for free during an appeal of his conviction.
Bash has claimed in a lawsuit against National Lampoon that Durham propped up the company by transferring $9 million, over the course of a decade, from investors’ holdings at Fair Finance.
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.
All of IBJ's coverage of Tim Durham and Fair Finance can be found here.