Fair Finance Co.’s bankruptcy trustee has extracted a $3 million settlement from National Lampoon, the media company once led by disgraced Indianapolis businessman Tim Durham.
Trustee Brian Bash four years ago sued the Los Angeles-based company, charging Durham had “fraudulently transferred at least $9 million of Fair’s money to National Lampoon.”
The deal, which requires court approval, is the latest in a string of multimillion-dollar settlements recently negotiated by Bash, who is scraping together a recovery for the 5,200 Ohio residents who funded Durham’s Ponzi scheme by buying high-yield Fair Finance investment certificates.
Bash has yet to funnel any money to the investors, who lost $205 million. But in the wake of reaching a $3.5 million settlement with former Fair board member Dan Laikin and a $35 million settlement with Fair lender Fortress Credit Corp., Bash said last month he anticipates making his first investor distribution by year-end.
Akron, Ohio-based Fair Finance, founded in 1934, specialized in buying finance contracts from fitness clubs, time-share condominium developers and other firms that offered their customers extended-payment plans. But in the years after Durham bought the company in 2002, that business shrank. In the same span, authorities say, Durham pulled tens of millions of dollars out of Fair to support a lavish lifestyle for himself and his friends, and to prop up money-losing businesses, including National Lampoon.
In an Ohio bankruptcy court filing late last week, Bash said that “although the trustee believes that his claims against National Lampoon have merit, it is unlikely that the trustee could recover on a judgment of $9 million.”
National Lampoon lacks the financial wherewithal to pay even the $3 million in a lump sum, Bash wrote. Instead, it will make monthly principal payments equal to 15 percent of the prior month’s gross revenue.
Bash said making peace with National Lampoon also made sense because resolution of the lawsuit likely “will have a positive effect on the marketability and potential value of National Lampoon’s brand and assets.”
That’s a big issue because Durham previously had settled other litigation by handing to the trustee his significant ownership stake in the company. Bash said he already has received “many expressions of interest” from potential acquirers of that stake and predicted the settlement would maximize the sale price.
Bash also predicted the settlement would “facilitate the dismissal or other expeditious resolution” of a 2013 lawsuit filed by National Lampoon that charged Durham used $1 million in Lampoon funds to pay his criminal defense attorney, John Tompkins.
According to the suit, one week after agreeing to a settlement with Warner Bros. over the distribution of the National Lampoon “Vacation” series of movies—a deal that paid Lampoon $2.7 million—Durham transferred $1 million of that money into the bank account of Tompkins' Indianapolis law firm, Brown Tomkins Lory & Mastrian.
In court papers, Bash does not specify how that case might be resolved.
Fair Finance shut down following an FBI raid in November 2009. A federal jury in 2012 convicted Durham of masterminding a Ponzi scheme that relied on the sale of ever-more investment certificates to Ohio residents, and he now is serving a 50-year prison sentence in Kentucky.