Money from Animal House comedy movie maker National Lampoon paid for the criminal defense of convicted Fair Finance Co. schemer Timothy Durham, a bankruptcy court document alleges.
Durham, the Indianapolis businessman sentenced last November to 50 years in federal prison for masterminding the $200 million Fair Finance Ponzi-like scheme that victimized thousands of Ohio residents, has since claimed he is penniless.
Fair Finance bankruptcy trustee Brian Bash, in a report to be heard today in U.S. Bankruptcy Court in Akron, said California-based National Lampoon, which Durham at one point managed and was part owner, paid for Durham’s criminal defense. Bash is suing National Lampoon for $9 million, saying money was illegally funneled to the company from Akron-based Fair Finance.
Besides the 1978 comedy hit Animal House, National Lampoon made the popular Vacation movie series starring Chevy Chase and other risque movies.
“The trustee recently discovered that National Lampoon possesses a significant volume of data and documents that National Lampoon previously contended were missing,” Bash’s 53-page-long monthly status report says. “That revelation and the trustee’s discovery of the use of National Lampoon’s cash to fund Durham’s criminal defense, has significantly changed the posture of the case.”
Bash is suing National Lampoon in U.S. District Court in central California. The trustee succeeded in asking the federal court to push back the trial date to December “in order to accommodate the considerable task of retrieving and digesting the newly discovered data for use in prosecuting the trustee’s claims.”
National Lampoon at one point was run by a Durham friend named Daniel Laikin, an Indiana businessman who was convicted of stock manipulation. Durham took over National Lampoon following Laikin’s imprisonment. Bash also is suing Laikin, a former Fair Finance board member, for $25 million.
Bash said his suit against National Lampoon has been complicated by management changeover at the company.
“The trustee is informed that Mr. Durham no longer has any position of management of or control over National Lampoon” and that current management is cooperating with him, Bash said in his report.
Durham, along with business partner James Cochran, in 2002 bought Fair Finance from the Fair family. Following FBI raids in November 2009 that closed the company, Durham, Cochran and former Fair Finance executive Rick Snow were convicted last year on various charges of defrauding about 5,300 Ohio residents out of more than $200 million they had invested in Fair Finance. Cochran was given a 25-year sentence and Snow was sentenced to 10 years. All three men are appealing their convictions.
Also today, the bankruptcy court is scheduled to hear about the proposed $3.55 million settlement between Bash and former Fair Finance owner Donald Fair, whose father founded the financing firm in the 1930s.
Bash sued Fair for more than $150 million, seeking the return of money Durham and Cochran paid to the Akron executive plus damages. Bash and Fair are seeking court approval for the settlement agreement.
If Judge Marilyn Shea-Stonum agrees to the settlement, then Fair’s money will be added to the more than $1.8 million currently in the Fair Finance estate’s money market fund for a total of nearly $5.4 million.
Bash has not yet disbursed funds to Fair Finance creditors. The money recovered to date has gone to pay the numerous lawyers and other professionals who are processing the case.
Today’s bankruptcy court hearing is scheduled for 9:30 a.m. in the federal building in downtown Akron.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.