National Lampoon Inc.'s former chief executive officer, who has ties to the bankrupt Akron company Fair Finance, was sentenced to 45 months in prison Wednesday for conspiring to manipulate the stock price of the media company that made the 1978 comedy movie Animal House.
U.S. District Judge Joel Slomsky in Philadelphia said Daniel Laikin deserved to spend almost four years in prison because he ''undermined everyone's confidence in our commercial markets'' through the scheme to pump up National Lampoon's stock price.
''I'm sorry for what I've done,'' Laikin told the judge before he was sentenced. ''I know what I tried to do was wrong. I crossed the line.''
Records in the Fair Finance bankruptcy case allege that Laikin and Timothy Durham, an Indianapolis businessman who purchased the Akron company, were transferring money from Fair to other holdings beginning in 2002. At about the same time the two men were solidifying their control of and making investments in National Lampoon and its parent company.
More than 5,000 mostly small investors in the Akron-Canton area are believed to have lost as much as $200 million in the Fair Finance collapse.
Prosecutors alleged Laikin, 48, of Carmel, Ind., in 2008 bribed individuals to make it appear there was interest in the stock. He sought to fraudulently increase National Lampoon's share price from $2 a share to $5 a share, according to court filings.
When the scheme became public, National Lampoon's share price lost
about 80 percent of its value over three days, the government alleges. The shares last traded over the counter Sept. 1 for 17 cents. National Lampoon, based in Los Angeles, also made the series of Vacation movies starring Chevy Chase.
Laikin conspired with Dennis Barsky, a company consultant, and two stock promoters to inflate the share price from March 2008 to June 2008, prosecutors alleged in an indictment. Laikin stepped down after being charged as part of a government sting operation against executives of several companies.
Laikin was a successful real-estate developer in Indianapolis before taking the helm at National Lampoon.
''Mr. Laikin was a millionaire and he's still a millionaire,'' Assistant U.S. Attorney Derek Cohen told Slomsky. He noted Laikin's Los Angeles mansion has been used to shoot the TV show The Bachelor.
The National Lampoon CEO shared confidential financial information, non-public news releases, and confidential shareholder lists, and coordinated the release of news with the illegal purchases in the stock, prosecutors alleged.
Laikin allegedly hired Eduardo Rodriguez, a Livingston, N.Y., stock promoter, to illegally pump up National Lampoon' stock price. Laikin is accused of paying Rodriguez $60,000 as part of the scheme.
''Laikin understood that Rodriguez would keep a portion of the payment as a fee and would use the balance of the payment to bribe brokers and/or stock promoters to cause their clients and others to purchase National Lampoon stock,'' according to the indictment.
Rodriguez then paid Tim Dougherty, a Webster, N.Y., stock promoter, about $40,000 to buy National Lampoon stock to drive up its price, the government alleges. Dougherty pleaded guilty to a fraud charge and Slomsky sentenced him to 30 months in prison in January.
Rodriguez pleaded guilty in January to fraud charges in connection with stock sales of National Lampoon as well as Advatech Inc. of West Palm Beach, Fla., and Swedish Vegas Inc. of Arcadia, Calif. He was sentenced to 18 months in prison.
Barsky's case was transferred to his home state of Nevada in May 2009 because of the defendant's health problems.