Although National Lampoon isn’t mentioned in the suit, it remains part of Durham’s business empire – he serves as chief executive and owns about 8 percent of the stock. As a result, the company could become part of the settlement with the creditors, said Kelly Burgan, attorney for the bankruptcy trustee for Fair Finance at the firm Baker & Hostetler LLP in Cleveland.
“Tim Durham has interests in more than 70 companies,” Burgan said. “This complaint doesn’t ask for a dollar amount, but we think we are entitled to everything those companies have – every last dollar.”
Burgan alleged that National Lampoon received indirect loans with money from Fair Finance. The money had been loaned to other Durham companies or friends, and then loaned again to National Lampoon . . .
Peter Davidson, partner in the L.A. office of law firm Ervin Cohen & Jessup, said the trustee has a strong case for recovering assets. Davidson is not involved in the case but reviewed its outlines for the Business Journal.Fair Finance's investors shouldn't get their hopes up too high just yet. The company's stock is no longer publicly-traded and is trading at pretty low prices.
“If companies received money as loans, then they have to pay them back and the trustee of Fair Finance has the right to demand payback,” he said.
Davidson estimated the bankruptcy court would decide the suit in 60 to 90 days, but that won’t be the end of the matter for Durham because the U.S. Attorney’s Office in Ohio has an open investigation of criminal charges surrounding the Fair Finance collapse.
“The FBI has a longer statute of limitations than the bankruptcy trustee,” Davison explained. “They take their time and are careful to make sure they can win a case before they file it.”
National Lampoon would appear to offer little compensation to any creditors. Its largest source of income is royalty payments on decades-old films such as “Animal House.” The company trades on the Pink Sheets, closing Feb. 17 at 5 cents a share. It has a market capitalization of $475,000.
However, Burgan said she has received numerous phone calls from people in Hollywood interested in buying the National Lampoon name, should the trustee gain control of it through the bankruptcy proceedings.
National Lampoon's former CEO, Dan Laikin, is serving time in a federal prison for stock fraud for paying stock brokers bribest to help pump National Lampoon's stock price. Laikin received at least $20 million in loans from Fair Finance. Durham has been acting as National Lampoon's CEO since Laikin stepped down from the company after he was charged.