INDIANAPOLIS (AP) — National Lampoon Inc. has agreed to pay $3 million to settle a lawsuit alleging that a financier convicted of swindling investors in an Ohio company fraudulently transferred millions of dollars from those investors to the entertainment company known for movies such as "Animal House."
A judge must approve that proposed settlement, which was filed last week in federal bankruptcy court in Ohio.
The bankruptcy trustee for Fair Finance Co. had sued National Lampoon in 2011, seeking more than $9 million and alleging that money was fraudulently moved from Fair Finance to the Los Angeles-based company which owns the rights to the "Vacation," ''Animal House" and "Van Wilder" movies.
Those transfers allegedly occurred when National Lampoon was controlled by former Fair Finance executive Timothy Durham, who was its CEO, and another man, Daniel Laikin, according to the suit.
Durham and two Fair Finance associates were convicted in 2012 of bilking investors in Akron, Ohio-based Fair Finance out of more than $200 million.
Federal prosecutors said Durham, who was sentenced to 50 years in prison on securities fraud and other charges, used some of that ill-gotten money to finance a lavish lifestyle, including buying mansions, classic cars and luxury items.
Bankruptcy trustee Brian Bash's lawsuit against National Lampoon is one of dozens of lawsuits he's filed seeking to recover some of the losses suffered by about 5,200 investors who lost money through Fair Finance's financial collapse. The federal judge who sentenced Durham also ordered him to pay $202.8 million in restitution to his victims.
National Lampoon President Alan Donnes said in a statement Tuesday that the company is "very happy to have this matter resolved in a manner that allows the company to move forward."
"This settlement finally allows us to move forward with our initiatives in television, the digital space, and in feature films," Donnes said.
In last week's court filing, Bash said that while he believes his claims against National Lampoon have merit, "it is unlikely that the Trustee could recover on a judgment of $9 million."
He added that the proposed settlement "is in the best interest of the Fair Finance estate and its beneficiaries" and added that it "will have a positive effect on the marketability and potential value of National Lampoon's brand and assets."
National Lampoon had sued Durham in 2013, alleging that he used $1 million in National Lampoon funds to pay the attorney who represented him during his federal trial in the Fair Finance case.
Andrea Loveless, an attorney for National Lampoon, said Tuesday the company hopes to resolve that suit within a few weeks.