The chief executive and financial officers of comedy company National Lampoon Inc. have been charged with running a $230 million Ponzi scheme.
Timothy S. Durham, National Lampoon's chief executive, and Rick D. Snow, its chief financial officer, were charged along with James F. Cochran, another associate, by the Securities and Exchange Commission and the Justice Department.
The SEC is accusing the three of orchestrating a fraudulent $230 million scheme involving at least 5,200 investors, many of them elderly.
The three orchestrated the fraud by purchasing Fair Finance Co. of Akron, Ohio, which they used to sell interest-bearing certificates. Instead of using the funds to make loans, the three diverted investor proceeds to themselves and others, and to unprofitable entities they controlled, according to the SEC complaint.
National Lampoon is no stranger to allegations of funny business at the top. A former CEO, Daniel Laikin, was charged with securities fraud by federal prosecutors in 2008 for plotting to inflate the company's share price artificially by paying people to buy shares. He was sentenced in December to three years and nine months in prison.
Mr. Durham and Mr. Cochran financed an extravagant lifestyle with the money, buying multiple homes, a private jet, a yacht, and classic and exotic cars, the government alleges. They also diverted investor money to cover gambling and travel expenses, credit card bills and country club dues, and to pay for parties and other entertainment, the complaint said.
The SEC filed a civil action against the three in U.S. District Court in Southern Indiana, and the Justice Department filed criminal charges based on the same misconduct.
National Lampoon publishes the long-running National Lampoon magazine and produces a variety of media. It owns interests in a number of properties, including “Animal House” and the “National Lampoon's Vacation” series.
