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A version of this story first appeared in the July 31 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
By the 1980s, National Lampoon had squandered its place in comedy, and its troubles were far from over. Even after the print magazine stopped publishing in 1998, National Lampoon, the company, would be walloped by a scandal that continues to impact the brand behind Animal House and Vacation.
In 2002, National Lampoon was bought by an Indiana-based investment firm connected with financier Tim Durham, who would later serve as chief executive. Around the same time, Durham and partner James Cochran also took over Fair Finance, a financial-services company, and raised money selling interest-bearing certificates, particularly to the elderly.
Years later, the offices of Durham and Cochran were raided by the FBI, which charged them with operating a Ponzi scheme causing more than $200 million in losses to support their own lavish lifestyles. Fair Finance was taken into bankruptcy, and a trustee began to look to National Lampoon to recover money.
In 2009, after losing more than $37 million in the Durham years, National Lampoon had been delisted by the New York Stock Exchange and had stopped filing reports with the SEC. The trustee charged Durham with having fraudulently transferred $9 million of Fair’s money to National Lampoon plus more to creditors to keep the comedy house afloat.
And the raiding of corporate funds went two ways. After Durham was arrested, National Lampoon would itself target its former chief for stealing $1 million from a settlement with Warner Bros. over Vacation profits (the company earned a royalty on each film) to pay for his criminal defense.
In December, the Fair trustee settled with Durham by taking over his ownership stake of National Lampoon. The trustee got an additional $3 million to resolve claims against National Lampoon.
The latter settlement, the trustee told a judge, would have a “positive effect on the marketability and potential value of National Lampoon’s brand and assets” (which includes the magazine’s library). According to court papers, potential buyers interested in acquiring National Lampoon’s stock or assets had already come forward and so a deal lifting a cloud on the company would serve to maximize the trustee’s stake.
On July 2, just days after Durham was given a new 50-year prison sentence (after an appeals court overturned two of 12 counts against him), the judge approved the settlement. Now, as the new Vacation opens (with no “National Lampoon” in the title), the brand could be once again up for sale.
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