National Lampoon Suing Durham And Criminal Defense Attorney To Recover $1 Million Paid For Criminal Defense

National Lampoon is accusing its former CEO, convicted Ponzi schemer Tim Durham, of embezzling $1 million intended to be paid to the company, which it alleges that Durham gave to his criminal defense attorney instead to pay his legal bills. The lawsuit also names as defendants his criminal defense attorney, John Tompkins, and his law firm, Brown, Tompkins, Lory and Mastrain. In addition, there are 50 Does named as defendants who the plaintiff says aided Durham in the misappropriation of the embezzled funds but who cannot yet be identified by name.

According to the civil complaint, Durham signed an agreement with Warner Brothers regarding the distribution rights for the National Lampoon Vacation movies, while acting as National Lampoon's CEO, and accepted an advance payment of $2.7 million. Durham then wired $1 million from the business' bank account to Tompkins law firm bank acccount on July 28, 2011 to pay for his legal defense without the approval of the company's board of directors or while acting within the scope of his authority as set forth in the company's bylaws.

Durham made the wire transfer to his Indianapolis attorney after he was arrested and charged with defrauding the investors of Fair Finance Co. out of more than $200 million during a time he was out on bail but confined to his home on house arrest between April, 2011 and January, 2012 when he resigned as the company's CEO. The company says it did not discover the missing $1 million until April, 2012 after Durham resigned. The lawsuit contends that Tompkins and his firm "conspired with, and/or assisted, Durham to misappropriate and convert all or a portion of the Embezzled Funds."

I never understood why National Lampoon allowed Durham to continue in his role once he was formally charged by the federal government given the nature of those allegations. It was almost like an open invitation to steal the company's funds. I also whether any attempt was made to prosecute Durham for the alleged crime after National Lampoon discovered the missing $1 million.

You can view a copy of the complaint filed in the Los Angeles Superior Court here.

UPDATE: National Lampoon's decision to sue Durham and his criminal defense attorney may be in response to the recent discovery by the bankruptcy trustee for Fair Finance that the company had funded Durham's defense. Durham's criminal defense attorney, John Tompkins, told the IBJ that he didn't believe the company had paid for his client's legal defense. "I don’t think it’s accurate that Lampoon funded his defense," Tompkins told the IBJ. "Beyond that, I don’t have anything to say." The bankruptcy trustee had already filed a suit seeking recovery of $9 million from National Lampoon, which it claims received money Durham diverted from Fair Finance to cover its losses over a period of several years.