National Lampoon Ex-Chief Gets 45-Month Term, Remains Wealthy

National Lampoon Inc. former Chief Executive Officer Daniel Laikin remains wealthy after being sentenced to 45 months in prison for conspiring to manipulate the stock price of the media company, a U.S. prosecutor said.

“Mr. Laikin was a millionaire and he’s still a millionaire,” Assistant U.S. Attorney Derek Cohen told U.S. District Judge Joel Slomsky in Philadelphia yesterday. He noted that Laikin’s Los Angeles mansion has been used to shoot the TV show “The Bachelor.”

Slomsky said Laikin deserved to spend almost four years in prison because he “undermined everyone’s confidence in our commercial markets” through the scheme to pump up the stock price of National Lampoon, which made the 1978 fraternity comedy “Animal House.”

Prosecutors alleged Laikin, 48, of Carmel, Indiana, bribed individuals to make it appear there was interest in the stock. He sought to fraudulently increase National Lampoon’s share price from $2 a share to $5 a share, according to court filings.

When the scheme became public, National Lampoon’s share price lost about 80 percent of its value over three days, the government alleges. The shares last traded over the counter Sept. 1 for 17 cents. National Lampoon, based in Los Angeles, also made the “Vacation” movies starring Chevy Chase.

Laikin conspired with Dennis Barsky, a company consultant, and two stock promoters to inflate the share price from March 2008 to June 2008, prosecutors alleged in an indictment. Laikin stepped down after being charged as part of government sting operation against executives of several companies.

‘Crossed the Line’

“I’m sorry for what I’ve done,” Laikin told Slomsky before he was sentenced. “I know what I tried to do was wrong. I crossed the line.”

As part of the plea, Laikin acknowledged he intended to cause between $2.5 million and $7 million in losses through the scheme, according to the government. Laikin was a successful real-estate developer in Indianapolis before taking the helm at National Lampoon.

As part of the sentence, Slomsky also ordered Laikin to pay a $100,000 fine and barred him from serving as an officer or director of a publicly traded company. Laikin still faces civil claims by the U.S. Securities and Exchange Commission over the stock scheme.

Laikin sought to enrich himself by ripping off shareholders, who included public-employees’ pension funds, Cohen said at yesterday’s hearing.

Sharing Information

To artificially inflate National Lampoon’s stock price, Laikin shared confidential financial information, non-public news releases, and confidential shareholder lists, and coordinated the release of news with the illegal purchases in the stock, prosecutors alleged.

The CEO hired Eduardo Rodriguez, a Livingston, New York- based stock promoter to illegally pump up National Lampoon’ stock price. Laikin is accused of paying Rodriguez $60,000 as part of the scheme.

“Laikin understood that Rodriguez would keep a portion of the payment as a fee and would use the balance of the payment to bribe brokers and/or stock promoters to cause their clients and others to purchase National Lampoon stock,” according to the indictment.

Rodriguez then paid Tim Dougherty, a Webster, New York-based stock promoter, about $40,000 to buy National Lampoon stock to drive up its price, the government alleges. Despite the conspirators’ efforts, National Lampoon’s stock price stayed flat, Donald Goldberg, one of Laikin’s defense lawyers, told the judge.

Other Conspirators

Several of Laikin’s conspirators also have been sent to prison over the scheme, prosecutors said. Dougherty pleaded guilty to a fraud charge and Slomsky sentenced him to 30 months in prison in January.

Rodriguez pleaded guilty in January to fraud charges in connection with stock sales of National Lampoon as well as West Palm Beach, Florida-based Advatech Inc. and Arcadia, California-based Swedish Vegas Inc. He was sentenced to 18 months in prison.

Barsky also pleaded guilty last year, but his case was transferred to his home state of Nevada in May 2009 for sentencing because of the defendant’s health problems.

Richard Margulies, 59, the former chief financial officer for Advatech, was sentenced to 51 months in prison this month on stock-fraud charges.

Laikin’s case is U.S. v. Laikin, 08-cr-00733, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE