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National Lampoon CEO accused of stock fraud

Federal prosecutors on Monday accused the CEO of National Lampoon Inc. and two other people of trying to inflate the company's stock price by paying people to buy shares.
/ Source: The Associated Press

Federal prosecutors on Monday accused the CEO of National Lampoon Inc. and two other people of trying to inflate the company's stock price by paying people to buy shares.

CEO Daniel Laikin and two others were charged with conspiracy and securities fraud for allegedly manipulating the stock price of Los Angeles-based National Lampoon, the company that owns the rights to the "Vacation" and "Animal House" movies.

The U.S. Attorney's office in Philadelphia and the Securities and Exchange Commission said the kickbacks were paid to people to buy and hold the company's stock, creating the illusion of market interest. To make the purchases seem more legitimate, the stock buys were timed to coincide with company news releases, prosecutors said.

"To borrow a line from 'Animal House,' the rules lost," U.S. Attorney Laurie Magid said at a news conference.

Laikin, alone and with partners, owned a majority of National Lampoon stock and stood to gain millions of dollars. Others charged Monday took the kickbacks.

National Lampoon spokeswoman Marcy Goot declined to comment.

Laikin, consultant Dennis Barsky and others hoped to push the price of the shares, which trade on the American Stock Exchange, from $2 to $5, prosecutors said. The stock was worth 73 cents Monday, resulting in a market capitalization of about $6.6 million, they said.

Trading of National Lampoon stock was suspended for 10 days starting Monday.

The case is being prosecuted in eastern Pennsylvania because some relevant financial transactions occurred here, prosecutors said.

Laikin, Barsky and a 29-year-old stock promoter who allegedly took $40,000 in kickbacks to buy company stock were charged for alleged crimes that occurred between March and June.

Laikin, 46, was arrested Monday in Los Angeles, where he lives, authorities said. Barsky, 60, of Las Vegas, was also arrested. The stock promoter, Tim Dougherty, of Rochester, N.Y., was making plans to surrender, authorities said.

National Lampoon makes and distributes comedic movies, TV shows and a collection of Web sites. It also licenses the National Lampoon brand. The company traces its lineage to the humor magazine of the same name that was itself spawned from the Harvard Lampoon.

It is perhaps best known for having its name attached to "Animal House," the 1978 John Belushi movie, and the "Vacation" series starring Chevy Chase. Its more recent films include ones it produced or acquired — "Jake's Booty Call" and "Monster Night" — and ones that licensed the company's name, including "Van Wilder II" and "Dorm Daze."

Prosecutors also charged four other people Monday in two related indictments that involve the same stock manipulation scheme. One of the four, Eduardo Rodriguez, 49, of Livingston, N.J., appears to be a central link between the three indictments.

Among the defendants in the related cases is Richard J. Margulies, chief financial officer of a West Palm Beach, Fla., a biotech company named Advatech Corp.

Margulies, 58, of Edison, N.J., paid kickbacks to two people, including a government informant, and divulged confidential information about the company, prosecutors said. No listed telephone number for the company or Margulies could immediately be found Monday.

(This version CORRECTS that Laikin, the CEO, is only employee of National Lampoon charged)