Fair bankruptcy judge issues $33M verdict against Dan Laikin

A bankruptcy judge in Ohio has issued a stinging rebuke of former Fair Finance Co. board member Dan Laikin and found that he should pay the failed company nearly $33 million.

The Oct. 24 finding by Judge Marilyn Shea-Stonum followed years of litigation, culminating with a trial this month. Shea-Stonum said she found Laikin’s arguments for why he did not owe the money—most of it drawn from a line of credit that his friend, Fair CEO Tim Durham, extended—wholly unconvincing.

Rather than cooperate during the discovery phase of the case, Laikin, an Indianapolis businessman, “withheld critical information concerning individuals who had relevant information and could point toward literally volumes of relevant documents,” she wrote.

“He also conveniently misplaced the laptop computer and cell phone which he used for sending electronic mail, his primary means of written communication.”

Shea-Stonum’s order is not the last word on the matter. It serves as a formal recommendation to U.S. District Court Judge Patricia Gaughan, who has the leeway to modify the decision.

Fair Finance’s bankruptcy trustee, Brian Bash, has won a number of big victories against parties that received millions of dollars that Durham doled out from Fair Finance’s coffers. But many of the judgments have been uncollectible because the individuals or businesses had few if any assets.

The vigor with which Bash’s attorneys pursued this case, however, suggests they believe there are significant assets to seize. Through August, the trustee had racked up more than $1.3 million in fees pursuing litigation against Laikin, who is a former CEO of Los Angeles-based National Lampoon Inc. and at one point owned two mansions in Southern California.

Laikin is one of many friends and business associates of Durham who received large loans from Fair, but never paid them back, attorneys for Bash allege. Durham also scooped up tens of millions of dollars for himself. The financial drain left Akron-based Fair unable to repay more than 5,000 Ohio investors who bought more than $200 million in unsecured notes from the company.

Federal prosecutors later charged that Durham ran Fair as a massive Ponzi scheme. A jury in June 2012 found Durham guilty on 12 felony counts—a verdict he’s appealing. A judge sentenced him in August of that year to 50 years in prison.

Laikin has had his own criminal troubles. A federal judge in 2010 sent him to prison for orchestrating an ultimately unsuccessful scheme to pump up the slumbering stock price of National Lampoon.