The head of National Lampoon Incorporated, 48-year-old Timothy Durham, was arrested at his West Hollywood home Wednesday and appeared in federal court to face charges of fraud.
Two of Durham's business associates, James F. Cochran and Rick D. Snow, were also named in the indictment.
Court documents allege Durham, Cochran and Snow used money from new investors to pay off earlier investors - then used investor proceeds to keep afloat their own unprofitable businesses, such as a car magazine, a race car team and a luxury bus-leasing business.
Documents allege the men used investor funds to maintain lifestyles which, in Durham's case, included an estate, yacht, private jets and a collection of exotic cars. The indictment also claims Durham wired himself another $150,000 for use at a casino.
The Associated Press contributed to this story