"The writer of an unauthorised Lord Of The Rings sequel has been ordered to destroy all physical and electronic copies and pay more than $130,000 in legal fees."
He's attempting to profit using someone else's intellectual property. It's the definition of copyright theft. It's the entire reason copyright exists.
The issue isn't actually about making the content. Fan fiction is a thing and there's no penalty for making your own sequels or stories using characters and stories under copyright. It's selling and profiting from a copyright you don't own or have a license for that is an issue.