News has come out in recent weeks about a literary agency where a bookkeeper stole millions of dollars of author’s money, both advances and royalties. The story was covered recently in a couple of posts on The Passive Voice, one of the two writing blogs I follow regularly. Passive Guy, an attorney who owns this blog about information relevant to self-publishing, generally takes posts from other publishing-related sites, quotes a good chunk of a post, and links to it.
He also linked to a post by defrauded author Chuck Palahniuk (who I’ve never read, but is quite a notable author). Palahniuk wondered why he wasn’t getting much revenue. Turns out this prestigious literary agency, Donadio & Olson, had one man who handled all money transactions. This clerk figured writers wouldn’t miss a few thousand dollars, so he took some or all of the agency’s clients 85% for himself, presumably passing on the 15% the agent and agency got. It seems D&O had zero financial controls in place.
This clerk’s theft is estimated to be $3.4 million of however many years he’s been doing it. He’s been charged. So far, I haven’t heard that anyone else at the agency has been charged.
Why not? The big bosses there (all two of them) didn’t steal, but they obviously didn’t fulfill their fiduciary responsibility. The agency owes writes this $3.4 million. They should be held liable for this, and probably face criminal negligence charges. Scratch one literary agency.
In another post, Passive Guy quotes a blog post from Kristine Kathryn Rusch, an author who has been published by trade publishers and who has championed the self-publishing sector in recent years. Kris is saddened for her fellow writers who have been cheated on, outraged (though not surprised) that the agency was so lax in controlling finances, and again speaking about the whole system of requiring agents in the first place.
One of the surprising things that came out of this is the non-response from the agency. The fraud was discovered in March. Even now, D&O’s web site is silent about this, and I don’t think they’ve sent notices to their authors. That is shameful to the max. Okay, so one of their employees was a crook. Let your clients know; don’t make them learn this from the media. Probably announce it to the world: He, world, and authors, our bookkeeper was a crook, we were asleep on the job trusting him, but we’ll get it right. They have lost the PR game, that’s for sure.
What about all the other literary agencies out there? I imagine they will experience fallout from this, though I don’t know what or to what extent. Will authors represented by agencies now wake up and demand that publishers send them their cut directly instead of through their agents? Better yet, since the author hires the agent, have the publishers send 100% of the funds to the authors, and have the authors pay their agents, the people they hire. Yes, that seems more fair to me. Maybe that will happen soon.
If I haven’t said this for a while, I’ll say it now: I am so glad I chose to self-publish back in early 2011. I avoided the whole agent thing and kowtowing to what publishers want. No, I don’t have a lot of sales, but the 561 sales I do have are gratifying. I’ll continue to self-publish, and watch the trade publishing industry continue to implode.