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From The New York Post:
A Manhattan accountant cooked the books at a prestigious literary agency that represents top writers, including “Fight Club” author Chuck Palahniuk, bilking its clients of millions and leaving the company on the brink of bankruptcy, according to legal papers.
Darin Webb, 47, faces 20 years in jail on wire-fraud charges for embezzling $3.4 million from storied Manhattan agency Donadio & Olson, according to a recently unsealed federal criminal complaint.
Although the agency, which also represents the estates of “Godfather” writer Mario Puzo and radio legend Studs Terkel, was not named in court papers, a lawyer representing the firm confirmed to The Post that Donadio & Olson was the subject of the alleged theft.
. . . .
The stolen money — allegedly lifted between January 2011 and March of this year — was earmarked for author royalties and advances, the complaint says.
But the theft could be exponentially more, a source told The Post, noting that a forensic accountant is combing through Donadio & Olson’s books all the way back to 2001, Webb’s first year at the agency.
He allegedly fessed up to the theft in March in a videotaped interview with company executives and their attorneys at the agency’s Chelsea office, saying he filed monthly financial reports that “contained false and fraudulent representations in order to accomplish the theft and evade detection,” the complaint states.
. . . .
The alleged theft was first discovered last fall when an unidentified author who was expecting to receive a $200,000 advance from his publisher asked Webb why he had not received the payment.
According to the complaint, Webb put the author off for months.
“The author did not receive the payment because Webb had converted the funds to Webb’s own use,” says the complaint.
Link to the rest at The New York Post
For those who are new visitors to TPV, PG will repeat his previous observations about literary agencies – The agency adds no value for an author by receiving all or any portion of the royalties to which the author is entitled from the publisher.
The solution is split checks – the publisher sends 85% of the royalties directly to the author and 15% to the agency together with a royalties report to each.
Unfortunately, this is not the first time an agent or an employee of an agent has stolen money that should have been paid to the agency’s clients.
According to the OP, this alleged embezzlement has been going on for about 17 years.
What does this say about the agent’s financial management skills? Does the agency ever pay attention to its authors’ money? Does the agency have even the most rudimentary accounting systems and safeguards in place to protect authors? Does the agency care?
The Guardian has a story about Fight Club author Chuck Palahniuk who says that he is “close to broke” because of the embezzlement.