From the Weld County District Attorney:
A Johnstown woman who publishes and writes romance novels is facing nearly two dozen charges after altering her clients’ book sales and pocketing the stolen royalties.
Jana Koretko was arrested and charged Monday with five counts of money laundering, four counts of felony theft, nine counts of computer crime and three counts of tax evasion.
According to the arrest affidavit, Koretko owns JK Publishing, primarily exclusive to romance and Erotica authors, and is accused of stealing more than $125,000 from multiple clients over a two-year period.
The Weld County District Attorney’s Office was first notified of the alleged scheme in August 2015 when one of the company’s authors noticed several discrepancies in her royalty payments. After further investigation, authorities learned Koretko was manipulating the monthly and quarterly sales reports from E-book retailers, like Amazon, iTunes, Barnes and Noble and Kobo, to indicate lower sales.
In some instances, she even inflated or exaggerated book sales to make the authors believe the novels were doing well or becoming bestsellers.
Over the course of the investigation, 15 authors were identified as victims in Koretko’s alleged scam. It was also determined she under-reported book sales by more than 10,000 books, resulting in more than $125,000 in royalty losses to her clients.
Link to the rest at Weld County District Attorney and thanks to Kris for the tip.
PG never thought about criminal prosecution for publishers who cheat their authors.
He really likes the idea.
One more question, or two i guess, at one point in the complaint, there is an exchange where the “publisher” is telling an author how great her sales are when (in reality) she has none…why does she do this? what is the benefit?
and sorry for sounding ignorant but if you look at these pen names, most of them have incredibly few reviews, sometimes just 3 or 4, so the income of JK herself (one month is 8 thousand plus) seems much larger than could possibly be evinced by the review numbers. is this saying that you cannot tell at all how well a book is doing by review numbers?
Thanks for answering if you have time!
There are a few theories floating around Kboards as to why the publisher inflated sales numbers. One of them is that she was trying to run some sort of ponzi scheme while another is that she needed the inflated numbers to keep authors Coming back for more.
http://www.kboards.com/index.php/topic,252322.25.html
One thing is for certain, The lady in charge of the company really wasn’t very smart when it came to her scam, she could’ve kept it going in definitely and in fact Many publishers already do. But bragging to her friends on Facebook and deliberately Miss filing taxes? It is almost as if she wanted to get caught.
thank you for your answer…vellly interesting! thank you.
i’ve seen quite a few “publishers” recently, who are offering these 50% deals, but the ones that i’ve seen also required the author to bring an already edited manuscript (ha!). one i saw noted that they also charged $750 for a cover that they would have done (the author would be paying the $750 upfront!) and their website in one blog posting noted that they use fiverr for their covers (so they’re paying $5 right, but charging the author $750…duh). also one “publisher was heavy handed about authors paying for advertising but the “publisher” still gets the 50%.
sheesh, what a racket.
So baffled…why would any author give up 50% of their income when they can easily load their own book and retain 70% of it (on Amazon anyway). Just don’t understand how this JK got all these authors to let her handle their books…Can someone explain to me? thank you.
Some people actually believe the zombie meme that you *need* experienced professionals to publish.
That said, the 50-50 split with the publisher isn’t inherently bad: that is about the same as Amazon’s Kindle Scout deal. Of course, there is a wee bit of difference between what AmazonPublishing provides in return for their 50% cut and what other tradpubs bring to the deal.
Case by case.
Sometimes tradpub *can* make sense, depending on who you are and what you’re doing.
Just not always…
And not as a default.
Today the default needs to be self pub, until the tradpub bidder provides credible proof of added value on the bottom line.
thank you, so nice to have it explained. still, seems baffling to give up that income:)
Well, with a good and honest publisher the slice of the pie is smaller but the pie is bigger. In theory. Problem is, with many tradpubs (say pre-merger Harlequin) the slice is way smaller and the pie doesn’t get much bigger, if at all. Often, the pie actually gets smaller through publisher mis-steps. Like getting into fights with retailers (S&S vs B&N, Hachette vs Amazon) or engaging in ilkegal conspiracies that reduce author revenues just to ensure readers pay more.
Not all tradpubs are created equal.
But some need to die, die, die… 😉
There were a couple of odd details in the affidavit related to the split. In a couple of places it said the funds paid to the authors were 50% of proceeds less expenses for editing. Huh? What is the publisher’s 50% for if not to pay for expenses related to publishing the books? That sort of double-dipping in the contract terms would make me very wary of doing business with the person who presented the contract.
It’s possible 50% isn’t enough to pay for everything else related to book publishing and editing, but to have some things in a black box and some things itemized is hinky.
Criminal prosecution for criminal actions – priceless!
The problem? Proving it.
It’s ALWAYS the problem.
Apparently, this isn’t the first time this publisher has been in trouble. https://www.ftc.gov/enforcement/cases-proceedings/refunds/jk-publications-refunds
Not the same company. 😉
when one of the company’s authors noticed several discrepancies in her royalty payments.
Anyone know what the author compared to identify the discrepancy? I presume the author had a royalty check or statement. What did she compare that to?
Amazon sales rank?
Another, similarly-ranked author?
There’s a thread in Kboards’ Writer Café about this and they provided a link to affidavit: https://localtvkdvr.files.wordpress.com/2017/06/jana-koretko-affidavit.pdf
It’s an interesting reading.
Thanks for that. It is an interesting read.
When it gets into the numbers, I was struck that if the accused simply stuck to the contracted terms, she stood to make good money.
Yeah. Without her shenanigans, she would probably continue to earn around 250,000 per year, but it looks like greed and some sort of twisted entitlement got the better of her.
It’s really sad, especially for the authors who found themselves in this mess.
Recommended reading for every independent author.
I read the PDF, thanks.
One thing I noticed is that the erotica authors seem to have had their pen names linked with their Real identities.
It’s possible that they agreed to this in order to get their money, or that this was done without their knowledge and if the latter, it could have serious real world ramifications such as the loss of jobs in teaching.
The people investigating were the Weld County District Attorney’s office and Colorado Department of Revenue Criminal Investigation Section. They have deeper access to records and had court orders to access bank records. It is possible the connection between pen names and real identities would not be visible to anyone without extraordinary access.
Definitely read the affidavit,it answers a lot of the questions people are asking. For instance, the publishers said they sold over a thousand copies of the book but when the author contacted Smashwords, they were told less than ten (I can’t remember the exact numbers)
It was also chilling to realize how casually the publisher lied about things. When people complained she stated that she had contacted the police and they sided with her (the affidavit states that is not the case)
The story reminds me of several shysters we have operating in our SP community right now.
I liked the fake email from Mark Coker to the accused’s assistant begging the accused to come to a party at Mark’s house to accept all the awards she had won over the years but hadn’t bothered to collect.
I think there’s a power of ten missing somewhere. $125,000 royalties over 10,000 books is $12.50 a book. I checked their catalog and the books are priced between $0.99 and $4.99. $1.25 would be a reasonable average royalty, so one of the figures is off by a factor of ten. Could be either.
p.s. Neither the company Facebook page nor Smashwords page mention any trouble. Lots of other sites are indulging in a little schadenfreude.