• Guest please check The Index before starting a thread.

[Agency] Donadio & Olson, Inc.

editing_for_authors
Editing for authors: because every writer needs a good editor.

ctripp

Christine Tripp
Super Member
Registered
Joined
Sep 10, 2009
Messages
493
Reaction score
30
Location
Ottawa, Ontario Canada
Website
www.christinetripp.com
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.

Seriously, how did this accountant EVER think he wouldn't get caught after keeping an entire advance? Skimming is hard to detect but when you take an whole advance, how long did he think it would be, before the Author contacted their Agent, rather then keep asking the accountant when her/his advance would arrive!
 

Old Hack

Such a nasty woman
Super Moderator
Absolute Sage
Super Member
Registered
Joined
Jun 12, 2005
Messages
22,453
Reaction score
4,938
Location
In chaos
Notice that the money that was stolen was not from the agency itself; it's from the authors.

The payments would have come into the agency. He then diverted money into his own account, rather than paying it to the authors. But he did take it from the agency accounts, as I understand it.

The fact it took seven years for ONE author to notice that something was wrong speaks volumes about the way authors are paid. The incredibly complex way royalties are figured practically guarantees that many authors have no idea if they are being cheated or not. Many are and have no way of knowing.

I'm astonished that it took anyone so long to notice what was going on. Royalty statements are sent out by publishers to agencies; agencies then take their cut, and pay the rest to the authors, and send them the royalty statements at that time. If the authors had checked them they'd surely have known that something was up. Unless the accountant produced fake royalty statements too.

Royalties aren't "incredibly complex" to work out: they're just a percentage of cover price, which is an easy calculation to make. Multiply that amount by the numbers sold and you're done. Royalty statements aren't always the clearest of documents to interpret but once you've understood what they're telling you, you can usually work things out.

Add to this the idea that there is exactly no oversight over literary agents in New York. No licensing, no standards, nothing. It's the Wild West. Any yahoo with the bucks for a business license can hang out a literary agent shingle. It's harder to be a hairdresser!

There aren't standards or qualifications for the job, because so much of the work can only be learned by doing it. We, as writers, can do our best to only work with agents of good repute. The ones who start up without any experience are relatively easy to avoid.

Some agents don't even supply their clients with copies of the contracts they sign!

I've never heard of a good agency which doesn't give its author-clients copies of their contracts. Can you cite some sources for this claim, please? I'd love to learn more.

This whole incident is a huge black eye for not just D&O but all agencies, and really the entire industry. This calls the entire way that agencies handle their author's money into question. I guarantee that every author with D&O are currently auditing those royalty statements, and probably not a few with other agencies as well. Want to bet a few with other agencies are going to be sitting there going "Hey, wait a minute, this seems wrong..." as well?
And is D&O going to be able to make up the money that was stolen? I doubt it. Those authors are probably just screwed.

Agencies usually treat their author-clients' money with scrupulous honesty and care. It's too risky not to. Yes, of course the writers represented by this agency will be scrutinising their royalty statements and payments now: they'd be foolish not to; but it seems somewhat odd to think that writers at other agencies will now also be checking their earnings. The guilty person here worked at this agency, and this agency only, had been there since 2001, and has not had access to money anywhere else.

D&O will still be expected to pay all outstanding monies to its authors. Yes, it's going to struggle to do that. Yes, it might have insurance but if it hasn't, it's in trouble. Real trouble. It's awful that so many people will have their livelihoods threatened by the actions of this one man.
 

R.A. Lundberg

Super Member
Registered
Joined
Apr 24, 2018
Messages
68
Reaction score
12
Location
Refrigerator box under an overpass
The payments would have come into the agency. He then diverted money into his own account, rather than paying it to the authors. But he did take it from the agency accounts, as I understand it.
From what we are hearing, ALL of it came from payments that should have gone to the authors. He diverted what was passing through the agency's accounts on it's way to the authors.



I'm astonished that it took anyone so long to notice what was going on. Royalty statements are sent out by publishers to agencies; agencies then take their cut, and pay the rest to the authors, and send them the royalty statements at that time. If the authors had checked them they'd surely have known that something was up. Unless the accountant produced fake royalty statements too.
Why does this surprise you? Far too many authors do not treat writing as a business, have no grounding in business, and are not interested in business. This is why agents and agencies exist-and why it's so easy for the "bad" ones to rip authors off. I cannot speak to D&O's process, but I do know that some (not all) agencies create a royalty statement for their clients, so it's entirely possible he did create false paperwork. Also have no idea if D&O pass on originals from the publisher or not; some agents keep all the paperwork and just create a single statement for their client (bad ones, again).

Royalties aren't "incredibly complex" to work out: they're just a percentage of cover price, which is an easy calculation to make. Multiply that amount by the numbers sold and you're done. Royalty statements aren't always the clearest of documents to interpret but once you've understood what they're telling you, you can usually work things out.
Indeed; I misspoke. Royalties are not complex to figure out, but some (again, not all) statements can seem like stereo instructions to someone who does not "understand" them. Many authors, especially new ones, simply do not have the experience or even the inclination to learn, simply trusting the agent and agency.


There aren't standards or qualifications for the job, because so much of the work can only be learned by doing it. We, as writers, can do our best to only work with agents of good repute. The ones who start up without any experience are relatively easy to avoid.
I find this statement remarkable. Really, contract law and fiduciary responsibility can only be learned by doing it? If all an agent or agency did was finding talented authors and placing books before editors and publishers, you'd be right. But, obviously, that's not the case. This agency acted as a clearinghouse for funds, negotiated contracts, etc., like most do. They had ONE GUY doing all their accounting/bookkeeping. Obviously no actual accountability or auditing. You would think with millions of dollars passing through there should be a system of checks and balances like any other business, but clearly there was not. And you keep talking about "good" agents and agencies, but this section of the forum exists simply because it's so easy for the BAD ones to take advantage of authors, especially young and/or inexperienced ones, and there's exactly nothing to prevent them from being in business.



I've never heard of a good agency which doesn't give its author-clients copies of their contracts. Can you cite some sources for this claim, please? I'd love to learn more.
I did not say "Good" agency. And yes, these are fly-by-night ones out there, preying on the inexperienced new authors, ripping them off. The phrase "common industry practice" gets used by them to cover up a lot.



Agencies usually treat their author-clients' money with scrupulous honesty and care. It's too risky not to. Yes, of course the writers represented by this agency will be scrutinising their royalty statements and payments now: they'd be foolish not to; but it seems somewhat odd to think that writers at other agencies will now also be checking their earnings. The guilty person here worked at this agency, and this agency only, had been there since 2001, and has not had access to money anywhere else.
I think you mean "good" agencies again. Come on, now. If it can happen to Chuck, it can happen to anybody- and he had no idea. He is just about broke. Here, read this. http://chuckpalahniuk.net/news/the-big-secret-why-behind-everything-so-far
A lot of authors are going to read that and think hey, maybe I should pay more attention to this sort of thing- and that's great! Trust, sure, but verify. This is BUSINESS. Anybody who thinks publishing and agenting isn't a business, and a cutthroat one in this day and age, needs to do some research back though this section of the forum.

D&O will still be expected to pay all outstanding monies to its authors. Yes, it's going to struggle to do that. Yes, it might have insurance but if it hasn't, it's in trouble. Real trouble. It's awful that so many people will have their livelihoods threatened by the actions of this one man.
Yes, they will be expected to make all their authors whole. However, according to the NY Post, D&O are on the brink of bankruptcy. If they do file bankruptcy, that case will be in court for years, maybe decades. Then what's left after the lawyers are done will get divided up among the creditors, with the most damaged being made whole first. Most authors will get little or nothing. Insurance? Very few private businesses carry specific insurance against embezzlement, and given the accounting practices this agency followed, I'd bet they do not. This guy could not have gotten away with embezzling 3 million plus with any kind of third-party auditing system. He got away with this for at least seven years, probably longer. They will probably find more. And I agree, it's very sad that this guy fouled up so many talented people.
 

Old Hack

Such a nasty woman
Super Moderator
Absolute Sage
Super Member
Registered
Joined
Jun 12, 2005
Messages
22,453
Reaction score
4,938
Location
In chaos
From what we are hearing, ALL of it came from payments that should have gone to the authors. He diverted what was passing through the agency's accounts on it's way to the authors.

Literary agencies earn their money through commission. Payments come into them from publishers; they take their commission (usually 15%) then pass the rest onto their author-clients. The accountant in this case took money from the payments that came in, and sent lesser amounts out to the authors; but I've not seen anything that makes it clear he was only taking money from the authors. The issue here, I think, is that he had total control over the payments and no one was working with him, checking up on the work he did.

Why does this surprise you? Far too many authors do not treat writing as a business, have no grounding in business, and are not interested in business. This is why agents and agencies exist-and why it's so easy for the "bad" ones to rip authors off. I cannot speak to D&O's process, but I do know that some (not all) agencies create a royalty statement for their clients, so it's entirely possible he did create false paperwork. Also have no idea if D&O pass on originals from the publisher or not; some agents keep all the paperwork and just create a single statement for their client (bad ones, again).

It surprises me because it's not typical among my writer-friends: we all check our royalty statements. And when I was an editor, it wasn't typical then, either. I'd often run through royalty statements with the authors I worked with.

Funny that you should mention agencies creating their own royalty statements: it's being discussed in another thread. It's not a good thing.

Indeed; I misspoke. Royalties are not complex to figure out, but some (again, not all) statements can seem like stereo instructions to someone who does not "understand" them. Many authors, especially new ones, simply do not have the experience or even the inclination to learn, simply trusting the agent and agency.

Royalty statements can be complicated, and the terms used on them often make little sense until you've had them explained to you. But still. I'm astonished that writers don't check them, and ask for explanations, and all that stuff. It's basic book keeping, isn't it? To know what you've been paid, how it's been calculated, why it's owed to you.

I find this statement remarkable. Really, contract law and fiduciary responsibility can only be learned by doing it? If all an agent or agency did was finding talented authors and placing books before editors and publishers, you'd be right. But, obviously, that's not the case. This agency acted as a clearinghouse for funds, negotiated contracts, etc., like most do. They had ONE GUY doing all their accounting/bookkeeping. Obviously no actual accountability or auditing. You would think with millions of dollars passing through there should be a system of checks and balances like any other business, but clearly there was not. And you keep talking about "good" agents and agencies, but this section of the forum exists simply because it's so easy for the BAD ones to take advantage of authors, especially young and/or inexperienced ones, and there's exactly nothing to prevent them from being in business.

Agents do so much more than contract law, though. And yes, having seen some of the best literary agents in the world at work there's no way they could have learned their craft through a college degree, for example.

The weak link here was this agency's reliance on just one person to handle their finances. It's so risky. Did he not have an assistant, was there no one from the books department attached to him? We're back to common sense here, again. And yes, it's important to distinguish between the good and the bad; but until this surfaced I'd have put this agency into the "good" category. I recognise that there was only one bad apple there; but if they'd installed some sort of system to check that things were working properly, this could have been avoided. So the other employees of the agency do have some culpability.

I did not say "Good" agency. And yes, these are fly-by-night ones out there, preying on the inexperienced new authors, ripping them off. The phrase "common industry practice" gets used by them to cover up a lot.

Which is why we should all do our research. (I guess you don't have those citations.)

I think you mean "good" agencies again. Come on, now. If it can happen to Chuck, it can happen to anybody- and he had no idea. He is just about broke. Here, read this. http://chuckpalahniuk.net/news/the-big-secret-why-behind-everything-so-far
A lot of authors are going to read that and think hey, maybe I should pay more attention to this sort of thing- and that's great! Trust, sure, but verify. This is BUSINESS. Anybody who thinks publishing and agenting isn't a business, and a cutthroat one in this day and age, needs to do some research back though this section of the forum.

Actually, I've seen a lot of agencies--good and incompetent--treat their authors with respect and great care.

Like you, I do hope that writers learn from this. I remain astonished that writers don't check their royalty statements, contracts and payments. It's a basic thing.

Yes, they will be expected to make all their authors whole. However, according to the NY Post, D&O are on the brink of bankruptcy. If they do file bankruptcy, that case will be in court for years, maybe decades. Then what's left after the lawyers are done will get divided up among the creditors, with the most damaged being made whole first. Most authors will get little or nothing. Insurance? Very few private businesses carry specific insurance against embezzlement, and given the accounting practices this agency followed, I'd bet they do not. This guy could not have gotten away with embezzling 3 million plus with any kind of third-party auditing system. He got away with this for at least seven years, probably longer. They will probably find more. And I agree, it's very sad that this guy fouled up so many talented people.[/QUOTE]
 

Aggy B.

Not as sweet as you think
Super Member
Registered
Joined
Feb 28, 2008
Messages
11,882
Reaction score
1,556
Location
Just north of the Deep South
Oh, I actually do. Clearly, you think you know more than I do, so I'm not going to argue with you about it. Good luck.

You made a bunch of sweeping statements about how agencies are like the Wild West - no law, no oversight, they just do anything! - and authors are too simpleminded or ignorant or trusting or... something to have any clue about how royalties work or know what they should be owed. Statements you don't seem to be able to back up. (Palahniuk actually did know he wasn't getting the money he was supposed to. He says that much in his little blog post - that he couldn't figure out how the sales could be that poor and his royalties that small because when he looked at the paperwork and payments he was receiving it didn't track with the numbers he'd seen in previous years. He just didn't know how to prove it when the accountant kept telling him "No. Those are the numbers.")

Sure. There are a lot of authors who don't understand how publishing works. The majority of that sub-set are not in it to make money - they just want to see their book(s) in print. They fall victim to predatory and incompetent presses all the time. (I have a friend who writes in a particular sub-genre, working primarily with the same couple of niche publishers over and over again and he either doesn't care or doesn't know about bad contracts. His focus is producing as much work as he can and getting paid upfront for as many books as possible. We did a project together and the small press contract I was sent was fucking terrible. Had I been the only author on the project, I would have rejected it on the spot. But this is a small press run by a relatively well-known author who apparently doesn't care about author-friendly anything for the folks he publishes. [And not just "this contract benefits the publisher" - they all start that way - but actual "this contract takes advantage of the authors".])

Publishing is a hard business with a fair number of crooks and idiots operating on the fringes of the industry. Characterizing agents and agencies as the source of the problem is disingenuous at best. Especially when you don't seem willing to back anything up. (Now you've moved from "OMG! Lawless agents robbing poor authors blind!" to "Well, maybe not at the 'good' agencies. But what about all the bad ones?".) Which is why I still stand by my previous statement. You are not saying anything which makes me think you really grasp how publishing in general or agents and contracts in particular work.
 

Aggy B.

Not as sweet as you think
Super Member
Registered
Joined
Feb 28, 2008
Messages
11,882
Reaction score
1,556
Location
Just north of the Deep South
Seriously, how did this accountant EVER think he wouldn't get caught after keeping an entire advance? Skimming is hard to detect but when you take an whole advance, how long did he think it would be, before the Author contacted their Agent, rather then keep asking the accountant when her/his advance would arrive!

My guess here is that, like many embezzlers, he was overspending what he was skimming and got desperate and/or overwhelmed with guilt. (Doing something he knew would get himself caught.) Or he had expected to be able to cover the stolen advance with other money siphoned from elsewhere in the agency but then couldn't make that happen. (And by elsewhere I mean other royalties.)
 

frimble3

Heckuva good sport
Super Member
Registered
Joined
Oct 7, 2006
Messages
9,485
Reaction score
2,442
Location
west coast, canada
Does it strike anyone as odd that a business of (apparently) some size has only one person in their accounting department? Aside from oversight, what if he got sick, or took a vacation?
The closest I've heard to this is a couple of local cases of churchs that trusted the nice volunteer ladies who did their books for years, until they caught the nice ladies skimming. But they were churchs, a level of blind trust is not unexpected. Businesses should know better.
 

ctripp

Christine Tripp
Super Member
Registered
Joined
Sep 10, 2009
Messages
493
Reaction score
30
Location
Ottawa, Ontario Canada
Website
www.christinetripp.com
My guess here is that, like many embezzlers, he was overspending what he was skimming and got desperate and/or overwhelmed with guilt. (Doing something he knew would get himself caught.) Or he had expected to be able to cover the stolen advance with other money siphoned from elsewhere in the agency but then couldn't make that happen. (And by elsewhere I mean other royalties.)

Aggy, I think you're right, would be my guess too.
I am wondering if his theft was on the monies to go to the Authors? Because surely the individual Agents would notice their %'s not being paid. But easier to string Authors along to wait or to short change the money sent to them?
 

Aggy B.

Not as sweet as you think
Super Member
Registered
Joined
Feb 28, 2008
Messages
11,882
Reaction score
1,556
Location
Just north of the Deep South
Does it strike anyone as odd that a business of (apparently) some size has only one person in their accounting department? Aside from oversight, what if he got sick, or took a vacation?
The closest I've heard to this is a couple of local cases of churchs that trusted the nice volunteer ladies who did their books for years, until they caught the nice ladies skimming. But they were churchs, a level of blind trust is not unexpected. Businesses should know better.

Royalties come in at specific times during the year. (While small publishers may pay as frequently as once per month, larger trade publishers usually pay once or twice a year.) Advances, obviously, can happen at any time, but even there it's possible for a delay of a few weeks without anyone blinking.

I would guess it wasn't blind trust. Dude had been working there since 2001, but (at this point) known thefts hadn't begun until 2011. (This is typical of embezzlers. They do honest work for a while before skimming. A level of trust is established.) It does seem like there should have been more oversight, but my in-laws had this issue with a mechanic for a while. He'd done good work to start off, when there started to be problems with charges for things that it turned out weren't being done it took a massive failure to reveal the problem because they had learned to trust him.

Which isn't to say the agents aren't at fault for not noticing, but it is one of those things where there are multiple layers of victims. And our tendency is to believe folks are doing what they are supposed to. (Psychopaths are hard to find for the average person because the behavior is so far removed from what we know we simply can't imagine someone would do those things.)

I am hoping the agency is able to resolve matters for their clients, but not holding my breath. Whatever money was embezzled is long gone at this point.
 

Old Hack

Such a nasty woman
Super Moderator
Absolute Sage
Super Member
Registered
Joined
Jun 12, 2005
Messages
22,453
Reaction score
4,938
Location
In chaos
Aggy, I think you're right, would be my guess too.
I am wondering if his theft was on the monies to go to the Authors? Because surely the individual Agents would notice their %'s not being paid. But easier to string Authors along to wait or to short change the money sent to them?

Agents don't get all of the 15% that they earn from their author-clients' sales. Much of the 15% goes to running the agency; some agents are employed on a salary, and only get a small percentage of the income they bring in; others take the full 15% and then pay a fixed fee, or a percentage of their commission, or both, to the agency; it's complicated, and every agency is different; and it often takes a while for payments to filter through. So it's perfectly possible that the agents wouldn't have noticed because time had passed, and they'd have trusted the accountant they employed.

It's still awful.

I really hope the agency has insurance which covers this.
 

writera

Super Member
Registered
Joined
May 24, 2017
Messages
200
Reaction score
6
Have there been any recent updates regarding this agency? Is this a place that's now considered one not to query or have the issues been sorted/are they open again to queries? Looked on their website and it seems to indicate they're open, but QueryTracker has a different story (though not updated since last year), so not sure.
 

waylander

Who's going for a beer?
Super Member
Registered
Joined
Oct 24, 2005
Messages
7,196
Reaction score
832
Age
63
Location
London, UK

Elizabeth George's book Write Away