They have apparently published novels, but here are the purchasing options for one of the novels on their website:
1) MS Word Format $4.99
2) HTML Format $4.99
3) Adobe Reader Format $4.99
4) MOBI Format $4.99
5) Paperback $10 + s/h
They don't describe their distribution system. Now, Uncle Jim's essential and eternal question (have you seen their books in bookstores?) is a good one, though you may miss some very solid small publishers by using this criterion unless you scan the shelves very carefully. Soho Press, for example, or Akashic, or Soft Skull, or Kunati; and, up until the success of The Time-Traveler's Wife, you might have missed MacAdam/Cage, too. Medallion Press usually has a book or two in a decent-sized bookstore, but you might not notice in browsing the shelves.
I'd suggest going onto Borders.com, visiting their Store Locator, and using their Search Inventory option--it lets you scan the holdings of up to six Borders stores at a time. Put in a title and see what you find.
The fact that the first four options are all nontraditional, electronic copies makes me suspect that these folks are not exactly breaking down the glass doors of Barnes & Noble and stuffing their books onto the shelves.
I see no evidence of a scam, but I'd be reluctant to place a novel of mine here if I wanted a wide readership.