UPDATE: A former bookkeeper who embezzled millions of dollars from a major literary agency has been sentenced to two years in federal prison.
Darin Webb was convicted of stealing from the New York-based firm of Donadio & Olson. The firm represents authors James Hynes, Chuck Palahniuk and Rick DeMarinis, as well as the estates of Robert Stone, Mario Puzo, Frank Conroy, Nelson Algren, Peter Matthiesen and Studs Terkel.
“This chain of events leaves me close to broke,” Palahniuk said in court papers. “Since the crime was uncovered, people have offered their children’s college funds. They’ve offered to mortgage their houses to keep me afloat. They’ve come forward with legal advice and stop-gap, hands-on help.”
Palahniuk lost more than $1.4 million in royalties and advances in Webb’s theft, estimated at more than $3.4 million from the agency. Donadio & Olson was forced to file for bankruptcy last month.
“Webb’s actions have irrevocably ruined our company’s reputation and left us insolvent,” wrote Edward Hibbert, one of the firm’s principals, in an impact statement to federal Judge Edgardo Ramos.
Other victims were equally hard hit. Heirs to Puzo’s estate lost more than $757,000 in royalties, while survivors of Catch 22 author Joseph Heller didn’t receive $35,665. The Edward Gorey Charitable Trust lost nearly $60,000, according to bankruptcy filings.
“At the point the theft was uncovered, the agency’s bank accounts were virtually empty,” agency principal Neil Olson told the court. “The cost of aggressively pursuing the thief was enormous … He has destroyed our business, a prestigious agency that endured for decades.”
Webb, 48, managed the firm’s books for nearly 20 years, but only began his thefts seven years ago. His malfeasance was discovered when Palahniuk called the agency when he did not receive a $200,000 payment owed from his publisher.
Webb’s attorneys claimed the stolen funds were used to cover expenses from Webb’s own accounting firm, SUM Innovation.
EARLIER: A major literary agency representing some of the biggest names in book publishing is reportedly close to bankruptcy after being allegedly embezzled for $3.4 million by a bookkeeper.
The New York-based firm of Donadio & Olson is the alleged victim of the crime. The firm represents authors James Hynes, Chuck Palahniuk and Rick DeMarinis, as well as the estates of Robert Stone, Mario Puzo, Frank Conroy, Nelson Algren, Peter Matthiesen and Studs Terkel.
The bookkeeper, Darin Webb, was arrested earlier in May and charged with defrauding the agency. The US Attorney for the Southern District of New York and FBI field office in New York issued a statement that Webb allegedly carried out the scheme by making transfers to his own accounts from the agency’s bank accounts, then changed its accounting system to evade detection.
U.S. Attorney Geoffrey S. Berman said Webb allegedly “cooked the firm’s books to conceal a multimillion-dollar embezzlement.” FBI Assistant Director William F. Sweeney Jr. added, “As alleged, Darin Webb was responsible for the financial welfare of the agency whose accounts he oversaw. But instead of upholding his fiscal responsibilities, he spent his time swindling more than $3.4 million from his victims. Cooking the books rarely pays off in the long run, as the defendant has learned today.”
The complaint alleges the activities by Webb started around January 2011 and ran through March of this year. Webb, who started handling the agency’s books around 2001, has been charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison and a $250,000 fine. Webb is currently free on $200,000 bail.
At least one victim has spoken out. Author Chuck Palahniuk (Fight Club) said on his website that he had to cancel shows and convention appearances because of the lost income, and is nearly broke.
All the royalties and advance monies and film option payments that had accumulated in my author’s account in New York, or had been delayed somewhere in the banking pipeline, it was gone,” Palahniuk wrote.
The New York Post reported that the thefts were discovered when an author expecting to receive a $200,000 advance from his publisher had not received the payment, and was not satisfied with Webb’s response.