How a Lone Bookkeeper Killed a 49-Year-Old Literary Agency

How a Lone Bookkeeper Killed a 49-Year-Old Literary Agency

It feels like we’ve been watching an episode of American Publishing’s Most Wanted.

Not many news stories have had me fired up as much as this one! A lone bookkeeper has been sentenced to ONLY TWO YEARS in prison for single-handedly putting a 49-year-old literary agency out of business, and screwing over their authors for millions in royalties.

In a nutshell, over a period of eight years, Darrin Webb, a bookkeeper for Donadio & Olson, siphoned $3.3 million from the business. Ignore the parts of the story about how he had good intentions. Rubbish. He’s a CROOK!

But, that’s not all that infuriates me. How in the name of all things green could a company of that size, which had allegedly received complaints about royalty problems “for years,” not have noticed SOMETHING was going on?

There are three VERY EASY ways to stop (or at least greatly discourage) this type of employee theft:

  1. Don’t let a non-owner sign checks or have access to money transfers. For larger firms, require two owners to approve every payment over a certain dollar amount.
  2. Do mini-audits. In other words, LOOK at what the accounting folks are doing. Track their tasks. Do reconciliations apart from theirs. Actually LOOK at the bank statements – but NOT the ones the bookkeeper gives you because he could be a Photoshop whiz on the side. Download them directly from the bank’s website.
  3. Put software on accounting employees’ computers to track their actions.

If the owners of Donadio & Olson had done these very simple things, their bookkeeper might not have taken the risk (or might have been caught much sooner), and the literary agency might still be in business.

According to this article: “One insider said it was an example of ‘management not paying very close attention.’ Though all sources spoke highly of Olson and his colleagues, many said that they might not be the best businessmen.”

That’s an understatement!

I was in accounting before I started BookLocker.com. I don’t think I’ve mentioned this before but I was sorting checks that arrived with my parent’s business bank statements before I was old enough for braces. My mother did the books for my parent’s real estate business and she taught me the old-fashioned way of balancing the books – with big, green ledger sheets (I still miss those) and an adding machine. I taught myself 10-key to make the work go faster. After I graduated, went to college, and started a family, I got a job doing accounting for a pipeline cleaning company, an aerospace manufacturing firm, and others. Along the way, I learned computerized accounting.

I worked for small companies with too much trust in their accounting employees (I was given check signing authority on day one of my employment with one such firm) and I worked for a large company that required signatures from two directors on every single check, regardless how small the sum.

When BookLocker started growing, I hired a CPA firm, which promptly offered to do my books for me. No, thank you. I have always done all of our accounting, from paying the bills, to bank reconciliations, to month-end processing, and everything in between. Our CPAs have it easy. I give them our Profit and Loss, Balance Sheet, my 1099s and W2s, and a host of other documentation at the end of the year and they just have to plug the numbers into their software program, and advise me of anything I should be doing differently, if they think I missed any deductions, etc.

I would never, EVER trust a non-owner with check writing or bank transfer privileges. That’s why I do NOT understand how such a respected, veteran literary agency could have let this go on for EIGHT LONG YEARS!

I am a hardcore American Greed fan and several episodes have featured crooked accounting schemes leading to the demise of a company. In these cases, the company’s owners aren’t the only victims. Every person and firm owed money by that dying company is also victimized, just as occurred with Donadio & Olson.

Now that the criminal case for the bookkeeper has been wrapped up, I hope Donadio & Olson’s authors have lawyered up. It’s unfortunate the owners of that agency can’t be charged with criminal stupidity. They deserve to  spend the rest of their lives paying off the debts their company owes to their talented, hard-working authors.

Please share your thoughts on this horrible situation in the comments box below. 

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Angela Hoy is the publisher of WritersWeekly.com, the author of 19 books, and the co-owner of BookLocker.com (one of the original POD publishers that still gets books to market in less than a month), PubPreppers.com (print and ebook design for authors who truly want to self-publish), and Abuzz Press (the publishing co-op that charges no setup fees).

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3 Responses to "How a Lone Bookkeeper Killed a 49-Year-Old Literary Agency"

  1. Macabee Dean  December 20, 2018 at 11:27 pm

    It seems that some literary agents, not only writers, have both their heads and feet in the clouds.

  2. Angela  December 20, 2018 at 9:47 pm

    I’ve worked as a Bookkeeper for over 20 years and recently got my Bachelor’s. Not every accountant is out to get you. And it isn’t always possible to do ALL the accounting work yourself. Not everyone has a degree in Accounting after all. I believe what would have helped was a yearly audit from an outside firm and every three years (or sooner with complaints) a fraud accountant should have gone in and look specifically for these red flags. I plan on getting my CFA for this very reason. I mean legitimately THIS situation solidified my desire to be a Forensic Accountant and to work in the field of fraud examination. While I LOVE writing, I believe that hard working authors deserve to get ALL of their money.

  3. Johnny Townsend  December 20, 2018 at 7:01 pm

    I worked for two financial institutions, and both had strict guidelines to prevent employee theft. Only one, however, had surveillance video. At first, it creeped me out, but I soon learned that the video camera was there to protect me. It proved that I didn’t go to places I shouldn’t go or open things I shouldn’t open. I’m still a little creeped out by surveillance cameras, but I’ve also worked in places where we deal with large sums of money daily, and there is NO video. If something turns up missing, any of several employees could be the culprit. I WANT video proving it wasn’t me. I’ve also worked in places where the money bags for the till have the ones in bundles of twenty or twenty-five and fives in bundles of twenty, and so forth. All employees are supposed to count the money in the bags, and I see other employees counting, “One bundle of ones, two bundles of ones, three..” and so forth, and then concluding, “Two hundred dollars in ones.” The employee has absolutely no way to know that’s true. All they know is they counted ten bundles. That’s not the same thing. I count every single bill that I am responsible for. Twice recently, a bundle came up short, and I reported it. But how does my boss know I’m not the one taking the missing bills rather than another employee? We all have the same combination to the safe. There is no video. There’s no way to know who is stealing, or being sloppy, if it’s unintentional, which is just as likely but still a problem. I’ve seen these types of problems over and over in various places I’ve worked. I always do everything I can to protect myself and my employer, but the employer is responsible for putting safeguards in place that protect everyone.