Kathryn Cramer

Advanced Marketing Services in Chapter 11 Shortly After 3rd Exec Is Convicted in Fraud Case

Just before the end of the year, Advanced Marketing Services (Pink Sheets: MKTS), a major book distributor (and owner of Publishers Group West), went into Chapter 11 bankruptcy, taking with it a big chunk of US publishing's Christmas receipts. This household has been watching it closely, and this was something I didn't blog because I didn't want to spook anyone with half-baked info.

The New York Times finally got round to running a story on January 5th. Our Year's Best SF series is published by HarperCollins, so I pay particular attention to the line in the NYT piece:

“We’re exploring ways to keep working with them,” a spokeswoman for HarperCollins, Erin Crum, said.

Uuummm. Ooohhkaayy.

Of course everyone caught in this has one big question: Are we going to get paid?

But my bigger question, once I looked into the situation was not whether HarperCollins and a whole laundry list of publishers were going to be able to find a way to continue working with AMS, but rather why they were working with them in the first place.

The New York Times remarks, a little too tactfully:

Advanced Marketing Services’ financial difficulties were widely known in the industry, after an accounting scandal in 2003 resulted in the ouster of several senior managers.

Ouster? Ouster? Try criminal conviction! From the San Diego Union Tribune, dateline December 12, 2006: Former AMS exec sentenced to 3 years for role in fraud case

A federal judge yesterday sentenced the former vice president of advertising at Advanced Marketing Services to 36 months in prison for her role in falsifying earnings at the San Diego company.

Sandra Miller Christie pleaded guilty in 2005 to charges that she conspired with other former employees to defraud AMS clients and inflate the profitability of the company's advertising department. The scheme occurred from 1999 through 2003. . . . Two other former AMS employees were sentenced by Burns earlier this year.

So WHY OH WHY were so many publishers caught short using a company that has just had three employees criminally convicted of cooking the books? The NYT article suggests a possible reason:

The distributor has near-exclusive access to the discount retailers known as price clubs, including Costco and Sam’s Club.

In other words, the problem here is Monopoly Capitalism: there has been so much consolidation of the once-diverse distribution system that publishers are forced to use a distributor known to have major issues with cooking the books in order to reach significant portions of the market.

Hello? Department of Justice? Can we get some anti-trust litigation going here? (Well, at least the FBI is still interested!)

AMS has been in turmoil since 2003, when agents from the FBI raided its Sorrento Mesa headquarters.

Three former AMS executives were sentenced last year to prison after pleading guilty to fraud charges. The executives defrauded publishers of funds that were intended to market books, but retained to boost company revenues, according to federal indictments.

An investigation into the company’s operations remains open, federal prosecutors said.

In addition to the criminal probe, AMS hasn’t reported financial results for more than three years, and has yet to restate its financial results dating back to its 2003 fiscal year.

Publishers Weekly reports:

Several of the largest publishers feel betrayed by AMS—just days before the Chapter 11 filing, AMS had assured the major New York houses that everything was fine.

Publishers Weekly relays Costco's advice on the current situation:

A Costco spokesperson said that until further notice, publishers should operate "on a business as usual basis."

Pay no attention to those men behind the curtain. You are growing sleepy, very sleepy. These are not the accountants you are looking for . . .

Meanwhile, Costco's profits are up:

Costco, the nation's largest wholesale club operator, said Thursday its first-quarter profit rose 10 percent and said it would take a second-quarter charge related to stock option grants.

For the quarter ending Nov. 26, net income totaled $236.9 million, or 51 cents per share, compared with $215.8 million, or 45 cents per share, a year ago. Revenue climbed 9 percent to $14.15 billion from $12.93 billion last year. . . . In October, Costco said an internal committee and independent experts reviewing the company's stock option grant practices found no evidence of fraud, but did find "imprecisions" related to certain grants.

The distributors are much bigger businesses than the publishers and the big box club stores are in turn much bigger businesses than the distributors.

Does ANYONE at Costco or Sam's Club care that they are and have been forcing the entire publishing industry to do business with crooks? It would appear that the answer is no: that's how Costco keeps its prices down.  Business as usual is business with crooks.

Meanwhile, perhaps the best we can hope for the Christmas publishing revenues is that they are having a nice holiday in the Cayman Islands.

Nigerian Spam about Quantum Mechanics

Someone in Nigera apparently read my most recent post, because I got a hillarious piece of Nigerian spam on the subject of quantum mechanics:

I am Civ Opopekim, the only son of the late Professor Lawrence Opopekim, of a much respected university in my country of NIGERIA, who was dedicated to the study of RETROCAUSALITY. Upon examining my father's scientific journals, I have discovered a matter of the most URGENT importance to your future (and past) well-being. As most of my father's work has not yet been published, I am counting on your discretion in this sensitive matter.

In the course of research, my father discovered the photons created in his experiments were entangled through QUANTUM MECHANICS with photons found in your locale. Further study revealed the break-through discovery of photon tilt patterns in the photons of your area based on experiments planned but yet to be performed by my father.

Alas since my father was poisoned to death with tainted YAK MILK by scientists from rival laboratories who lured him to GENEVA under the false pretense of a scientific conference, a financial situation has arisen where I can no longer assure the continuation of his research or the operation of his laboratory (it embarrasses me to admit this sad truth).

As a person of science, you are aware that even changes at the quantum level cause universes to take separate but parallel infinite paths. I fear that if I am unable to continue my father's schedule of experiments and therefore cause the photons in your immediate area to not have tilted in the way they already have, the life you have come to know and enjoy will cease to be and you will find yourself in a parallel existence unfavorable to you.

To this end, and for the sake of your past and current self as well as my father's research, I humbly ask you for the sum of US$10,000, which will allow me to keep for father's laboratory open for a time to carry out the scheduled experiments.

As an indication of your willingness, please forward to me your: full name, company, full contact address, phone, cell, fax, city, sate, zip code, occupation, SSN and all the necessary information will be sent to you on the acceptance of this arrangement.

His dad must have been a very important guy! It's not everyone who gets fed poisoned yak milk in Switzerland!

My father, John Cramer, remarks that he will know to avoid the yak milk at future physics conferences.

Frank Abagnale, the 'Catch Me' con man on the Technology of Fraud

From the Miami Herald, a lecture from the Catch Me if You Can con man:

When [Frank] Abagnale, 58, did it more than 30 years ago, the process of stealing someone's identity was simple, if a bit time-consuming. It required going to the county clerk's office, finding the name and Social Security number of a dead child, asking for a copy of the birth certificate and using that certificate to obtain a driver's license. With the Social Security number and driver's license, the financial world was his oyster -- and still is for today's crooks.

MUCH EASIER NOW

''It was all on paper,'' he said. "Now it's all done online. Electronic records just make it easier.''

To illustrate, he pulled up a copy of a mortgage document he obtained electronically about Porter Goss, the former director of the Central Intelligence Agency and U.S. representative from Florida. The Social Security numbers of Goss and his wife were part of the document, though they were crossed out on the PowerPoint screen onstage.

''Technology breeds crime,'' said Abagnale, who designed the birth certificate form now used in Florida. There are ''no con men anymore because the victim will never see them. They can be a thousand miles away.'' While banks and companies lose laptops and other records containing sensitive personal information, kids with cellphones secretly shoot pictures of checks being written in checkout lines of grocery stores. They can blow up the images on a computer and get all the information they need to commit bank fraud.

''Fraud has just gotten easier,'' he said. "I never in my life saw a simpler crime.''

It's interesting that he thinks there are no more con men to be met in person. Obviously he hasn't had much exposure to the subject of Internet dating sites where fraud is rampant and the whole purpose of it is to meeting someone under false pretenses, sometimes just for sex, and sometimes for financial gain. (Dating sites are not my thing, but I've been told Tales of Terror by older single women with experience in that area.)

Further, though, the culture of the Internet promotes the idea of assuming an alias with the idea that this gives the Netizen more personal freedom. But freedom to do what? Yes, it affords the possibility of expressing political and sexual opinions while keeping one's job in an oppressive corporate environment. But as I have argued before, this is a very slippery slope. Teaching people to assume aliases teaches them a way to avoid responsibility for their own actions.

It will be interesting to see how much this carries over into daily life: Will there be a broadening of the use of aliases, not just by, as it were, the usual suspects, but by people who would not otherwise have felt the need of additional personae in real life. And how far will this extend?

Regarding Abagnale, his website bio explains:

Mr. Abagnale was the subject of a major motion picture entitled "Catch Me If You Can", directed by Steven Spielberg with Leonardo DiCaprio and Tom Hanks. "Catch Me If You Can" is currently in development for a television series. The series will be produced by DreamWorks Television.

Joseph A. Cafasso: A Call for Information

Cafasso in Outfoxed (2004) about 34 minutes in.

I am interested in receiving information concerning the life and activities of former Fox News Military & Counterterrorism Editor Joseph A. Cafasso aka Joe Cafasso, Jay Cafasso, Gerry Blackwood, Gerard Pal Blackwood, Jay Mosca, J. Mosca, James Mosca, Joseph Mosca, Jay Anthony, Tom Adams, and Jake Adams.

He stole my computer and owes me about twenty grand.

Of particular interest are:

• other known aliases
• information concerning debts & unpaid financial obligations
• incidents involving computer equipment or credit cards
• medical conditions
• employment history
• documentation such as photographs, videotapes, audiotapes
• transcripts or other documentation concerning public events he attended
• documents he presented

Information can be provided to me via the comment section below, or via email to kathryn.cramer@gmail.com.

UPDATE: Many thanks to those of you who have written to me already. Your help is much appreciated.

FURTHER UPDATE: For the record, I have no connection with the various Jack Idema-connected disingenuous new attack blogs devoted to the subject of Cafasso. They display an alarming lack of empathy for both Cafasso's targets and his family.