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Post date: February 22 1999

State Appeals Court Affirms Fraud Ruling Against Phony Literary Agents

Attorney General Spitzer today praised a ruling by the Fourth Department of the State Appellate Division which found four Buffalo area residents and one California man were operating a fictitious literary agent and publishing house business that defrauded over 3,600 consumers nationwide.

A ruling was issued from the State appeals court yesterday affirming the conviction of William S. Appel and Denise A. Sterrs of Williamsville, Eduardo E. Gahona of Cheektowaga, Kelley Culmer of Kenmore and Charles C. Neighbors of Upland, California. These participants operated a scheme to defraud aspiring writers into spending thousands of dollars for editing costs only to have their manuscripts rejected by phony publishing companies and literary agents.

"I am encouraged that the decision to uphold significant penalties against the participants of this scam will provide a deterrent for others considering similar acts," Spitzer said. "Moreover, these victims placed their hopes and dreams in fraudulent literary agents and publishing companies only to be deceived into paying for an over-priced editing service, lied to about the qualifications of the editors, misled about the potential for acceptance by a publishing company, and ultimately rejected by fictitious literary agents or publishing houses. It is equally important that we fight to get substantial refunds for these consumers."

This phony literary service generated approximately $4.75 million in revenues. Consumers were duped into believing that their manuscripts showed "great promise and excellent commercial possibilities" but required professional editing. The participants then made referrals to Edit Ink, a Cheektowaga firm which charged hopeful writers up to $2,000 per manuscript. What was not disclosed to the consumers, however, was the fact that these fake literary agents were receiving a 15% kickback from Edit Ink for every referral. After resubmitting their edited writings to the literary agent or publishing house, the victims were informed that their manuscript had been rejected.

In addition, the Appellate Division panel upheld $2 million in civil penalties for their fraudulent acts, false advertising and deceptive business practices. Although the lower court judge had included full refunds in his decision, the appellate court sent back the issue of restitution in order that hearings be held to determine the appropriate compensation for victims.

Assistant Attorney General Dennis Rosen, head of the Buffalo Regional Consumer Frauds Bureau, handled this matter.

This is the second major win for the Attorney General against fraudulent literary agencies in a week. Late last week, a New York City judge ruled against an Internet publishing company, the Woodside Literary Agency of Queens, for misleading it client writers and misrepresenting its literary services.