The Donadio & Olson literary agency filed for Chapter 7 bankruptcy December 3 following years of embezzlement by its former bookkeeper, Darin Webb, who was sentenced December 17 to two years in jail for his crimes.
The agency filed for Chapter 7 in the U.S. Bankruptcy Court for the Southern District of New York, listing assets of $47,241.90 and liabilities of $186,613.90. The agency's authors are owed a total of $2.7 million in royalty payments. The firm has already begun liquidation proceedings.
The two principals in the firm, Edward Hibbert and Neil Olson, explained how the embezzlement led to the downfall of D&O in separate letters to the judge made public at the time of Webb’s sentencing. Olson provided the more complete explanation of what took place, saying that Webb had been the agency’s bookkeeper for about 20 years and, during that time, had taken over most of the agency’s back office functions. What looked like dedication to the job, Olson wrote, was really part of Webb’s scheme to steal $3.4 million.
According to Olson, Webb, over time, stole an “ever larger portion of our and our client’s money. His means of doing this were complex—hidden bank accounts, fraudulent reports, gently squeezing out a part-time assistant who asked too many questions.”
When Webb confessed to the theft, it became clear, Olson wrote, that he did not "have the means to repair what he has ruined, and we do not have the means to continue." As a result, Olson wrote, the agency “will cease to exist within weeks.” (The letter was dated October 21, 2018.)
Olson expressed deep regret for harming the financial interests of the agency’s clients, and for any other pain the embezzlement caused. "The shame of this for us who looked after [our clients'] interests is not something that any amount of time or recompense can erase,” Olson wrote.
He also noted that his own loses “have been severe." When the theft was discovered, Olson explained, "the agency’s bank accounts were virtually empty.” Olson said he used personal funds to try to find out what happened and spent “hundreds of hours assisting our lawyer and forensic accountant” to try to get to the bottom of Webb’s scheme.
Despite those efforts, Olson acknowledged, “we will never untangle the theft completely, or account for all of the loss. We have simply run out of time and resources.”
