“I’m being mugged by a bank,” stated Greg Bates, publisher at Common Courage Press in Monroe ME. On April 1, Bank One and its subsidiary, American National Bank, seized $1.2 million belonging to 85 publishers including Common Courage. On April 23, the bank demanded publishers hand over the same amount again. It’s a demand a bank might make of any business caught in this situation, not just publishers. Bank One is the nation’s fifth largest bank holding company.
In an effort to resolve the matter quickly, some publishers tendered a generous offer. It would have allowed the bank to keep the $1.2 million already taken and be paid an additional $750,000 of publishers’ money over 10 months, amounting to about 80% of what the bank is after. Bank One turned it down cold.
“I’m not even a customer of the bank,” expressed Bates in astonishment. “I never borrowed money from it. I demand that Bank One put the money back immediately. They knew the money didn’t belong to them when they took it. The bank is relying on forcing small publishers with shallow pockets to surrender rights to the money. This is like being stuck in the financial equivalent of a Franz Kafka novel,” Bates said.
Common Courage and the 85 publishers use LPC Group as a distributor for their books. LPC had a loan from the bank, with about $2.7 million outstanding. No publisher had signed onto the loan. Most if not all were unaware that LPC had obtained it. The bank acknowledges that LPC was not behind in loan payments. It recalled the loan after deciding LPC was a bad credit risk, essentially asking publishers to pony up for its own bad business choices.
As with every month, on April 1, LPC deposited a $1.2 million payment it received from an independent warehouse for sales of the publishers’ books. Bank One, from documents in its possession, knew at the time that the payment was created from the sale of books owned by the publishers that were with LPC on consignment. It also knew that $1 million of the deposit was due to be sent out to publishers. Nonetheless, it seized the money the day it arrived in LPC’s account.
Bank One, still owed another $1.4 million, wants money from the next sales as well.
“This isn’t just our money,” stated Bates, who so far is out $35,000-his share of the $1.2 million-plus legal fees. “It includes royalties due our authors. In effect, the bank is stealing from writers, not just publishers.”
Ironically, Common Courage publishes books about the excesses of corporations, including Merchants of Misery, which mentions Bank One. “Since hiring Jamie Dimon as CEO, they’ve certainly succeeded in taking predatory lending to the next level,” Bates mused. “We are about to publish a book on Enron, showing that corporate evil is endemic to the global economy. Now we ourselves are grist for the mill. It’s a pretty high price for the right to say ‘I told you so’,” he quipped.
Bank One’s position is straightforward. Yes, the contracts between publishers and LPC all stipulate that the books belong to the publishers and are under consignment. But the publishers failed to file forms with state governments that would have “perfected” the consignment. Had they done so prior to the loan from the bank in 1999, publishers would have had first claim to the books and resulting sales. That publishers were unaware of the loan and had no way of knowing it was about to be made in ’99 is irrelevant, according to the bank.
“Bull feathers,” responded Bates. “Sucking money belonging to others out of an account is reprehensible. It’s as if a traveler momentarily set down his luggage in an airport. A stranger, who is owed money by the airport, walks up and grabs the luggage, claiming it as partial payment for the airport’s debt. Bank One’s position amounts to the thief arguing he has a right to the luggage because the traveler failed to attach a name tag to his possessions,” Bates went on. “Contrary to the bank’s view, even a 5 year-old can tell you who rightfully owns what.”
For more information, email or call Greg Bates at firstname.lastname@example.org.
Or contact the bank, Jamie Dimon, CEO, Bank One, 1 Bank Plaza, Chicago IL, 60670 tel 312-732-4000 http://www.shareholder.com/one/contact-ir.cfm and its lawyer, Doug Skalka, at Neubert, Pepe and Monteith, 195 Church Street 13th Floor, New Haven, CT 06510, 203-821-2000 email: email@example.com