May 4, 2015

This week in textbook theft and fraud

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Apparently not enough money to hire a professional website designer.

Apparently not enough money to hire a professional website designer.

Textbooks. They’re heavy, expensive, and omnipresent, and they’re chained to education, which makes their demand fairly inelastic. And as we’ve previously covered, this makes them a fairly attractive object of fraud and straight-up theft.

The LA Times recently reported on one man’s secret to a successful used-book hustle; steal your inventory!

Corey Frederick, 44, hatched a scheme to steal thousands of textbooks from cash-strapped local school districts so that he could sell them to distributors. Starting in May 2008, Frederick recruited librarians, office technicians and warehouse supervisors — a dozen in total — from the Los Angeles, Inglewood, Lynwood and Bellflower school districts.

Over two years, he paid them more than $200,000 in bribes so they would steal textbooks in economics, physics, anatomy, literature and language arts, prosecutors said.

Through his Doorkeeper Textz bookselling business in Long Beach, Frederick resold the stolen books to distributors including Amazon, Seattle-based distributor Bookbyte and Illinois-based Follett Educational Services, according to a Grand Jury indictment that was returned in 2013.

Frederick’s no contest plea to multiple counts of embezzlement and bribery was quickly answered with a sentence of over five years and prison and an order to pay almost $800,000 in restitution.

When your two-year bribery budget hits six figures, it indicates that you’re running fairly major bookselling operation (or a minor financial institution). Prosecutors claimed that Frederick even sold stolen textbooks back to the schools they were stolen from, though they were unable to gauge the full extent of the theft due to a complete lack of inventory control and tracking. Which is dismaying, because if enough texts could be lifted to finance $200,000 in bribes, not to mention profit, over the course of two years, then it would seem that either the school’s entire accounting process is severely underexamined or that textbooks just comprise a blind spot.

It was just such a blind spot that allowed Christopher Alan Mervyn, a college bookstore employee, to make off with almost $30,000 from his employer before getting caught. The Norman Transcript reports:

According to the affidavit filed with charges, Mervyn made 233 fictitious book buybacks at Ratcliffe’s Bookstore, pocketing $29,280. The embezzlement allegedly occurred between May and December 2014.

Reports show that bookstore employees examined inventory transaction reports, which shows every time an employee adjusts the quantity of a book in inventory. For every book Mervyn adjusted, there was a matching buyback on the same date, the affidavit said.

Every buyback transaction also has a customer name associated with it. For each transaction, the customer name was searched in the OU People Search and no customer names Mervyn provided could be found in the database, records show.

In this case, Mervyn wasn’t operating on the base assumption of a textbook’s value; his was more of a straightforward skim. That he made up 233 fake names seems weirdly dedicated, but who knows, maybe he’s a Pessoa fan.

In any case, the phenomenon of fraud or theft associated with consumer goods is nothing new. However, the reasons it continues to happen (and the reason we report it) is that it’s a look inside the supply chain, as well as a demonstration of changing cultural attitudes toward the value of books. Understanding how so much money can be mined from textbooks is a reminder that we’re still paying too much for them. The advent of ebooks hasn’t changed the price or availability of textbooks much at all. Amazon’s campaign to lower book prices, and to make their users and the general public feel entitled to such, has been fairly successful, and they do indeed do brisk business in used textbooks.

But the strategy that allows Amazon to operate as a monopsony, which involves a relentless campaign to convince the public that books should be cheap, effortlessly made chunks of entertainment, a delivery system for tiny squirts of dopamine a la Candy Crush and nothing more, doesn’t function as effectively with textbooks, despite a very real national student debt crisis and a poorly funded and run public education system.

So why are textbooks so expensive? Production costs, rising tuition, and the profit motive, to name a few reasons. But the reason they get stolen is simple: people will pay for them.

 

Liam O’Brien is the Senior Sales & Marketing Manager at Melville House, and a former bookseller.

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