In May 2008, the Indiana Attorney General filed suit against vanity publisher Airleaf and its owner, Carl Lau for taking authors’ money without providing services in return. Additionally, Lau was accused of violating Indiana’s Deceptive Consumer Sales Act, of using company assets to cover expenses not related to the business, and of continuing to solicit authors, promise services, and accept payment for months after Airleaf became insolvent. The suit sought restitution for Airleaf authors, civil penalties of up to $5,500 per violation, and reimbursement for the cost of the investigation.
A Consent Judgment between the AG and Airleaf/Lau was entered on June 30, 2008. There was a provision for restitution–but for just two of the 120 authors named in the suit.
On August 21, those authors received the following email from the Attorney General’s Office:
As most of you know, on June 30, 2008 the Office of the Indiana Attorney General entered into a Consent Judgment with Airleaf and its owner, Carl Lau. Among other things, the judgment contained a provision regarding restitution for your particular loss. For those of you who do not already have a copy of the judgment, please feel free to access a PDF version via www.IndianaConsumer.com. Our ongoing investigation since that filing was made revealed that Airleaf and its owner are insolvent and any attempt at formal collection activity would therefore be fruitless.
On August 3, 2009 Carl Lau and his wife filed a join ‘no asset’ Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Indiana, under Case Number 09-11308-AJM-7. The filing again confirms our conclusion that further attempts to secure restitution are inadvisable.
Enclosed you will find a Notice of Bankruptcy Filing the Bankruptcy Court recently sent to my Office. Please note that the due date for “objections to discharge” is November 20, 2009. Bankruptcy law allows creditors (which you are by virtue of the Consent Judgment) to file a lawsuit within the bankruptcy proceeding to prevent discharge of the debt at issued if the creditor can prove fraud.
The State has concluded that such a lawsuit, even if prosecuted successfully, will not be collectable. Therefore, we will be unable to obtain restitution for your loss. If you believe you might wish to pursue such a lawsuit on your own, please consult a private attorney.
Tom Irons, Deputy Attorney General, Consumer Protection Division
It’s disappointing, but not surprising. Cases of this type tend to be mainly moral victories; there’s rarely any money left for restitution.
Details of Lau’s bankruptcy filing (which suggest that he has at least some assets) can be seen in a news article reproduced at Airleaf victim advocate Bonnie Kaye’s blog.
On an unrelated note, Writer Beware is about to go on vacation, so no blog posts for the coming week. See you when I return!
Thank you all for your advice. If any of you know of any attorney who is willing to work on a consignment basis, please let me know by writing to me at Bonkaye@aol.com. Sadly, people are too burned to invest more into a case that they don't believe they can win, especially after losing so much money. Any attorney I have spoken to (which is 4) wants $5,000.00 up front, then money for an investigator, then filing charges, etc. It would take thousands of dollars to invest in something where there is not necessarily going to be much of a payback.
Thanks for your thoughts and concerns.
Bonnie Kaye, M.Ed.
Hmm, I'm no lawyer, but I reckon a course of 'valid restitution' that involves burning Lau's house down would be frowned upon by the courts.
However, it does offer food for thought!
And, while NOT legal advise, I agree with C.E. Petit. Victims need to talk to an attorney. Fraud claims are not dischargable in bankruptcy. Furthermore, the consent order does not necessarily cover the additional invidiuals who were not given any sort of restitution, unless they signed off on it and agreed to waive this right. Their causes of action could still be valid. Just because the government gives up, does not mean the individuals have to.
Thanks for keeping us updated on this one. I actually signed Bonnie Kaye's petition in spring. So it's nice to hear what's transpiring on the front lines.
I've only just discovered your site, but I am immediately writing a post on my blog recommending you to all writers. Thankx for your hard work and research.
This is not legal advice, but victims should consult counsel soon about filing claims in the bankruptcy proceeding. The key point is that claims arising from fraud are not dischargeable in bankruptcy — that is, they would continue to exist. There are other procedural hoops to jump through, though, so a victim cannot just rely on the nature of the claim without making a filing.