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!