Peter McGuigan, the cofounder of Foundry Literary + Media, has filed a lawsuit against his former business partner, Yfat Reiss Gendell. The suit, filed on Friday in New York's Supreme Court, claims that Gendell stole money from the former partners' literary agency.
Last September, McGuigan and Gendell announced they were both leaving Foundry to form new companies. The professional split--she began a new agency called YRG Partners while he unveiled Ultra Literary--left Gendell (who is a lawyer and CPA) in charge of the contracts still residing at Foundry.
The complaint alleges that, between January 16, 2020 and November 25, Gendell withdrew $634,277.50 from Foundry’s operating account without McGuigan’s knowledge. The withdrawals, the suit alleges, were for Gendell's personal use, “thus defrauding the company of hundreds of thousands of dollars.” The lawsuit also states that Gendell withdrew at least $187,245.72 more from the operating account, last fall, to fund her new agency.
The suit comes on the heels of an outcry from a collection of Foundry authors who said they were not being paid their royalties by the agency. The authors, some of whom have reached out to the Authors Guild for help, claim they have not been paid, or have been sent checks that later bounced.
In the complaint, McGuigan acknowledges that he froze both Foundry’s operating account and its client account. (The latter is the one used to pay royalties to authors.) The lawsuit says McGuigan took this step in order to force Gendell to pay back the money she took from the agency.
In a letter McGuigan sent to clients on January 18, which PW procured, McGuigan said he filed the lawsuit "in an effort to protect the best interests of Foundry, its agents, and its clients.” The letter also address the issue of unpaid royalties. In it, McGuigan said Foundry “is hiring a new, professional bookkeeper who comes from the book publishing world, and any unpaid monies currently in Foundry’s bank account will be delivered to you once his services commence." McGuigan then added: "Rest assured, I am doing everything to make certain this happens incredibly soon.”
When reached for comment, McGuigan echoed much of what he stated in the letter. He said he filed the suit, "because I thought it was in the best interest of Foundry, it’s agents and our clients." Speaking to the unpaid royalties, he added that "the client account isn’t locked. Things are slightly delayed as we hire a new bookkeeper."
Gendell, when reached for comment about the lawsuit, offered this statement: "I vehemently disagree with the allegations in the complaint and will vigorously defend against them. But in the meantime, my immediate mandate is to get payments to clients, agents, colleagues, and all of Foundry’s service providers.”