Darin Webb, the bookkeeper who stole more than $3.4 million over eight years from venerable New York literary agency Donadio & Olson, was sentenced to two years in prison on Monday, less than half the 51-63 month term the government had recommended.
Calling the sentencing guidelines high, and clearly swayed by the defense’s Sentencing Memorandum, which portrayed Webb’s theft as “a stark departure” from character that was "not motivated by personal greed," judge Edgardo Ramos sentenced the former bookkeeper to two years in prison to be followed by three years of supervised release. There was no fine, (since, the judge concluded, Webb had no ability to pay) but a final restitution order for roughly $3.3 million will be added pending a submission by the government, within 90 days.
Choking back tears, Webb apologized to his victims, including his former employers, agency principals Neil Olson and Edward Hibbert, who, Webb said, he regarded as family.
“There are no words to describe how sorry I am,” Webb told the court, acknowledging that his actions have “caused so much heartache.”
Olson, meanwhile, sat expressionless in the front row of the courtroom, and did not react to Webb’s apology. Hibbert was unable to be in court.
In a pre-sentencing memo filed last week, Webb’s attorneys detailed the theft, explaining that the vast majority of the stolen funds went to support Webb’s business, Sum Innovation, which, as part of its mission, had included a non-profit arm that provided “training and employment opportunities for underserved communities.”
But over the years, as Webb's payroll ballooned, rather than scale back his vision, Webb began siphoning funds from his main client, literary agency Donadio & Olson, to cover his business's payroll expenses. The vast majority of the stolen funds, Webb's attorneys contended, were paid out to cover payroll expenses, not for Webb's personal use.
In a letter to the court, Webb explained that he was able to pull off the scheme because, over time, he came to think of himself as “running” the agency.
“I don’t recall exactly the first time I transferred money from the agency into Sum Innovation,” Webb’s letter to the court states. “I told myself I was investing in my company and it would benefit the agency in the end. I told myself I was supporting the families that worked for me. I told myself I would pay it back. I could not let this fail. I saw the potential we were striving for, I just needed to hold on until it all worked. I suppose you could compare the feeling to gambling or drug addiction. Just one more card, one more hit.”
The scheme did eventually fail, however, after a “perplexed” Neil Olson confronted Webb in March of this year, according to court fillings.
Meanwhile, sentencing documents filed last week by the government show the breadth of the destruction caused by Webb’s criminal conduct. Somehow running undetected for years, Webb's actions nearly bankrupted bestselling author Chuck Palahniuk, and ultimately destroyed Donadio & Olson, which officially filed for Chapter 7 protections on December 3.
“Over the course of approximately eight years, Webb transferred at least $3,414,650 from D&O’s bank accounts into bank accounts controlled by Webb,” the sentencing documents reveal. “The scheme spanned more than seven years, beginning in 2011 and ended only when the fraud was uncovered, in March 2018. It caused D&O to cease operations and declare bankruptcy, and the owners of the agency to lose their business and livelihoods. It also harmed many of D&O’s clients and their successors."
In asking for a sentence of 4-5 years in prison, U.S. attorneys rejected Webb’s contention that his crime was merely a “stark departure” from a “previously straight and laudable path.” Rather, prosecutors portrayed Webb as a “self-serving criminal” who “engaged in hundreds of unlawful transfers; hundreds of individual acts of theft and deceit; and countless lies to cover it all up.”
Among the details in the filing was the astonishing number of unauthorized transfers Webb made over the span of his theft, which ranged from $1,000 to $75,000. According to the filing:
- In 2011, Webb made 40 unauthorized transfers, totaling $288,500.
- In 2012, Webb made 45 unauthorized transfers, totaling $380,000.
- In 2013, Webb made 43 unauthorized transfers, totaling $425,000.
- In 2014, Webb made 33 unauthorized transfers, totaling $392,500.
- In 2015, Webb made 45 unauthorized transfers, totaling $565,500.
- In 2016, Webb made 48 unauthorized transfers, totaling $413,000.
- In 2017, Webb made 97 unauthorized transfers, totaling $963,900.
An appended document also shows that of the $3.4 million Webb stole, more than $2.7 million came from royalty payments due the agency’s authors, estates, or their assignees, with two clients suffering the greatest: Chuck Palahniuk, the bestselling author of Fight Club, who was bilked of $1.44 million; and the five children and the Estate of Mario Puzo, author of The Godfather, which was cheated out of a combined $757,000.
Among the other major victims: the Edward Gorey Charitable Trust ($59,829.84); The Peter Mathiessen Trust ($64,208.96); Joseph Heller’s assignee ($35,665.97); Studs Terkel’s assignee ($60,458.22), and Michal Herr’s assignee ($71,988.70).
'Overwhelming and Complete'
Despite Webb’s insistence that he would try to pay back the money he stole, the prosecution’s sentencing documents suggest there is little chance that he will be able to do so, since Webb owns no property that can be seized and most of the stolen money was paid out to employees. Meanwhile, the impact of Webb’s crime, the government stressed, has been devastating.
“The financial impact of Webb’s embezzlement on D&O and its owners cannot be overstated,” the filing states, noting that “D&O has ceased to be a going concern, is in the process of liquidation, and has virtually no assets.”
In a victim impact letter to the Court, Neil Olson also described the harm Webb inflicted, citing not only the negative financial impact upon the agency, but the psychological and career harm as well. “The shame of this for us who looked after [our authors’] interests is not something that any amount of time or recompense can erase,” Olson wrote. "An agency that started in the 1960s, which cared for so many great writers, so many talented unknowns, so many friends, will cease to exist within weeks."
In a separate victim impact statement, Hibbert described the destruction inflicted by Webb as "overwhelming and complete."
“I turned 63 a few weeks ago,” Hibbert wrote. “This betrayal has affected me financially, physically, and mentally. I have developed chronic insomnia, panic attacks, and acute anxiety as to how I will be able to support myself in the years to come.”
Following his sentencing, Ramos also agreed to recommend, at Webb's request, that Webb serve his time at the Otisville Satellite Camp, a minimum security facility in upstate New York. Ramos ordered that he surrender himself on February 18, 2019.
After the sentencing, Webb declined comment to PW.