In a previous article about the sudden closing of All Romance E-Books, LLC and the owner’s announcement that she was not going to pay any royalties for the 4th quarter sales of books from the over 5000 publishers and authors with books on the site. The ‘conscientious burglar’ said she would pay ARe victims 10 cents on the dollar in exchange for not pursuing legal action against the company. It was also outlined the somewhat suspect behavior of the owner and the company prior to this announcement and detailed the actions taken over the last twenty-four hours. Thanks to some court documents from Florida, it would appear this isn’t the first case of disturbing business practices associated with the company.
In order to see the whole story, you need to go back to 2014 when a dramatic conflict began between Lori James and her business partner, Barbara Perfetti Ulmer. In fact, Ulmer sued James and All Romance E-Books, LLC in the Sixth Judicial Circuit Court of Pinellas County, Florida – where ARe was established as a legal business entity – on March 2, 2015. Ulmer filed a complaint alleging that James had been “denying access to contemporaneous and current financial information related to All Romance, breach of duties (fiduciary, care, and loyalty) unjust enrichment, inequitable distribution, and judicial dissolution of All Romance.”
The information regarding this lawsuit is easily found thanks to the open court records in the state of Florida, and can be viewed online here. Interested parties do not need to have an account, the records cost no money to view, and every document pertinent to the lawsuit (including exhibits) are indexed and viewable. All you need to read these documents for yourself is one name.
The story that emerges is sordid and disturbing, and certainly seems to establish a tendency on the part of James to capitalize and profit off ARe without concern or fear of legal retribution. Ulmer and James established All Romance E-Books, LLC together as full partners in 2006. Ulmer was the Chief Financial Officer, and as she was resident in Florida that’s where the physical address of ARe was established. (Remember the three addresses in Florida? One was in Ulmer’s town, Safety Harbor, and appears to be a post office box, which would be understandable as she was the CFO.) James was the Chief Operating Officer, and under the terms of their original operating agreement (Exhibit A) both partners owned 50% of the company and all decisions were to be made by “unanimous agreement” while all financial considerations – both contribution and distribution – were to be equally shared.
According to Ulmer’s complaint, in October of 2014, Dominick Addario, MD – a forensic psychiatrist affiliated with the University of California-San Diego – examined Ulmer to determine whether she was “disabled” and unable to perform her duties under the terms of their operating agreement, which stipulated that if a condition was “permanent or expected to be of an indefinite duration” and prohibited one of the partners from performing their duties, the other partner could assume full responsibility for the company, including all financial and operational decisions.
On November 26, 2014 Dr. Addario sent an email (Exhibit B) to both partners stating that: “…I recommended certain treatment and testing for her and suggest reevaluation in 3 to 6 months at which time she may once again be fit to carry out her duties…”
Obviously this was not a permanent or indefinite condition. However, the lawsuit goes on to state the following:
“On or around November 27, 2014 James unilaterally assumed the power and authority and began making all decisions affecting All Romance. James excluded Perfetti (Ulmer) from any further involvement in All Romance. On or around November 27, 2014 James also unilaterally decided to begin paying herself a salary. In the past while the Members of All Romance had made distributions, neither Member had ever drawn a salary from All Romance.”
Despite the fact that Addario’s expert opinion (and he is, according to his website, a nationally recognized expert in forensic psychology) that Barbara Perfetti Ulmer was not disabled either permanently or indefinitely, Lori James presented her as disabled and completely cut her off from any decisions, policies, input, interaction, and remuneration from ARe. James began to pay herself a substantial salary, promoted herself to CEO of Are, and cut off Ulmer’s access to company websites, bookkeeping, and meetings.
When Ulmer asked to be included in meetings, James told her no and to “stop being a distraction.” When Ulmer asked to return to work, James said no. When Ulmer protested, James told her that “if she did not like what James was doing, that Perfetti(Ulmer) should go get a lawyer.” The following claims were made by Ulmer as James’s breaches of duty and contract against her:
a. Wrongfully declaring Perfetti a disabled member;
b. Locking Perfetti out of the business operations of All Romance;
c. Refusing to provide contemporaneous and current financial information;
d. Engaging in self-dealing by making excessive compensation and/or distributions to herself;
e. Conducting business matters to the oppression and exclusion of Perfetti, so that it is not practicable for All Romance to continue; and
f. Refusing to take the necessary action to dissolve All Romance and distribute to Perfetti one-half of the value.
So take a minute and think about this. Two years ago, James undertook a coup in which she declared her partner disabled without any corresponding medical opinion, refused her access to all information and access regarding the business or its finances, began paying herself an “excessive” amount, and refused to consider closing All Romance E-Books.
In other words, she was violating her own operating agreement and taking money out of the company’s capital while painting her business partner of eight years as incapable of fulfilling her duties as Chief Financial Officer of the company.
No wonder Ulmer’s suit further avers that: “James is liable for all damage to property or persons resulting from James’s grossly negligent, reckless, willful, and/or intentional misconduct.”
How strange, then, to discover that ARe is in such financial straits that they cannot pay authors their 4th quarter royalties for 2016 and is closing its doors with only three days’ notice on December 31, 2016. That means in an approximately two-year period from November, 2014 to December, 2016, Lori James was the sole member of the ARe partnership making business decisions and conducting the financial operations of the business.
During that two year period, she unilaterally and without the agreement of her partner, promoted herself to CEO and paid herself an “excessive” salary. And at the end of that two year period, the company has no capital and cannot continue operating – and in the process is stealing thousands of dollars from thousands of publishers and authors.
After our previous article on ARe, authors who are owed thousands of dollars by ARe left comments to that effect. And authors who published through ARe’s publishing program are being told they can get their intellectual property rights back…but only if they agree to take no royalties at all. But for writers, perhaps the saddest thing (aside from being stolen from) is what’s happened to long-time readers. One reader who is being victimized by this debacle left a comment that we felt we had to share, so that everyone can see the scope of ARe’s actions on a personal level.
I am a long time customer who has approximately 2200 books that I have purchased over the years.
When I started pulling books down to back up to another service, I noticed a gradual trickle down of my numbers in my library – I assume this means that books I have purchased are somehow being taken away from my library. Some of those books – they are not for sale anywhere else!!!!
I have only been able to pull down 230 thus far (backing up to another cloud service). I actually have a job so my time to download the remainder of my books over the next two days will be limited. I devastated that I am potentially going to be losing thousands of dollars in books that I purchased.
I won’t even get in to the ebucks and the group-on certificates that I had planned on redeeming after the first of the year. Or the fact that I pre-ordered a bunch of books.
This whole situation makes me sick.
And now we learn that the foundation for this supposed disaster was laid over two years ago, when Lori James manipulated Barbara Ulmer out of any sort of role in the company they owned together.
There are a few key elements to this series of events that I find personally disturbing. First, James denied Ulmer access to the financial books and any knowledge of or input on the company’s finances while at the same time giving herself a salary which is in opposition to the procedures contractually agreed upon by both parties in their operating agreement. I’m not a lawyer, but to a layman writer with a genuine working knowledge of publishing and contracts I can’t help but feel that is suspicious.
In my opinion, this establishes a prior intent on James’s part to extract and exploit ARe’s finances to her sole benefit. After all, there was no one outside of James who knew exactly how much capital the company had accumulated, or how and for what or whom that capital was spent. James was accountable to no one when it came to the financial status of the company, and no one had access to the accounts that could determine whether the money was being handled responsibly and legally.
Second, why would Barbara Ulmer be examined in San Diego by Dr. Addario, who is an admitted long-time associate of Lori James, to determine a disability that would prevent her from fulfilling her duties to ARe? I’m absolutely certain there are forensic psychiatrists in Florida with comparable experience and expertise. It doesn’t make sense that she would fly to California to be examined by a doctor of James’s choice in such a matter, especially if her continued involvement and profit from a company she co-owned was at stake.
Additionally, although Addario didn’t determine Ulmer to be permanently or indefinitely disabled, James went ahead with her plan to oust Ulmer and block her access to the company as if he had. On the very next day, allegedly, Ulmer’s access to the company was completely severed and employees were told she was no longer associated with ARe.
And third, how does this lawsuit and the allegations Ulmer made against James affect the current situation?
Well, for one thing – this lawsuit was dismissed on August 24, 2016 for lack of prosecution, meaning neither party had actively pursued the case for ten months. Why, after the allegations Ulmer made against her former partner, would she not continue with legal action?
Possibly because James reached a settlement with her out of court. If that is the case, it’s entirely possible that Ulmer forced the closure of ARe according to the terms of that 2006 operating agreement. The profits from the 4th quarter of 2016 might have gone to squaring the books, so to speak. Or in other words, Lori James had to compensate Barbara Ulmer in an equitable fashion – as in two years’ worth of an “excessive” salary and compensations plus the normal distribution of profits established in the 2006 contract. If this is what happened, then James’s management of ARe was indeed “grossly negligent, willful, and reckless.”
We called Barbara Ulmer for a comment or interview. So far, we have not heard back.
But if that’s not what happened, the other options are far uglier. At the very least, this is the result of disastrous management on James’s part. At the most, everything from the day Lori James purportedly stabbed her partner in the back to December 31 when ARe will close its doors and defiantly keep the royalties due to thousands of authors, was part of a plan to exploit the company and extract as much money from it as possible, regardless of the people and businesses who would be damaged as a result.
Either option is sickening. Was ARe destroyed as the result of rank stupidity? Or was it the victim of a pre-planned rape of its capital, profits, and contributors? Only the courts, most likely, will be able to decide.
As we mentioned in our previous article, authors who wish to refuse James’s arrogant offer of ten cents on the dollar should file a complaint with the Florida Attorney General’s Office. If authors or publishers wish to work in coordination with other writers, there is a Facebook group for ARe contributors who are already working with an attorney on a potential case. By joining in their effort and expanding the group, the chances are significantly higher that the state of Florida will be forced to examine the whole stinking mess.
If anyone wishes to research or cite the lawsuit between Barbara Ulmer and Lori James (All Romance Ebooks LLC) it’s Case Number 14-001375-C1 in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, State of Florida. You can read the entirety of the original operation agreement from 2006, the complaint against James and ARe, the examination results of Dr. Addario, and all pertinent legal documents by doing a search for any of the litigants; names on the Pinellas County Florida Public Records website.
For readers and customers of All Romance E-Books who are losing years of e-book collections and thousands of dollars, some authors are offering replacement copies of their books free as a courtesy to people who once bought their titles. I Don’t write straight up romance, but I do write fantasy. Any readers who lost copies of their library of books at ARe (and not just my books) can get copies of my books this week to kick off their new collection if they contact me through my website. Maybe that will in some small way help until we get all the answers.
But the thing of it is? I think we all already know the answers. As any good forensic psychiatrist will attest, there’s plenty of research out there about behavioral patterns and their likely results. It’s difficult to imagine that the owner of a company who could force her partner out in such a ruthless and cold-blooded fashion has somehow accidentally screwed over all those authors. The thing about ruthlessness and cold-bloodedness is that neither attribute is spontaneous. These types of actions are not accidental. They are planned well in advance, plotted carefully, and executed mercilessly.
Which leads us to a disturbing question:
How does any author or publisher know that the sales numbers reported to them by ARe in the past two years are actually correct? If this is a serious case of fiscal malfeasance, there’s no way to know if the sales the site reported for a book was actually ten sales or sixty. Without the provenance of a CFO or an external source to examine the ARe books, the numbers reported to authors and publishers could have been wholly compromised.. Considering the circumstances and the background of the situation, it’s a legitimate concern.
And a legitimate question for the authors and their attorneys to demand answers to.
Let’s be frank: at this moment, it’s not known exactly what happened at ARe. But the addition of this previous court case and the alleged actions and behavior of Lori James against her former partner certainly raise a number of red flags for victims of ARe and their legal representatives to consider as they ponder legal action. And it’s certainly reasonable to wonder if Lori James, in order to pay an out of court settlement to her former partner, had to find the cash to do so fast. It’s the end of the year, after all. If the capital had already been eaten up by disbursements outside the original agreement (like an ‘excessive’ salary) then perhaps the only ready cash on hand were the profits of ARe in the final quarter of 2016 – the profits that have now been withheld from the rightful recipients.
Red flags, rotten fish in Denmark, alarms going off – the euphemisms all mean the same thing, really. Don’t give in. Join with the other authors and publishers who are already combining their efforts to fight against Lori James and All Romance E-Books, LLC. Sue for the full royalties you are legally owed by ARe. Use the legal system to force an investigation into ARe’s financial operations since the fall of 2014. Take a stand against the predatory actions of this company, and fight against a system that allows companies like this to steal your money and your rights.
Force the answers out of the predator. I bet they’ll be a lot more interesting than the theories racing through the publishing community right now. As of this writing, it’s December 30,2016…and All Romance E-Books, LLC under sole owner Lori James is still selling books when she has already stated the company will not pay the authors and publishers of those books the royalties for those sales.
Not only a thief, but a thief who tells you she’s going to steal your money before she steals it. A conscientious thief. Nice.