THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Wednesday, February 5, 1997 TAG: 9702050469
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MATTHEW DOLAN, STAFF WRITER
LENGTH: 96 lines
A former book salesman from Chesapeake has received a boost from the U.S. Department of Justice in his claim that the nation's largest book wholesaler intentionally overcharged libraries and others up to $200 million over the last decade.
Ronald T. Thornburg, a retired books sales representative for the Charlotte, N.C.-based Baker & Taylor Inc., and Robert N. Costa, a former librarian for Richmond, first filed a whistle-blower's suit against Baker & Taylor in June 1995, their lawyer said Tuesday.
On Monday, the Justice Department announced that after an 18-month review, it would intervene in the False Claims Act suit against Baker & Taylor, its parent, the Carlyle Group of Washington, D.C. and its former owner, W.R. Grace & Co.
Public libraries in every city in Hampton Roads purchased a sizable portion of their books from Baker & Taylor for at least 10 years, often through the region's library bidding cooperatives, officials said.
The suit charges that Baker & Taylor defrauded libraries, schools, universities and government agencies when it did not provide a discount for certain books as required by their contract. Costa and Thornburg filed on behalf of the federal government, which provides funds for some libraries.
Wholesalers such as Baker & Taylor buy books from publishers, often at discounts, then sell those books to libraries and other institutions at a higher price.
The suit claims that Baker & Taylor has been deliberately mis-categorizing certain ``trade'' books as nontrade books. Baker & Taylor offers discounts up to 46 percent on trade books, which include widely available books, such as best sellers.
The result, according to Thornburg, Costa and now the government, has meant that libraries and schools received smaller discounts than they were entitled to.
James S. Ulsamer, president of Baker & Taylor, denied the charges Tuesday. Ulsamer questioned the motives of Costa and Thornburg, who could receive part of a financial judgment. He said the definition of a trade book is flexible.
Virginia Beach officials, who first complained about overcharging to Baker & Taylor in the early 1990s, said they still pay some $600,000 a year to Baker & Taylor for library materials.
``We had done some investigations on our own back in 1990, 1991 with the city attorney to see if we were being overcharged,'' said Virginia Beach Public Library System Director Marcy J. Sims.
Sims said the city believed it had been bilked, but added that it would have been difficult to prove. When Baker & Taylor refused to compensate the city, Sims said the city did not pursue the issue legally.
Suffolk library director Elliot Shaw said his system received an out-of-the-blue payment from Baker & Taylor in 1993 for ``about $3,000 or $4,000'' for overcharging.
``They didn't really explain why they gave us the money,'' said Shaw, whose library spent $64,000 on library materials from Baker & Taylor during the 1995-96 fiscal year.
Jody C. Treadway of the Chesapeake Public Library said her system paid $300,000 to Baker & Taylor for the 1995-96 fiscal year and they had had no problems with mis-labeling of book prices.
``We look for the best price and the best service,'' Treadway said. ``We have had no problem that I am aware of.''
Accusations against the company's pricing practices started in 1993, when it settled with Richmond for $5,600, Costa said.
``I went to a state meeting of library directors and warned them about the overcharging that we had found,'' he said.
Costa, later joined by Thornburg, brought the issue to the attention of state library officials, the state attorney general and the U.S. Attorney's Office, but he said he was rebuffed.
``The case was going nowhere,'' Costa said. ``And then I heard about the False Claims Act, and we went to a Washington firm to file for it.''
The legislation offers a financial incentive - a minimum of 15 percent of a monetary judgment - to whistle-blowers who expose wrongdoing.
``It's still unclear how much money these libraries might receive if there was a judgment in our favor,'' said lawyer Peter Chetfield of the Washington-based Phillips and Cohen, which represents Costa and Thornburg.
Although Costa's suit convinced federal officials to get involved, he is still battling with Richmond over his job.
The library board in Richmond fired Costa on Dec. 9, 1996, for allegedly using library staff to pursue his federal lawsuit. Chetfield said Costa and city officials were working on a new financial settlement over the dismissal.
Thornburg, who said he knew nothing of the alleged price inflation while he worked for Baker & Taylor, said money was not the motivation for the lawsuit.
``I sold books all over Hampton Roads to libraries,'' he said. ``I didn't get into this to become rich; these librarians were my friends, and they never knew what was happening.''
KEYWORDS: BOOK & TAYLOR LAWSUIT OVERCHARGE