Re: Taking Stock of Books

Laverne — Mon, 04 Aug 2008 14:21:59 -0000

You need to educate yourself further both on Mr. Lin's activities, his parents' (Jui-Teng Lin and Yuchin - a.k.a. Suchin - Lin's criminal activities regarding stock fraud, and the regulations involving these kinds of offerings that were instituted in the New Deal to protect legitimate investors from just this kind of thing.

What he’s done is in violation of SEC rules. You can’t offer shares in a nonesxistent corporation to the general public without first going through the admittedly cumbersome process of filing the proper documents and making sure that you make the offer on paper ONLY to “qualified investors.”

As you will see from going on the Freakonomics blog or Mr. Lin’s own post’s comments, this is a young man whose parents have been called by the SEC “securities fraud recividists” and who fled the country facing an SEC judgment that they disgorge the $1.7 million from the investors they stole from by using lies, money laundering, and outright fraud. Mr. Lin’s father served time in federal prison after being found guilty of fraud by a Brooklyn federal jury in December 2002.

It would behoove you to do some research before touting a scheme that is risky to investors, possibly totally fraudulent and certainly in violation of current federal securities investigations. It would be dangerous for any other writers to emulate him in this.

Mr. Lin, as you will see if you check on him, is an admitted shoplifter and vandal who has a long history of having a reputation as a bad actor in the publishing world.

I am sorry to see that you have apparently fallen for this scam artist’s self-serving scheme.

A complaint has been filed with the SEC regarding this matter, including in it Melville House, Mr. Lin’s publisher, who has a contract for the novel in question. He, in fact, has gone behind their back to sell shares in his royalties paid for by them. Thus he has subjected them (with the firm’s assumed deeper pockets - if Mr. Lin is this desperate for money, he is obviously judgment-proof) to liability in this matter.

There might be ways to do this, but Mr. Lin, like his parents, apparently believes rules do not apply to him. Anyone who invests in this is letting themselves in for a complete loss of their funds, and Mr. Lin, as he notes, has absolutely no downside risk at all. Trust him, he says - just what his parents told the investors in their firms whom they bilked of nearly two million dollars.

At the very least, you should rent the film "The Producers"!

Re: Taking Stock of Books

Laverne — Mon, 04 Aug 2008 17:35:13 -0000

All investments carry some risk, of course. But then there are risks taken on both sides in most investments. What is Tao Lin's risk in all of this? What are his liabilities should the novel fail to sell as many copies as he projects? What remedies are available to the investors. Presumably, if he can be believed, Tao Lin already has $10,000 of people's money. Are there contracts? What if there is no novel in progress? What if there is, but he abandons it? What happens if something, God forbid (I am not being nasty here but if you are investing to a person, we are all vulnerable to accidents, illness, premature death), happens to Tao Lin that makes him unable to write the novel?

There are some investments that are less risky, of course. If you invest in a certificate of deposit at a bank, your returns are lower but your money is guaranteed by the FDIC. If you invest in stocks, you have more of a risk but more of an upside (as well as downside), but at least you are protected by SEC rules, state rules (see how NY State Atty. Gen. Andrew Cuomo, and before him, Eliot Spitzer, has used state power to do for cheated investors what the federal government could not), and SIPC.

Tao Lin sounds as if he's doing this on the fly, without any legal documents: the kind of offerings you need to register with the SEC or state authorities; without contracts; and most importantly, without any legal obligation to do anything.

If he were sincere about creating an innovative scheme, he would have consulted a lawyer. Presuming he has a contract with Melville House for the book, then he may be violating it by committing a portion to as-yet ephemeral royalties paid by Melville House to Tao Lin. He is also cruelly and thoughtlessly laying his publisher open to liability if the investors decide to sue. Because Tao Lin may have no assets, they can sue Melville House, who as the publisher, is clearly involved in the product.

What if the book fails to sell not because of its literary merit or great reviews but because Melville House screws up and doesn't print enough copies or doesn't promote the book successfully or, as often happens, goes bankrupt, gets taken over by another entity which has no interest in promoting or printing more copies of Lin's book, etc.?

The point of this longwinded reply is, he thinks he is still dealing with the kids (under 25) who are his blog and book readers and not adult rules and governmental regulations that are in force when you take thousands of dollars from "investors" in a "corporation," which he calls it. (You just don't call things "corporations" without doing a lot of paperwork.)

Finally - whew, I'm sorry - don't you think that if this had been a valuable idea that some artists' and writers' groups, business people, publishers, etc., would have thought of it and used it before it was thought up by a penniless 25yo hipster who apparently has worked only minimum-wage menial part-time jobs? (He said his last job was in a vegan cafe).

Tao Lin is just in this for the same reason he does everything else: to selfishly promote himself. But this scheme is just one more thing he's done to give himself a very, very bad reputation among serious writers and publishing people.

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