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Department of Justice joined yesterday. District Court in San Francisco, alleges that book distributor deliberately overcharged more than 10,000 of its institutional customers over the past 10 years.
More than 90 percent of the country's 15,000 public libraries order volumes through Baker and Taylor, the book company estimates. Those libraries altogether spend more than $444 million a year on domestic books, according to the book company.
Among the largest customers are the and the . San Jose typically orders more than $1 million worth of books annually from Baker and Taylor, said attorneys for the original plaintiffs, a librarian and a former employee of the book company, both of Virginia.
The San Francisco and Alameda County public libraries are also big customers.
"The penalties could be in the billions," said San Francisco attorney , who is representing the two plaintiffs. Each book order could constitute a claim; federal and state laws say that anyone who submits a false claim to the government is liable for civil penalties of a minimum of $5,000 and maximum of $10,000 per claim.
The suit, filed in July but sealed until yesterday, alleges that Baker and Taylor deliberately miscategorized certain books on computerized invoices.
The company offers its customers a 40 percent discount for trade books and a 10 percent discount for nontrade books. By defining more books as nontrade volumes, the company was allegedly able to overcharge its customers.
Victimizing public institutions is "particularly unconscionable," Havian said. "Schools and libraries are the least able to afford to pay fraudulently inflated prices for books, especially in this time of budget cutbacks."
The men who first filed the lawsuit under the whistleblower provisions of the False Claims Act are , head librarian of the city of Richmond, Va., and of Chesapeake, Va., a former sales representative for Baker and Taylor.
Costa states in the suit that he discovered the alleged fraud in the course of his library work, reported it to city auditors, and later gained partial restitution for overcharges Baker and Taylor made between 1990 and 1992.
Thornburg, who spent 17 years at Baker and Taylor, states that he became aware of the alleged fraud the year he left the company, in 1989. Since then, he states, he kept in contact with Baker and Taylor employees and helped Costa.