"Crisis of Treachery" and Financial Troubles
On April 19, 2006, Kevin Siembieda issued a statement that revealed Palladium Books' critical financial difficulties due to alleged embezzlement and theft resulting in losses from $850,000 to $1.3 million, coupled with a series of delays in negotiating license deals for their properties in other media (the Nokia N-Gage game, the Jerry Bruckheimer movie, a MMOG license, and other potential deals). They raised money to continue operations by selling a signed and numbered – but not, strictly speaking, "limited edition" – art print by Kevin Siembieda, as well as by urging fans to buy directly from their online store if their financial situations would allow for it.
An April 26, 2006 article in the Kingsport Times-News revealed that Steve Sheiring, Palladium's former sales manager, had been sentenced in a plea bargain to a misdemeanor conviction, one year of probation, and ordered to pay $47,080 in restitution to Palladium Books in connection with these thefts. It also provided more information about the thefts, which took place from 2002 to 2004 and were only discovered when Palladium took inventory.
Responding to the controversy engendered by such a low settlement amount in relation to the large loss figure claimed in his earlier press release, Kevin Siembieda posted an open letter to the Palladium forum explaining the matter. Siembieda stated that he had not wanted to make public Sheiring's identity out of the fear that overzealous fans might get into trouble by committing acts of reprisal. He explained that the heaviest punishment Sheiring had been likely to receive even without the plea bargain was probation. Siembieda had a choice between getting any amount of settlement money at all to pay critical bills, or spending more time and money to attempt to get his "pound of flesh" from a man who was reportedly broke anyway. Given the urgency of Palladium's situation, Siembieda did not feel he had any real choice but to take what little he could get.
During the week of May 7, 2007, Palladium announced that revenue from increased sales of books, admissions to its first annual Open House, and purchases of the special art print had covered most of the short-term damages it had incurred. This period of financial instability became referred to by Siembieda as the "Crisis of Treachery" in keeping with his stance that the root cause of the difficulties was the embezzlement perpetrated by Sheiring.
Read more about this topic: Palladium Books
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