Societies Win Fraud Settlement

The Los Angeles-based journal subscription service Eastwood Books and its manager Jung Shin have paid the American Institute of Physics and four other scientific societies $250 000 in a settlement of a civil action fraud claim; the Los Angles Police Department and District Attorney are continuing a separate criminal investigation.

The company and Shin allegedly joined the societies under false pretenses to get individual rates on journal subscriptions and then resold them at higher prices to institutions in Korea. Because institutional rates can be up to 10 times the individual rate, the scheme cost the societies more than $1 million in lost revenue.

The fraud came to light two years ago when a former Eastwood Books employee e-mailed 40 society publishers with details of the scheme. “We’re the only one who noticed the e-mail,” says AIP Executive Director Marc Brodsky, who contacted the other publishers about the claims. AIP, the American Physical Society, the Institute of Electrical and Electronics Engineers, and the American Chemical Society then sued Eastwood Books and Shin. “We are more concerned with stopping this alleged activity than with lost revenue,” says Brodsky, “and we hope that this expensive settlement will discourage others from considering similar tactics, which we now will keep watch for and vigorously pursue.”