Wednesday, June 15, 2011

Rooting Out Corruption at Marvel – Part Three of a Bunch

The Benevolent Lapping Scam – Benign Malfeasance

Around the beginning of December, 1977, Marvel President Jim Galton offered me the Editor in Chief job, replacing Archie Goodwin.  (How that came to pass is another wondrous strange tale, coming soon.)  Archie was going to step down as EIC and become a contract writer-editor.

The plan was for Archie to finish out the month and for me to begin on the first working day of January, 1978.  Stan thought it would be best not to announce the change until just before it went into effect. 

The month of December, 1977 was a traumatic time for Marvel.  John Romita resigned as Art Director to work full time on the Spider-Man syndicated strip. 

And, Production Manager John Verpoorten died at the age of 37.

Sol Brodsky quickly arranged for the promotion of Marie Severin from staff artist to Art Director, to replace Romita.  He also arranged for Lenny Grow, who was sort of the production department staff sergeant to be promoted to Production Manager to replace Verpoorten.  And, he hired his son-in-law as assistant production manager.

The above was a little odd, since Sol had NO AUTHORITY WHATSOEVER to do all of the above.  Those should have been my hires, or, conceivably, Archie’s, though he was on his way out.  My promotion was in stealth mode at the time, at Stan’s request, and I didn’t want to blow my cover by making objections, so I said nothing, didn’t question it.  There was some trouble later caused by Sol’s actions, but that part of the tale will wait.

New Year’s Day 1978 fell on a Sunday, so we might have had Monday off.  But, either Monday, January 2, or Tuesday January 3 was my first day as EIC. 

One of my first acts was to change the vouchering and payment system.  All work and all vouchers were to be delivered to the editor.  Only the editor, or me, the EIC, could approve a voucher.

Of course, because before my promotion took effect the only editor, or reasonable facsimile thereof had been “associate editor” me, and I hadn’t yet filled the spot I had just vacated, that meant all work and vouchers came to my desk. 

At first, so did the checks.  My plan was to have the accounting department distribute the checks, but I had more than a few fires to put out during those first few weeks, so I didn’t have time to arrange that right away.

After a couple of weeks, the person upstairs who processed the vouchers, Mille Shuriff, caught a double voucher—someone vouchering for payment for a job that had already been paid for.

The culprit?  Me.

I had written, and vouchered for Spectacular Spider-Man #3.  However, Millie said that Gerry Conway had already been paid for it!  I insisted that I was the writer.  Millie insisted that Gerry was.

Then, double vouchers started turning up in droves.  Chris Claremont.  Doug Moench.  Bill Mantlo.  Not just writers.  A few pencilers.  Many inkers. 

And solid citizens all, at least voucher wise.  Claremont?  No way.  Moench?  Never.  Mantlo?  Nebres?  Janson?  Give me a break.

Informed by accounting that they had double vouchered and weren’t getting paid, these creators were unhappy.  Unhappy as in mad as hell.

I sat down with Millie, who was sure at that point that we were all a bunch of lying, stealing weasels, to try to figure out what was going on.  We went through all the recent, current and pending vouchers.

We found Gerry Conway’s voucher for Spectacular Spider-Man #3, which, indeed, he had been supposed to write—but he’d left and gone to DC before doing so.  Nonetheless, on the strength of that voucher, he’d been paid for the issue.

But my check for SSM #3 had come with my voucher’s hard copy stapled to it!  I showed it to Millie.  Curiouser and curiouser. 

We found among Millie’s voucher batches a Spectacular Spider-Man voucher of mine for issue #7.  Which I hadn’t written.  In fact, at that point, I don’t think it had yet been written.

But “my” #7 voucher was in John Verpoorten’s handwriting.  Hmm.

We made similar finds for the other alleged culprits.  Vouchers for issues far ahead in John’s handwriting.

Finally, Millie and I grokked.

Here’s what had been going on.  John would let a creator voucher a job in advance.  He’d put their voucher through, as he did with Gerry’s voucher for SSM #3.  They’d get paid.  Then, for some reason, they didn’t deliver. 

So, someone had to actually write a script for SSM #3.  In that case, me.  I dutifully delivered the job and my voucher to John.  John tucked my voucher for #3 in his desk drawer and wrote out a new voucher for a future issue, in my case, SSM #7.  When the check for SSM #7, made out to me, came down from accounting to John, he removed the hard copy of the voucher for #7 he’d filled out and put it in his drawer.  He pulled out the voucher I’d filled out for SSM #3, stapled the hard copy to the check and delivered the check to me.  It was for the right amount and had the right hard copy attached.  The only indication of what the check was for was on the hard copy.  No such info appeared on the check itself.

John would have repeated the process when someone actually wrote #7.  This, in accounting parlance, is called LAPPING.

He did it a lot.

Eventually, John would move the non-existent jobs into inventory.  Eventually, he would designate the non-existent inventory jobs as “obsolete inventory.”  Then, they were written off.

So, what was in this for John?  Nothing.  He was a soft touch.  Creators would come to him with a sob story.  He’d let them voucher a job in advance.  They’d swear that they’d deliver.  Once in a while someone did, but most were lying, or they’d simply fail.  A few got so far behind with John they went to DC for work to escape having to make up all that ground.  A few, especially one studio that represented a group of Filipino artists, exploited John’s kindness then callously screwed him over.  They’d had a lot of practice screwing people over, especially the artists who worked for them.

If the advance-voucherer was an inker, on a number of occasions John inked jobs himself in their names, for no pay, to cover their shortfall!  John pitched in a couple of times on Frank Giacoia’s behalf, for instance.  Frank was, in my opinion, brilliant, but he was slow.  John had a lot of sympathy for him.

It is important to note, here, that in those days, the mid-1970’s, comic book work paid very little.  Also, it was page rate only.  No royalties, no incentives, no benefits.  And the page rates were pathetic.  One more thing—though Roy had initiated an artwork return program, the market for originals had yet to take off.  Most originals were worthless.  Example:  Early in his career, Frank Miller approached an art dealer trying to sell some originals to make a few bucks and was offered FIFTY CENTS A PAGE.

Everybody was struggling to survive.

John had too big a heart.  What he did was wrong, but there was no malice in that man.  He erred on the side of humanity.  A gruff Production Manager who was secretly channeling Brother Juniper. 

John was privy to the fact that I was coming in as EIC, and he knew that I intended to change the system.  It must have been very stressful just keeping all the balls in the air anyway.  How much did the stress increase when he found out he was certain to be found out?

John was a huge guy.  Almost as tall as me and easily double my weight.  You could fit three Archies inside the space John took up and still have room for a Roy.  He had a sedentary lifestyle, as so many of us do.  He probably didn’t have the healthiest diet.  He smoked.

But 37 is too young to go.

I’ve thought about it a lot.  I think that if John had been alive when I took over as EIC, and the truth came out, as it surely would have, I think I would have fought to keep John right where he was.  Defended him to the best of my ability.  He was terrific at what he did—the Production Manager part, I mean.  He was loved and admired.  People like that don’t come along often.  We could have made up the difference.  We could have made it right.

Coda:  When Millie and I presented our findings to Financial V.P. Barry Kaplan he was sure he was going to be fired over the mess.  Especially, given the scale—hundreds and hundreds of thousands of dollars.  It was, after all, his responsibility to prevent such things from happening. 

I suggested that he tell the President and the board that he had reviewed the voucher procedures (set up long before Barry came to Marvel) because of the new editorial/production regime coming in and that HE had discovered the scam.  I didn’t need a forensic accounting notch on my belt.  He was grateful, and I think it kept him from getting in too much trouble.  P.S. Barry’s the one who taught me the word “lapping.”   

A note:  If you’re wondering, the Production Manager and Art Director reported to the EIC, even though it didn’t appear that way before me.  John certainly appeared to be running the place, and any outside observer would have guessed that he was the boss, at least during the time that Len, Marv, Gerry and Archie were Editors in Chief.      

Important note:  Though Gerry Conway had, indeed, fallen behind on his quota, and had been a beneficiary of John’s lapping scam, Gerry did the right thing.  When he left Marvel to go back to DC, he informed DC that he owed Marvel some scripts.  Rather than have Gerry work off the debt writing for Marvel, DC sent Marvel a check for the arrears and worked out some payment plan with Gerry.

Addition to the Important Note:  DC’s check was delivered to Marvel’s accounting department.  Barry Kaplan had no clue, at that point (before the scam came to light) what it was for, assumed it was a mistake and sent it back!  DC then sent the check to John Verpoorten, probably at Gerry’s suggestion.  The five figure check was found in Verpoorten’s drawer after he died.  Of course.  How could he deliver the check to accounting without explaining what he’d been doing?

Chris, Moench and the other victims got paid.  So did I.

With Barry’s help, I set up a system by which the editors who handled the vouchers never handled the checks.  Accounting people handled the checks.

Guess what?  Somebody still found a way to beat the system.

NEXT:  Trickeration


Addendum

It seems that most people took my "Brother Juniper" reference above to be a nod to the Brother Juniper single panel syndicated strip from years ago.  Nope.  I was referring to the real Brother Juniper, St. Francis's Brother Juniper, who was known for his boundless compassion and generosity.  He often gave away his clothes, which were property of the monastery, by the way, to poor people who had only rags.  This caused even St. Francis to get frustrated with Brother Juniper.  But, St. Francis was also heard to say, "Would to God, my brothers, I had a whole forest of such Junipers."

17 comments:

Dale Bagwell said...

This is all really good stuff. I'm sure it happens on other businesses for sure, but it's really interesting to read about it going on in Marvel. I wonder if DC ever had this problem at one point. Hopefully you'll elaborate on who or how your new system was beat.

Marc Miyake said...

Dear Jim,

I never imagined I'd ever be fascinated by a story about ... accounting!

When I worked in comics ... when I freelanced for anyone, period ... it never occurred to me to voucher a job in advance! But what if conditions were worse? Originals at fifty cents a page?! I can see why creators would feel desperate. The industry has come a long way due to the efforts of people like you and Roy.

I'm relieved that Verpoorten meant well. I not only learned what "lapping" was, but I also had to look up "Brother Juniper."

I'm looking forward to learning what "trickeration" is.

And I'm sorry to hear about that "one studio that represented a group of Filipino artists." Those artists' story has yet to be fully told, though I've seen glimpses. So much talent, but so little said about them. Thanks for mentioning their treatment.

Marc Miyake said...

The last word of my last line should have been "mistreatment."

Why did Sol Brodsky step in to arrange for multiple hires without having the authority to do so? I would have expected Archie Goodwin to find replacements for John Romita and John Verpoorten while your promotion was in stealth mode. I guess I'll find out later.

KlausNordby said...

In the comics biz, even the accounting makes for an entertaining tale! Wham! Bang!

Comic.Reviewer said...

Jim, I've been reading your blog for a while, but only recently clicked in as follower.
I find myself waiting eagerly for your posts.

I really hope you are considering a publishing deal, and put a book out, with all this stuff. It is Insiders-info gold.

My best to you, and keep on bloggin!!!

Richard Guion said...

Fascinating story. I had always heard about the voucher system but had no idea how it worked. What a complicated mess for John to try and juggle on his own.

50 cents a page for Frank Miller art? Wow.

I can see you must have more stories about making changes and finding resistance. Any manager who makes changes to an established system faces adversity. I am wondering if you had problems with Sol Brodsky as he was used to making decisions as the default "right hand" man.

kintounkal said...

The jump from 50 cents to $448,125 for Frank Miller's original art to page 10 from Batman: The Dark Knight #3 is really staggering. Owning a Miller page will be a pipe dream for most collectors when covers like Daredevil #188 fetch $101,575.

Tue Sørensen said...

As Comic.Reviewer said, you really should put together a comics history book about all this, Jim.

Marc Siry said...

Wow, it's been a long time since I've seen a Marvel voucher, and an even longer time since I thought about having to go up to 11 and explain to Millie why some freelancer's vouchers were wrong.

Now I see why she was always so irritated about it!

If you don't get to the "voucher switching" scam in the next installment, I'll post a comment about it (or probably Facebook message you privately about it, actually). It was pretty benign compared to this stuff.

niederklopfer said...

Wow!!! Great story. You really should make this blog a book.

Defiant1 said...

Ethics is a big deal where I work. I've been through a Sarbannes-Oxley compliance audit once. I'm glad there are legal requirements now that companies must follow. I repeatedly have to remind people that problems I 'can' fix are ethically and morally outside the scope of what I'm 'allowed' to fix.

Many years ago a project manager where I work had found a way to buy himself an SUV with embezzled money. He went to jail for it. I don't think he'd be able to do it today with the guidelines we follow today. Our financial people work hand in hand with upper management. Their offices are typically adjacent or occasionally shared.

We were building equipment for Enron when their whole fiasco blew up. Although my division made it's money, another division which had the Enron contract lost millions. More eyes are trained to look for this kind of stuff now.

baryg said...

Jim,

I was fascinated by that story. Who has time thinking up these schemes? First off, I would NEVER want to get paid in advance. It was great looking forward to getting that paycheck in the mail. I miss working with you especially in the 70's and 80's. You were one of the most professional people I have ever met. You really helped me focus on becoming a better colorist and I learned so much. Good luck to you!!!

Best,

Barry Grossman (Ben Sean)

Marc Miyake said...

Dear Jim,

Thanks for the Brother Juniper correction. Yesterday I couldn't find an article with his name at Wikipedia, so I Googled it and found the comic strip first. But today I discovered that the Wikipedia article about the original Brother Juniper is titled "Saint Juniper."

halojones-fan said...

@Defiant1: Indeed, for all that people bitch about stuff like "SarBox", stories like this are what it's supposed to *prevent*...

JediJones said...

I definitely agree this is one of the best stories I've read on Jim's blog yet. This is the kind of story that, if told with less skill, would be boring at best and incomprehensible at worst. The way Jim tells it, it's an edge-of-your-seat thriller about...accounting. I know very little about accounting (I dropped the class in college because it was terminally boring to me) but I understood and was fascinated by everything here.

This story had it all. There's mystery, emotional involvement, irony, even a little slapstick comedy with DC's check being passed around like a hot potato. One of the principal players is a complex, sympathetic, flawed character we learn about only through flashback. It ends with a happy ending and a heroic touch by our other lead character. Then we get a cliffhanger indicating things may not be as tightly wrapped up as they seem after all. All it needs to become a great comic book is some spandex and a fistfight or two. Bravo.

Eklectic1 said...

Wow. I'm a freelancer and live by my wits. It's hard enough to get regular payment for the freelance stuff that I work hard to get in on time, or before deadline if I can---but to try to get a check for stuff I hadn't done yet---that just blows my mind.

I can understand the guy being compassionate toward his freelance help, but that "system" just seems so sloppy I am just plain amazed by it. Obviously a guy who couldn't say No...and not a businessman at heart...

You can run a business into the ground with things like that, so, so easily, over time. I hate having to wait wait wait for my payment, for that amazing day when my company decides they are finally ready to send it out, but I am glad they keep the reigns tight...it keeps 'em in business so that I continue to have work.

I think some people feel that "business"---any "business" or "company" as an entity---is a formless thing with bottomless resources, a kind of magic bag into which someone's hand can always dip and come out with gold...

Thanks for the story.

JediJones said...

Good point. There are many people who feel that way about the government also, that it's just an endless resource of money there for the taking. One of the most unexpectedly distressing images I've seen recently was on a John Stossel program called "Freeloaders" I believe. They showed long lines of people, lobbyists of some sort I guess, lined up in the hallways outside the doors of members of Congress. Everybody interviewed on camera said they were there representing some group or company asking for money for something. Apparently this is just a typical day there.

So our congresspeople are constantly put in the same position as John Verpoorten of having the ability to basically pass out other people's money to anyone who can talk them into it. Many of them looked like they would cave just as easily as John did if the sob story sounded good enough. Obviously these lines wouldn't be forming in the halls of Congress every day if people didn't know that going there to beg for a handout pays off.