Unraveling Herman Cain’s Money Laundering Scheme
Newt Gingrich does it. Ron Paul does it. Running for president in order to raise expense money isn’t news. But Herman Cain has adopted an entirely new strategy for converting campaign contributions to other uses. Cain’s tactic is a way to convert campaign contributions directly into personal cash — sell your product to yourself.
Bloomberg reports that the Cain campaign spent $36,511 on books and $64,000 on other expenses to a company named “THE New Voice, Inc.” THE New Voice, Inc. is solely owned by Herman and Gloria Cain.
Of course it’s not quite that simple. Herman Cain’s corporation (that exists to promote Herman Cain) is selling Herman Cain’s books (that were written to promote Herman Cain) to Herman Cain’s campaign (which some argue was created to promote Herman Cain’s books.) Sheesh! No wonder this guy speaks in the third person so much.
“They are buying my books and my pamphlets,” one Herman Cain told Bloomberg of another Herman Cain. Is his use of “they” an indication of something to hide? Are we to believe no Herman Cain had anything to do with the insider deal? C’mon, Herman Cain’s. Seriously?
Unraveling the nature of this money laundering scheme (which might turn out to be sort of – but not entirely – legal) requires some understanding of the book publishing industry, a little knowledge about the Federal Elections Commission, a look inside Cain’s company, “THE New Voice, Inc.,” and at least a dab of inference, since Herman Cain won’t speak candidly about what he bought from Herman Cain.
Why wouldn’t Herman Cain buy discounted author-distribution copies directly from his publisher? In traditional publishing, a publishing house can’t sell directly to bookstores – the big giants like Borders and the late Barnes and Noble don’t allow it, and the cost of servicing small independents is just too high. So publishers sell through book wholesalers, one of the largest being Ingram Book Company. Ingram buys books for 35-40% of the cover price, marks them up 15-20% and order-fulfills them to bookstores. Cain’s publisher, Simon and Schuster, has its own wholesale division — with roughly comparable wholesale pricing.
Here’s why this matters: Every author’s contract specifies a price for buying author-distributed copies. It falls somewhere between the distributor cost and the bookstore cost — 35-60 percent of the cover price. In the case of “This is Herman Cain” he can buy copies of the $25 book for somewhere between $8.75 and $15, probably closer to the lower amount since Amazon currently retails it for $15.
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