A newsagency business changed hands this year where the vendor included returned magazines as part of the inventory for which then purchaser paid.
The stock take was not undertaken by people skilled in newsagency business stock takes.
The solicitor for the purchaser had never aced for a client in the purchase of a newsagency before.
The accountant for the purchaser had never acted for a client with a newsagency business before.
On the shelves at settlement was thousands of dollars of stock of magazines for which the vendor had been given credit by their magazine distributor. The magazines were not topped. Some were nine months old, yet there they were, on the shelves, for sale to shoppers.
The expert in the transaction was the vendor. They are at fault here. They defrauded Gotch, and through them the magazine publishers. They deceived the purchaser, causing them to pay for stolen goods and, through their actions, encouraging the purchaser to sell stolen goods.
My advice to the purchaser was to engage a new lawyer, to pursue the purchaser, to consider pursuing their original lawyer and to advise Gotch formally of what was discovered.
Gaps in handling magazines allow unscrupulous operators to get away with crimes like those outlined above.
Gotch should verify all return claims. Publishers should demand it, and be prepared to pay for it. While I understand they do spot audits, which have found discrepancies that have led to newsagents paying compensation, that is not enough. The situation I have outlined above should not have been allowed to happen.
Every returns over claim should be caught.
Gotch and the newspaper publishers should consider working with the ACCC on an authorised process for handling the change of ownership of a newsagency business. This could ensure the stock take is undertaken by a registered, skilled and ethical stock taking business.
Sadly, it is not the first time I have heard a story like this and, I suspect it will not be the last.
It has been a tough baptism into newsagent life for the purchaser. Hopefully, they have learned to be more curious about situations they encounter in business for the first time and to have a healthy questioning about those they deal with.
We don’t need more bureaucracy, we need industry participants who are professional. The naivety of the buyer is shocking but it is the culture that allows the seller to exist that sickens me.
A lot of suppliers, reps and switched on customers would have been well aware of the seller’s business methods. Dob the bastard in I say. For which I would be branded a social lepper. All those who knew what was going on are guilty of aiding and abetting this crook. There are many more out there, waiting for the next innocent victim.
How do those people sleep at night know they have taken advantage of someone like that. Pathetic, I hope they get caught.
I wouldn’t necessarily lay much blame on the stocktakers, their payed to count the stock on the shelves. If they have to start going through returns paperwork to determine if magazines (and cards, books ect) are legit the cost of stocktaking is going to go through the roof.
I wouldn’t be in favour of G&G auditing all returns either as that would mean the end of the no physical returns program and the end of that just put costs back on newsagents.
This is straight out fraud, don’t engage a lawyer, put all the facts together and go to the police its a criminal charge and should be pursued by them.
I would also be questioning the agent who acted on behalf of the seller. If they were a “specialist” broker then they probably would have had an idea from walking in the shop what was going on.
People who cheat the system like this knuckle end up cheating themselves. At least they are no longer in the game and most likely will never get a Gotch account again.