A Sydney publisher of the Fifty Shades of Grey trilogy is facing a multi-million dollar payout after a US jury found she committed fraud against her Texas partner.
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Jennifer Pedroza, who helped run the fan fiction site The Writer's Coffee Shop with Australian Amanda Hayward, may be entitled to a quarter share of up to $40 million in potential proceeds from the sales of the runaway New York Times bestseller.
Auditors representing both parties are now combing through the books and records of the Coffee Shop business to assess how much Pedroza is owed.
Pedroza's lawyer, Mike Farris, says it will be significant.
A Texas judge has ordered Hayward set aside cash and investments totaling $10 million dollars pending a further hearing in July.
This is to be inclusive of a royalty cheque from Random House estimated to be worth $1 million, as well as proceeds from Amazon and the American bookshop chain, Barnes & Noble.
In a statement Hayward says she intends to appeal the findings but did not want to litigate the matter in the press and would make no further comment.
Pedroza sued Hayward last year, claiming she had been deprived of her rightful share of the financial windfall from the Fifty Shades of Grey trilogy.
In February a district court jury upheld the partnership and found Hayward had acted fraudulently "in connection with the business of the Coffee Shop".
Pedroza and Hayward started the online fan based fiction site, The Writer's Coffee Shop, in 2009, publishing Fifty Shades of Grey in e-book form, along with its two sequels. Pedroza says she issued press releases, made speaking engagements, and packed and mailed paperback books for the partnership.
She claims to have been induced to sign an individual contract and received a one-off payment of $US100,000 after the Coffee Shop sold its publishing rights to Random House in March 2012.
Author E.L. James, a pseudonym for Erika Leonard, subsequently topped Forbes magazine's list of highest-earning authors with estimated earnings of $US95 million for the 12 months to June 2013, ahead of John Grisham, Dan Brown and Stephen King.
Hayward is also a wealthy woman.
Her personal investment interests identified by Pedroza's lawyers include a gymnasium, a hairdressing salon and a consultancy business.
Pedroza's claim for "equitable remedies" refers to five properties including Hayward's $6 million home in Dural, and a commercial property in South Windsor. Proceeds from book sales, presented in court by Pedroza's lawyer as "Exhibit One", were estimated at around $US30,000 per month.
An attempt by Hayward's lawyer, Robert Kantner, to set aside the jury verdict failed in court. An appeal is expected. But in an account of the hearing in the Fort Worth Star-Telegram, Kantner said Hayward had used the royalties to run the company and spent as much as 50 per cent on tax bills in the US and Australia.
A second complainant, Christa Beebe, who was brought into the fold in January 2012 to help with marketing and distribution of books including the erotic trilogy, settled out of court in December. The agreement is subject to confidential terms.
