Early Friday afternoon, the studio completed a deal to purchase pre-emptively the film rights to "I Am Number Four," an unpublished science fiction book, for Bay to produce and possibly direct. It is the first in a planned six-volume series co-written by "A Million Little Pieces" author James Frey.

Neither the studio nor WME, which represents Frey and Bay, would confirm Frey or divulge the name of the other author. The deal is in the high-six figures.

WME began shopping the book's feature and publishing rights early in the week to a number of producers and studios. The agency used a pseudonym for the authors presumably because Frey is notable mainly for his scandal-ridden fudging of facts in his ostensible memoir of addiction and subsequent high-profile dressing down by Oprah Winfrey on her show.

The "Four" story line involves nine alien teens assimilating to high school on Earth after their planet is destroyed by an enemy species. The fourth of the group discovers that the enemy is now after him on Earth.

Readers in several states, including New York, California and Illinois, filed lawsuits saying that Mr. Frey and the publisher had defrauded them by selling the book as a memoir rather than as a work of fiction. In June the cases were consolidated to the United States District Court for the Southern District of New York. Under the terms of the agreement, which has been accepted by 10 of the 12 plaintiffs who are part of the consolidated case, both Mr. Frey and Random House will pay out no more than a total of $2.35 million, which includes the cost of refunding customers, lawyers’ fees for both sides and a yet-to-be-specified donation to charity.

To claim a refund, readers who bought a copy of the book on or before Jan. 26 must submit proof of purchase. This will not be limited to a dated receipt however: hardcover buyers, who are entitled to a $23.95 refund, must submit page 163 (chosen at random, according to the source familiar with the negotiations); paperback buyers (entitled to $14.95) must send in the front cover of the book; those who bought the audio book ($34.95) will have to send in a piece of the packaging, and those who bought the e-book, at $9.95 apiece, must send in some proof of purchase.

People making a claim will also have to submit a sworn statement that they would not have bought the book if they knew that certain facts had been embroidered or changed.

Mr. Frey declined to comment. But his lawyer, Derek Meyer, said, "We worked with Random House on whether to resolve these lawsuits and the desire to move on became a powerful incentive to resolve what are otherwise very weak cases."

Oprah Winfrey is facing a new weight battle — the talk show queen has packed on 32 lbs and, pals say, needs to stop before she's out of control. Sources close to Oprah have told The National Enquirer she has privately blamed her weight gain on stress and her fondness for junk-food snacks.

The recent pressure stems from the controversy that erupted over a book she promoted that turned out to be a fake. Oprah has also recently been dwelling on a failed romance with a married man that ended bitterly 25 years ago — memories triggered by the feelings of betrayal she experienced in the scandal of the James Frey book A Million Little Pieces.

On her February 23 show, 52- year-old Oprah — possibly sensing her audience had noticed a weight gain — admitted that she's a compulsive eater. She said: "I have an eating addiction that I am constantly trying to control. I know that there have been instances where... I'm eating to repress my feelings."

Why would any self-respecting person engage in such a thing as writing a memoir? To begin with, Mr. Frey's book is not a memoir, let alone representative of the genre. Critical events were fabricated. It was written and first submitted as fiction, then fraudulently resubmitted and published as a memoir. Unsuspecting readers, thinking they were getting an honest remembrance, got Frey's flights, or descents, of fancy.

I don't mean to imply that memoirs need to be held to the standards of journalism, or even that imagination can have no place in it. A memoir is the creation of a mind remembering. The writer recalls and reflects on the past and evidence gathered about that past. Usually, the more evidence the better, but as any memoirist will tell you, remembering is always a tricky business.

There are many levels of accuracy. There are memories that the writer can verify empirically. There are memories for which the evidence is irrecoverable. And, moving farther from "objective truth," there are hazy memories, then conjecture, then informed imagination. Here fact and fiction do indeed become blurry.

*****

At its best, a memoir combines hard research, an engaging narrative, the intimacy of lyric poetry, and the thoughtfulness of an essay. The aspirations of memoirs are different from those of fiction or nonfiction, and the measures by which they are judged should also be different. A good story is important. Factuality is important. But the ultimate question about a memoir is: Out of how deep and considered a life does it spring?

McDonald, now v-p and executive editor, at Riverhead Books, said he learned about the allegations "the same way as everyone else." He said he has not commented up until now because the situation was constantly changing and he wanted to give Frey the chance to comment on the book.

His statement also sought to clarify a few aspects of the situation: "A Million Little Pieces was submitted to me in early September 2001.From the beginning, I understood it to be a memoir. As an editor, I was drawn to the literary voice, and I worked closely with James to hone his style in telling his story.Throughout the editing process, I was assured by James that the events he recounted in the book - even the most extraordinary ones - were accurate and true."

....Ms. Talese truly had no idea what she was in for. "I was asked to go onto a program that was going to have James on it, and then I was going to be joined by Frank Rich and Richard Cohen to talk about 'Truth in America.' That was the program," Ms. Talese said by phone this past weekend. As she was walking onto the set of the special live broadcast, however, she was informed that the theme of the show had been changed to something called "The James Frey Controversy." Ms. Talese was surprised.

*****

Suddenly called upon to defend the troubled industry she’s worked in for decades, Ms. Talese faltered. "I hoped I would have the opportunity to explain that publishing is a business of trust--we trust our authors are telling the truth," said Ms. Talese later, outlining what she had wanted to say. "Fact checkers will no more protect people against those who do not honor truth any more than they protect the public against newspapers, television, bloggers—the Internet is rife with misinformation—or indeed from politicians and corporations. So in the end, it depends on honor, trust and character. And, indeed, forgiveness for mistakes."

Yet, like Ms. Talese, many—perhaps most—people in the book business claim they don’t think that anything is wrong with the old way of doing things, which explains the clash of civilizations apparent on Ms. Winfrey’s show. Thus far, it seems that no major changes will be made to ensure that future memoirs will be more truthful. "It worked until now. I’ve only been doing it for 30 years," said one veteran literary agent, who wouldn’t speak for attribution. "Most authors are law-abiding authors, but you get one in 1,000 who is a nutcase, and no magazine, no book publisher, can defend against that," said another, who also requested anonymity.

"It will change for a nanosecond because of the fear factor," said one publisher at a well-regarded house. "If you hope to book somebody on Larry King, you’ll ask harder questions of that writer so nothing explodes in your face. The biggest terror everyone has right now is that Oprah will suddenly say 'Oh, to hell with it and stop doing her book club."

The two men, one a state judge in Louisiana who in June was convicted of mail fraud, were offered to The New York Times as witnesses by Mr. Frey's publishers, Doubleday and Anchor Books, imprints of Random House, to back up the accuracy of his descriptions in the book. Their names and telephone numbers were given in response to comments from former employees of Hazelden, the Minnesota rehabilitation center reportedly attended by Mr. Frey, who have said his portrayal of the treatment experience there was false and misleading. Mr. Frey has admitted to embellishing his past, but has maintained that his experiences in drug rehabilitation were real.

Alan J. Green, a Louisiana state judge, said he appeared in Mr. Frey's book as Miles, a federal appeals court judge. In a telephone interview Monday, he said he was a roommate of Mr. Frey's at Hazelden's main campus in Center City, Minn.; Mr. Frey himself has not named the treatment center he attended.

"Over all, I think he gave a pretty accurate description," Judge Green said of the book. But, he added, "there may have been some differences in how I would have described things." Asked about particular incidents in the book, like scenes of fighting between patients or violent treatment of one patient by another, Judge Green said, "There may have been some pushing and shoving, but as far as knock-down-drag-outs, I don't recall ever witnessing anything like that."

Asked about Mr. Frey's medical condition - the author describes arriving with a hole in his cheek and having his nose rebroken and reset at Hazelden - Judge Green said, "If a person needed medical treatment, they would be taken out to a local medical facility." In June, Judge Green was convicted of mail fraud in Federal District Court in New Orleans on charges involving two $5,000 cash payments that he accepted from a local bail bonds company. The conviction resulted from an investigation of racketeering charges in the Jefferson Parish courthouse. Judge Green, who has been suspended from the bench, is scheduled to be sentenced next month and could face up to 20 years in prison.

More trouble is brewing for Michiana native James Frey who is said to have embellished parts of his best-selling memoir. A Million Little Pieces was the top-selling non-fiction book of 2005 and is based on the life of the graduate of St. Joseph High School in Michigan.

Thursday, a Chicago woman filed a lawsuit against Frey and his publisher, accusing them of consumer fraud. She says she read the book after hearing about it on The Oprah Winfrey Show and was emotionally moved. But now, she says she feels cheated, since learning parts of the book aren't true. James Frey has 20 days to respond to the lawsuit.

"When the manuscript of A Million Little Pieces was received by us at Doubleday, it was received as nonfiction, as a memoir," said Ms. Talese by phone. "Throughout the whole process of publication, it had always been a memoir, and for the first year and a half it was on sale, it was always a memoir with no disputation. It was never once discussed as fiction by me or anyone in my office."

Ms. Talese’s statement appears to contradict Mr. Frey, who has said that it was his publisher’s decision to foist A Million Little Pieces onto the public as a memoir rather than a novel, as he had originally written it. Just a few days ago, during an unrepentant appearance on Larry King Live, Mr. Frey said: "We initially shopped the book as a novel, and it was turned down by a lot of publishers as a novel or as a nonfiction book. When Nan Talese purchased the book, I’m not sure if they knew what they were going to publish it as. We talked about what to publish it as. And they thought the best thing to do was publish it as a memoir."

Ms. Talese said that she "almost collapsed" when she heard Mr. Frey make that statement. (Mr. Frey, as well as his editor, Sean McDonald, who is now at Riverhead, and his agent, Kassie Evashevski, didn’t respond to calls from The Observer.) Critics and journalists have since repeated Mr. Frey’s claim, citing it as evidence that the publishing industry and its craven marketing decisions are to blame for the fact that elements of Mr. Frey’s book are, in fact, not true.

*****

If Mr. Frey came to Ms. Talese today with the same manuscript, she said she’d publish it the same way, most likely with a disclaimer in the front. (In any case, she said that the book would never have worked as a novel, in part because the author himself is the only real character in it.) She added that [I]f Mr. Frey had confessed prior to publication to the fabrications revealed by the Smoking Gun last week, she would have excised them from the book. A transgression had been committed, Ms. Talese acknowledged, but the person responsible was Mr. Frey. "I don’t think it is ever a good idea to purposely distort the truth," she said.

Unfortunately, because A Million Little Pieces -- one of the best-selling books about drug addiction ever written -- has been trumpeted as an unflinching, real-life look into the world of a drug addict, it has helped to shape people's notions about drug abuse. Ironically, the very abundance of its clichés has likely helped make it a runaway best seller: People, after all, like having their suspicions confirmed. For nonaddicts, Pieces reinforces the still dangerously prevalent notion that it's easy to spot a drug addict or an alcoholic -- they're the ones bleeding from holes in their cheeks or getting beaten down by the police or doing hard time with killers and rapists. For those struggling with their own substance-abuse issues, Pieces sends the message that unless you've reached the depths Frey describes, you don't have anything to worry about—you're a Fraud. And if you do have a problem, you don't need to necessarily get treatment or look to others for support; all you need to do is "hold on." In building up a false bogeyman -- the American recovery movement's supposed reliance on the notion of "victimhood" -- Frey has set himself up as the one, truth-telling savior. In fact, it seems clear that Frey would have been well-served by taking the kind of unflinchingly honest look at his own life that most recovery programs demand.

On Wednesday....he appeared on Larry King with a more nuanced position: "a memoir is a subjective retelling of events," he said. "it's an individual's perception of what happened in their own life; this is my recollection of my life." Oprah, in her inimitable semi-divine fashion, called into the show to lend her carefully-phrased support: " the underlying message of redemption in James Frey's memoir still resonates with me, and I know it resonates with millions of people who read this book."

There's a distinction being made here that's worth scrutinizing. The "subjective retelling" defense invokes the double-layer of distortion that's inevitable in any memoir: events are filtered through the author's memory, and then they're fuzzed even further by the inherently impressionistic nature of any literary medium. Short of the unexpected appearance of a Recording Angel, there isn't much a memoirist can do to pull aside that two-ply veil. But before we get lost in an epistemological fog, let's not forget that those distortions must be kept separate from the wilfull deceptions of an author who's giving in to ulterior motives. Some falsehood comes with the territory of the memoirist; others must be deliberately imported into it.

Frey's second line of defense is a little more formidable. As he put it on Larry King, "the emotional truth is there." In other words, whatever the nitty-gritty bookkeepers turn up, his story has an empathic force, a psychological power, that makes the actual factual status of his writing kind of moot, and renders trivial the question of where it should be shelved in the bookstore.

But that defense simply begs the question, if it's not factual, why didn't Frey publish A Million Little Pieces as fiction? By claiming this his story was literally true, Frey endowed it with a heightened immediacy and an emotional force that it lacked as a novel — in effect, he borrowed a litttle extra emotional oomph from his trusting readers, who treated his narrative as 100% lived experience, real dues paid by a real person. That's not trivial. If Frey wasn't entitled to that immediacy and that force — if he stole that oomph rather than borrowed it — well, that's cheating. And he should come clean and give it back.

Readers calling Random House's customer service line to complain on Wednesday were told that if the book was bought directly from the publisher it could be returned for a full refund. Those who bought the book at a bookstore were told to try to return it to the store where it was bought.

"If the book was bought directly from us we will refund the purchase price in full," one Random House customer service agent told Reuters, noting readers would have to return the book with the original invoice. "If you bought it at a book store, we ask that you return the book to the book store." Asked why the publisher, which normally sells books directly to consumers as nonrefundable, would offer refunds, the agent said, "because of the controversy surrounding it."

Several customer service agents called by Reuters reporters also agreed to pay refunds. A Random House spokeswoman said the company would issue a formal statement about returns later.

Frey's memoir of alcohol and drug-induced mayhem sold 1.77 million copies last year after being chosen by Oprah Winfrey's book club in September. But investigative Web site The Smoking Gun on Sunday reported the book, published by Random House's Doubleday division, was full of exaggeration and inaccuracies.