Thank you all for trying to break through my confusion.
I was under the impression that royalties would be paid on the end sale (store) price, which is obviously not true and would probably be an accounting nightmare except for possibly ebook sales direct to the consumer.
I do not understand why harlequin would offer a reasonable (better than many?) royalty and then go to such lengths to get some of it back. Would seem simpler to just start a subsiduary offering lower rates and recomending it to authors that they did not feel they wanted to keep.
Also if I am reading the article and comments correctly, the whole thing smacks of collusion and fraud. Cannot charges be made on these grounds that would make a civil suit easier to settle?