Here's how The Observer described him back in 2003, when he was but an emergent "Power Punk":

Big, quiet, slightly rough-hewn Sean McDonald, the senior editor and online creative director of Riverhead Books, has become the Zen master of the publishing world. He inspires utter confidence among his peers, exuding a kind of quintessential American self-assurance, understated and direct, large-scale but devoid of grandiosity.

McDonald replaces Lorin Stein, who recently left FSG for The Paris Review.

According to a press release, Mr. Mosley's first book for Riverhead, where he will be edited by Sean McDonald, will be a mystery novel that centers around an African-American private investigator named Leonid McGill living in present day New York. The book, scheduled for 2009, will be the first installment of Mr. Mosley's new series, the second installment of which will also be published by Riverhead. Mr. Mosley's third Riverhead book will be a "literary novel," says the release.

Riverhead publisher Geoffrey Kloske declined to comment on the amount Mr. Mosley would receive for the three books.

UPDATE: Asked to comment on Mr. Mosley's move to Riverhead, Little, Brown publisher Mitchael Pietsch said in an e-mail, "Walter Mosley is one of America's greatest writers and I wish him success in everything he does."

UPDATE: The literary novel referenced in this morning's press release will be the second book Mr. Mosley will write for Riverhead, according to Mr. McDonald. Mr. McDonald said the tentative title for the novel is The Last Days of Ptolemy Grey. 

But 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.

A spokesperson from Harpo Productions said that the company had no comment.

So yet another “truth”—this time from the jaws of Harpo itself—is called into question. Ms. Talese might never have agreed to appear on the show had she known Ms. Winfrey’s full intentions. The resulting televised spectacle was less a dissection of the lies that comprise modern American life and how they led to Mr. Frey’s fabrications, than an opportunity for Ms. Winfrey to vent her anger on Mr. Frey and Ms. Talese—in essence, on the entire book business.

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.”

Mercy evidently was not on the schedule that day. But what was also clear was that the publishing veteran was unable to adequately explain how this particular mistake happened or, as many have suggested, sufficiently accept responsibility for it. Ultimately, Ms. Talese was taking the fall for a business long known to be ailing—one desperate for the next gimmicky novel or sappy memoir to bail it out of a gloomy fiscal year and satisfy its corporate owners.

Back in Oprah-world, angered by personal humiliation fueled by critical newspaper columns and viewer e-mails, Ms. Winfrey aggressively reduced Ms. Talese and Mr. Frey to puddles on the couch. Ms. Talese said that Mr. Frey was “reeling” on the flight back to New York from Chicago.

Ms. Talese said that she’d initially been reluctant to appear on the show at all and actually said no at first. But Mr. Frey had already agreed. Ms. Winfrey was the one who had asked him to appear on Larry King Live on Jan. 11, and he felt that he had to do Ms. Winfrey’s show as well, Ms. Talese said, since she had made his book such a success. So after repeated calls from Oprah’s people, Ms. Talese relented and agreed to talk publicly about “Truth in America.”

Explaining how the publishing industry failed its public was another matter entirely.

Ms. Talese’s meek performance on TV only emphasized something she has in common with many of her publishing colleagues. In those circles, there is outrage over Mr. Frey’s deceptions, but there is no strong belief that Ms. Talese or Doubleday did anything wrong in the handling of his book in the first place.

THE PUBLISHING INDUSTRY BEARS THE WEIGHT of contradictory expectations: It must make money, as well as maintain the illusion that it’s one of the last bastions of highbrow culture. Which leaves book editors and publishers with the impossible task of creating products that will both sell at Costco and serve as intellectual currency at Upper West Side dinner parties.

But if the publishing business wants to keep shacking up with Oprah—and perhaps save face post-Frey—it might have to start paying better attention to distinctions such as fiction and nonfiction, memoir and “autobiographical novel,” reality and “emotional truth.” Ms. Winfrey represents the millions of Middle Americans who don’t trust the “liberal media” and who buy best-sellers at Wal-Mart; New York publishing prides itself on certain intellectual standards. Somewhere in between lies the watchful Google eye. As the financial incentives for exaggeration in art and life have grown exponentially, so have the opportunities to get caught. A permanent alliance between publishers and Ms. Winfrey’s millions signifies the end of the gentleman’s handshake.

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.”

When asked why the publisher, like the others, refused to speak for attribution, the person admitted it was because they were in the throes of their own memoir panic, revisiting the books in their catalog.

“I don’t want to call attention to them in any way,” the publisher said. “I’m sure they’ll check out and everything, but …. ”

Additionally, the criticism from columnists and reporters and reviewers from newspapers and magazines—which run corrections every day—strikes the publishing people as pure hypocrisy. The nagging about fact-checking seems both naïve and impossible to execute.

“Having journalists pointing fingers at fact checkers … it’s not like it doesn’t happen with The Washington Post and The New York Times,” said Daniel Halpern, the editorial director of Ecco Press. “I just don’t know if fact-checking is the only answer. I think it’s got to be a combination of the legal people, some kind of fact-checking, and maybe the relationship between the author and editor, to catch the majority of the problems.”

Morgan Entrekin, the publisher of Grove/Atlantic, ran through the economics of hiring underpaid 20-year-olds to look up facts: “How much can one person employed at $35,000 a year fact-check—10,000 words a week?” said Mr. Entrekin. “That means they can do four 125,000-word books a year, so that adds $8,000 to $10,000 in costs to each book. If it’s going to sell three million copies, that’s no problem, but many books sell only 5,000 copies, which would be a burden.”

However, Mr. Entrekin continued, “this is a very important issue, and we as an industry need to make sure that we’re very clear about this, because there is a sort of erosion of truth, with the Internet and the new media and reality TV. And the authority that is conferred on a book that comes from Random House—one of most prestigious publishers in the English language—is a very precious thing, and it’s got to be guarded very carefully.”

When asked whether he felt that book publishers should accept the standards and transparency of someone like Bill Keller, the executive editor of The New York Times, Mr. Halpern of Ecco paused.

“I would hate to think that I would put a book out there that was a distortion of the truth, that caused people the kind of pain that this evidently caused people,” Mr. Halpern said. “Nobody’s in publishing to make money. You’re putting books out there because you’re on a kind of mission, because you believe you have a taste in literature, whether fiction or nonfiction, and you want to share that, and you want to publish books that change people’s lives. You do the best you can to not have this happen. Not for the embarrassment of it, but for the immorality of it.”

THE HUMILIATION THAT MS. TALESE SUFFERED on network television was felt viscerally by many of her colleagues. But surely Ms. Talese’s former protégé, the young, media-savvy Sean McDonald, was having the strongest stirrings of remorse, watching his old boss take lashings for a book that he acquired and edited?

Mr. McDonald has resisted explaining his role in the Frey mess (he didn’t return calls from The Observer). But it is believed in the industry that he and Mr. Frey are extremely close and that he bears some responsibility for Mr. Frey’s deceptions. (Ms. Talese said that she has had little contact with Mr. McDonald since the drama began.) So why hasn’t Mr. McDonald come forward?

Mr. McDonald and Mr. Frey are known to be buddies who socialize and watch sports together. According to a transcript of a panel discussion between the two of them on Mediabistro.com in Oct. 2005, Mr. Frey said: “We’re friends. We do a lot of stuff outside of publishing and writing and we talk about shit that has nothing to do with work and for me that has been a very important part of it because I trust a friend who’s giving me good advice, as opposed to a boss who’s giving me an order.”

The editor brought Mr. Frey with him from Doubleday to the Riverhead imprint at Penguin in 2003, where he published Mr. Frey’s next work, My Friend Leonard, and developed a buzzy reputation (an “editor-as-rock-star-type” profile of him was underway at New York magazine before the scandal broke). Leonard was published in hardback with Riverhead’s standard disclaimer notifying readers that identifying details had been altered.

However, the timing of Mr. McDonald’s next contract with his celebrity author raises questions.

On Jan. 5, the online newsletter Publishers Lunch reported that Mr. McDonald had signed Mr. Frey to two more books, including a novel. (The deal is thought to be a generous one, well into the seven figures.) Three days later, on Jan. 8, the Smoking Gun posted its lengthy exposé, the result of a six-week investigation, indicating that Mr. Frey had spoken with them several times since Dec. 1—well before his book deal with Riverhead was signed.

Whether Mr. Frey had shared this information with Mr. McDonald is unclear. Regarding Mr. Frey’s new two-book deal, a Riverhead spokesperson said: “The ground has shifted. It’s under discussion.”

Meanwhile, Mr. Frey’s agent, Ms. Evashevski of the Hollywood agency Brillstein-Grey, told Publishers Weekly that she never sent his first book out as a novel, as Mr. Frey has repeatedly maintained.

She also disclosed that she has dropped Mr. Frey as a client.

Ms. Evashevski, who mostly works with movie types, not authors—in Hollywood, not New York publishing—had this to say to PW’s Sara Nelson about why she wouldn’t stand behind Mr. Frey: “It became impossible for me to maintain a relationship once the trust had been broken.”

Big, quiet, slightly rough-hewn Sean McDonald, the senior editor and online creative director of Riverhead Books, has become the Zen master of the publishing world. He inspires utter confidence among his peers, exuding a kind of quintessential American self-assurance, understated and direct, large-scale but devoid of grandiosity.

Mr. McDonald's first job out of Yale was at Arcade, the quirky, Europhile literary boutique where he did everything from edit and design books to assist in production. In 1998, Nan Talese called: The publishing grande dame wanted a young editor for the Doubleday imprint she's run since 1990. "I still have no idea how she knew who I was," the 31-year-old said. "I was not the logical choice." But after a half-hour interview, Ms. Talese decided, she said, that the fit "was perfect"; she was knocked out by his "really good literary taste."

Mr. McDonald persuaded Ms. Talese to take a big risk on A Million Little Pieces, James Frey's profanity-strewn memoir about kicking crack, a book in which the author describes his own vomit in graphic detail at least a dozen times. "I brought it to Nan with some trepidation," Mr. McDonald said. Ms. Talese gave him the go-ahead after reading 100 pages. While at Nan Talese/Doubleday, Mr. McDonald signed other challenging works whose literary excellence would easily have been missed by more conventional editors, including The Bug, computer programmer Ellen Ullman's first novel, and The Question of Bruno by Sarajevan author Aleksandar Hemon.

Then, in full stride, Mr. McDonald left. In a slow-moving business where many editors hang around houses for decades, hoping against hope that they'll have a shot at power before they cash in their puny 401(k)'s, Mr. McDonald understood that it's better to leave when the party's in full swing. He said it was "really hard" to leave Nan Talese-he liked her so much, and some of his books hadn't even come out yet-but that, even with "as much freedom" as Ms. Talese gave him, "it was kind of limiting defining yourself against something more than just defining yourself."

Mr. McDonald seems a little like a camera-shy coach who speaks reluctantly to the press out of devotion to his team. An editor, Mr. McDonald said, is a "friend and advocate …. Getting a book back from the printer is amazing," he added, cupping his sizable hands as if holding a precious object. "That's the best part."

Mr. McDonald is aggressive with the red pen, and he likes to keep his hand in designing book jackets. At Riverhead, the Penguin imprint that Phyllis Grann founded in 1994, Mr. McDonald works with publisher Susan Petersen Kennedy and co–editorial director Julie Grau. His books under contract include The Wu-Tang Manual by RZA of the Wu-Tang Clan; The Sound and Fury, Alex Abramovich's history of rock 'n' roll; and Hector Tobar's Translation Nation, about Spanish-speaking America. "Basically, I felt there was more room for me" at Riverhead, Mr. McDonald said.

He grew up in Laguna Beach, Calif., where his father teaches drama at U.C. Irvine; his mother is a high-school counselor. Mr. McDonald lives in Chelsea with his girlfriend since college, Emily Dougherty, a beauty director at Elle. And although he doesn't like the bad Frank Stella in the lobby, Mr. McDonald is glad to spend his workdays at Riverhead's offices in the Saatchi Building on Hudson Street. "Anything to get out of midtown," he said. What about lunching? "Oh, I like lunch fine," he said. "If the food is delicious." And with a peaceful smile, he tucked his hands into the pockets of his too-thin winter coat and went back to the office.

-Rachel Donadio