James Frey, who admitted two months ago he made up much of his best-selling memoir “A Million Little Pieces,” has been dropped by his publisher, Riverhead Books, Frey’s representative said Thursday.

Frey’s unmasking and public confession to Oprah Winfrey, the daytime television host whose endorsement catapulted the drug-rehab memoir to the top of the bestsellers list, has rocked the U.S. publishing industry, stirring debate about the nature of memoirs and the importance of accuracy.

After writing “A Million Little Pieces” for Random House, Frey moved with his editor Sean McDonald to Penguin imprint Riverhead Books, which published his second book, “My Friend Leonard,” last June. Riverhead then contracted Frey to write two more books, one of them a novel, for an undisclosed sum.

Penguin said last month that deal was “under discussion” and Frey’s representative, Lisa Kussell, said Thursday the deal had been canceled.

“All I can say is he no longer has a deal with them,” Kussell said, declining to give any more details.

Penguin spokesman David Zimmer declined to comment.

The uproar over Frey’s book started when the Smoking Gun Web site said it could find no public records supporting the author’s claim he had spent three months in jail after trying to run over a police officer with his car.

Frey’s book sold more than 1.77 million copies last year after being chosen by Winfrey for her Book Club.

On another appearance on Winfrey’s show last month, Frey admitted that much of the book was fiction. He spent two hours in jail, not 87 days, and an account of his breaking up with a woman who later committed suicide was condensed in time and changed, he said.

The Los Angeles Times reported last month that Warner Brothers was reconsidering plans to make a movie version of “A Million Little Pieces.”

Despite the controversy Frey’s sales remain strong.

“A Million Little Pieces” was in the No. 2 spot on The New York Times’ latest paperback non-fiction bestseller list, just behind Elie Wiesel’s “Night,” which is Winfrey’s latest Book Club recommendation. “My Friend Leonard” was in fifth place on the hardcover non-fiction list.

James Frey, the disgraced author of “A Million Little Pieces,” has a hard luck story he doesn’t want to share: He will not write a book about the unraveling of his admittedly tainted million-selling memoir of addiction and recovery.

“I think writing a book about this experience would be trying to capitalize on it in some way and that’s not something I want to do at all,” Frey said in a segment on Oprah Winfrey’s syndicated talk show that was taped, but not immediately aired, after Thursday’s explosive program when Winfrey turned against the author whose book she endorsed last fall.

Frey’s comments were part of “Oprah After the Show,” a conversation featuring Frey, Winfrey and publisher Nan A. Talese to be broadcast Friday night on the Oxygen network, a cable channel Winfrey helped found.

Despite Frey’s on-air humiliation, when Winfrey berated him and the author acknowledged that key parts of the books were invented, “A Million Little Pieces” kept on selling. On Friday, it was in the top 5 on both Amazon.com and Barnes & Noble.com.

Meanwhile, publishers and agents agreed that tighter scrutiny was needed after Talese acknowledged what the industry knows well but perhaps not the general public: Memoirs are not fact-checked.

Despite calls from Winfrey and others to tighten standards, many doubt publishers will hire fact checkers.

“Publishing companies run on pretty tight budgets and there’s just not enough time to check every book,” said Viking associate publisher Paul Slovak. “But it is possible that somebody might look at these books with a slightly more alert eye.”

Here is video from Oprah’s live show that aired today. James Frey appeared to finally come clean about embellishing almost all the “facts” in his “memoir” New York Times Bestseller “A Million Little Pieces“. Oprah was PISSED.

The first video you can just press play. The second is a link–it’ll open up a new window and play a different clip from the show I found on ABC News.com

Click Here To Watch The ABC News Clip

Oprah Winfrey broke her silence about James Frey’s disputed memoir of addiction, “A Million Little Pieces,” dismissing allegations of falsehoods as “much ado about nothing” and urging readers who have been inspired by the book to “Keep holding on.”

“What is relevant is that he was a drug addict … and stepped out of that history to be the man he is today and to take that message to save other people and allow them to save themselves,” Winfrey said Wednesday night in a surprise phone call to CNN’s Larry King, who was interviewing Frey on his live television program.

Frey has been under intense scrutiny since The Smoking Gun, an investigative Web site, posted a story last Sunday alleging the author had substantially fabricated his criminal record and other aspects of his past.

Publishers, writers and readers have offered their opinions, but none mattered so much as Winfrey’s. Her selection last fall of “A Million Little Pieces” for her book club made the memoir a million seller and she might have fatally ruined Frey’s reputation by condemning him.

Frey, in his first interview since The Smoking Gun story came out, acknowledged he had embellished parts of the book but said that was common for memoirs and defended “the essential truth” of “A Million Little Pieces.”

“The book is about drug addiction and alcoholism,” he said. “The emotional truth is there.”

Police reports and other public records published online on Sunday have raised substantial questions about the truth of numerous incidents depicted in James Frey’s best-selling memoir, “A Million Little Pieces.”

The book, originally published in 2003 by the Nan A. Talese imprint of Doubleday, soared to the top of the best-seller lists in the fall after it was chosen by Oprah Winfrey for her television book club. Ms. Winfrey’s enthusiastic endorsement helped the book to sell more than two million copies last year, making it the second-highest-selling book of 2005, behind only “Harry Potter and the Half-Blood Prince.” “A Million Little Pieces” currently tops the New York Times paperback best-seller list; Mr. Frey’s second book, “My Friend Leonard,” is on the paper’s hardcover best-seller list.

Mr. Frey has repeatedly stated that his book is true. But a lengthy article posted Sunday by The Smoking Gun Web site (www.thesmokinggun.com) quotes Mr. Frey as saying that events “were embellished in the book for obvious dramatic reasons.” In particular, it quotes him as saying he did not spend nearly three months in jail after leaving an alcohol and drug rehabilitation center in the mid-1990’s, as he contends in his book, but rather only a few days, at most. In “My Friend Leonard,” Mr. Frey writes that his girlfriend, Lilly, whom he’d met in rehab, called him distraught just before the end of his sentence. Upon his release he races to her side, only to discover that she has committed suicide.

In “A Million Little Pieces” Mr. Frey says that the three-month sentence stemmed from a 1992 arrest on felony charges, including fighting with police officers and hitting an officer with his car, that could have landed him in jail for up to eight years. But the Smoking Gun article and supporting documents state that Mr. Frey was held for a few hours after an arrest on a drunken-driving charge and that he eventually paid a small fine, but otherwise spent no significant amount of time in jail.

The Smoking Gun article, which did not carry a byline, stated of Mr. Frey: “The 36-year-old author, these documents and interviews show, wholly fabricated or wildly embellished details of his purported criminal career, jail terms and status as an outlaw ‘wanted in three states.’ ”

Yesterday, Mr. Frey did not respond to a telephone message left at his home in Manhattan. Officials at Random House, Doubleday’s parent, would not comment on the Smoking Gun article but issued a statement saying, “We stand in support of our author, James Frey, and his book which has touched the lives of millions of readers.”

Ms. Winfrey and her representatives at Harpo Productions also did not return calls yesterday. Ms. Winfrey’s promotion of Mr. Frey’s book was among the most enthusiastic she has ever given to an author. When Ms. Winfrey announced her choice - the first work of nonfiction she had selected - she called the book “a gut-wrenching memoir that is raw and it’s so real.”

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