Arbortext Accounting Fraud #38: The Demand Letter To Arbortext

Chapter Thirty-Eight

The Demand Letter To Arbortext

 

Watching Blair and Bernheim enrich themselves at our expense was pretty disgusting. But digesting the Plante Moran audit was even more so.

“I still don’t understand the MRO.com Intermarket thing,” I said mentioned to Mary one morning. “Mark Robinson doesn’t find any evidence of it on his first pass at Arbortext’s books, then we fax him our evidence of it, then he finds one example. MRO. Was it always there and he missed it? Or did Arbortext stick it in there so he could trivialize our evidence? Like they’ve got two sets of books.”

“I don’t know. It’s a red herring. What he said about it is pretty ridiculous, too. Where is his audit? I need to read it again.”

After a brief search, it was located on the floor underneath the dinette table. Our filing system in the Rhinoceros Palace was a wee bit less organized than it had once been while living in an actual home with an actual office.

Mary paged through the audit and then read the first MRO reference:

 

“E-Catalog (a.k.a. Intermarket), as well as the Arbortext Site License and the Arbortext Site License maintenance, relate to Arbortext’s August 2000 Application Development & Software License Agreement with MRO.com (WP-10). Arbortext was developing a product called Content Manager by extending the functionality of Arbortext programs and integrating them with MRO’s Intermat product. Soon after the agreement and some licensing of software to MRO in September 2000, the joint development effort was abandoned. The total revenue that Arbortext received that was related to E-Catalog and Site License was obtained from MRO.com (refer to Exhibit D for amounts).”

 

“So,” Mary said, “he admits there is an E-Catalog/Intermarket, just like Zoltan Gombosi says on his resume, but he shrinks all the other evidence of Intermarket that’s all over the web and the $4,000,000 Gombosi mentions this product hauled in and explains it all by this one and only one contract with MRO. Is that preposterous or what?”

“That’s the word Jim Sterken used when we first complained about missing sales. Right before a whole year of them magically turned up in their records.”

“Look at his concluding sentence. He states any and all revenue relating to E-Catalog is solely obtained from this MRO relationship. Now look at his Exhibit D for the amounts. There’s $100,000 for an E-Catalog Application License and $417,643 for a Site License. Those are Arbortext products! MRO got billed for purchasing them. And Robinson says ‘some licensing of software’ like it’s a couple of bucks. We’re talking over a half million dollars here. Then he says the ‘joint development’ was abandoned, like that’s all to that story. Implying no other companies bought Intermarket and the Intermarket product was abandoned. Only the joint relationship with MRO was abandoned. The joint development was not to create Intermarket, it was to integrate Intermarket into MRO’s Intermat product. But not before they paid over half a million to Arbortext for Arbortext products, i.e., E-Catalog. What’s really bizarre is that, according to Robinson’s Exhibit D, this supposedly abandoned development continued to generate revenue to Arbortext in 2001, 2002, 2003, and 2004. Mostly from Partnership fees and Maintenance fees. Meaning MRO continued to pay Arbortext for these Licenses, this supposedly abandoned relationship. There’s even a Maintenance Initial in 2002. And a couple of Technology Partner fees and Maintenance in 2002, 2003, and 2004. MRO is continuing to pay Arbortext for its software right up to the audit! Four years after Robinson says the whole thing’s canceled. The joint development might be abandoned, but the customer – MRO – is still paying for Arbortext software licenses. It even says on the Exhibit that E3 Standard Option/PWDO is included. That means our technology, Interchange, is included! Yet Robinson has the gall to profess ignorance about what was in a Site License. Look at your own exhibit Robinson! (See page 18, Exhibit S, the Plante Moran Audit) E-Catalog is still listed as an active SKU product license! In 2005. How can Robinson ignore this?”

“Robinson also doesn’t mention that Karen Sharplin initially said that E-Catalog and Intermarket were never developed and never sold. Which was a lie and he knows it.”

“This audit gets worse every time I look at it. Robinson is bending over backwards to cover up this whole thing. His report never mentioned the clear and convincing evidence we gave him regarding this product. It was one of the main things we stressed to him and he never addressed it! Worse, he tries to erase it.”

“Even after he found it.”

“Even then. ‘It is unclear as to what software components are contained in E-Catalog or are part of a Site License.’ What utter nonsense. Look at the invoices, look at the product descriptions. What is he doing in there auditing them if he can’t even say what the heck is in a site license? Look at your own Exhibit, Mr. Robinson. There’s a line called ‘Partner Program Marketing Fee – Consulting’ with payments for this consulting in 2002, 2003, and 2004. How can Arbortext be getting money for consultation from an abandoned joint development relationship? Everything Robinson says is refuted by his own evidence. Incredible.”

“I bet Kessler International wouldn’t come back with some lame ass report like that. It’s total bullshit.”

“That’s why Peralta wouldn’t let Kessler come in for the audit. Kessler would actually DO one.”

“If Dick Blair had simply done his job, which the Judge told him to do, Peralta could never have kept Kessler out. This whole nightmare is directly Dick Blair’s fault. So, what are we going to do about Arbortext now?”

“I’ve got a call into Claudia. We’ll see what she advises.”

After conferencing with Mary and I, she decided it was time to send a Demand Letter to Arbortext. For payment. Of $750,000. To Blueberry. A greatly understated, but gentlemanly amount.

The meat and potatoes of her Demand Letter were provided by Mary. She was the only one who truly understood what the Audit had revealed and what it had hidden. And the only one who could do the math. And had the evidence. Three and a half years of her research and Internet sleuthing were finally ready to be officially presented.

And so satteth Mary down. On the RV couch at her laptop perched atop a long, narrow card table (Kmart green, for you color aficionados – the obligatory one wobbly leg), coffee mugs all around, Life Channel movies murmuring in the background, papers of evidence piled high hither and yon to the left and right and on the floor and up in the cabinets and over in the bedroom closet and under the bed and out in the tool shed and across the lane in the trunk of the car and beyond the park to the storage rental space — to compose her J’Accuse!

Mr. Me’s contribution to this opus? Executive Assistant. In charge of fetching, feeding, cleaning, shopping, sounding boarding, commiserating, encouraging, swatting flies and stepping on spiders, getting out of the damn way, and any other type of action that contributed to her humming along the road to completion.

 So this is what it’s like to be a lowly, unsung, housewife, I mused. It has an anonymous comfort to it, I suppose. Not much plotting or conniving involved. Steady, meaningful work. Very brief moments of satisfaction. Very brief. Lots of room for day dreaming. It was definitely not as enjoyable as being a useless male asshole, but I think I could learn to live with it, if such should become my fate.

When Mary had completed her work, she emailed it, along with pages and pages of evidence, to Claudia. Who then organized and composed it in legalese, attached all Mary’s evidence as exhibits, and mailed it to Peralta.

We high fived and sat down to wait.

Was this the Moment? Was this the Day? Was this the Time? Today? That Greatest Moment of Them All?

Nay. Nope. Nada. Nyet. Non. Nae. Nein und abermals nein! Fuhgeddaboudit!

When Claudia informed us that she had received a response to her Demand Letter, there appeared a new wrinkle in our inkle.

The response came from Parametric Technology, not Arbortext. The entire cast of evil, sneaking, entrails dwelling Arbortext characters we had learned so much about and grown to loathe so passionately had disappeared out the back door, wallets stuffed to overflowing.

In their stead was one person at Parametric. Paul Cimino. Parametric’s corporate counsel.

His response foreshadowed by a couple of years O.J.’s book proposal idea of If I Did It. In Cimino’s case, it was “If We’re Guilty . . ., so what? It all washes out if Blueberry accepts, ta da, a pay off of $100,000.”

 

Note:

See Exhibit T for Claudia Rast’s Demand Letter to Arbortext.

See Exhibit U for a picture of my brains splattered against the RV wall. Just kidding! Exhibit U is still available for use in a later chapter.

To be continued . . .