Dead Solid Pluperfect

A Hot Buttered Guff™ Production

Arbortext Royalty Fraud: Chapter One

The Rape of Blueberry

A True Story About the Gang of Crooks
At Arbortext, Incorporated
And the Cover Up by Plante Moran

by
Steve Beigel
Copyright 2008 by Steve Beigel
All Rights Reserved

Chapter One

The Toad Ride Begins

Jim Sterken was a thief, a liar, and a scoundrel. A white collar, corporate crook.

I first met this malignant dingleberry in July of 2000 in Palo Alto when we signed a royalty contract between his company, Arbortext, Inc., and my company, Blueberry Software. Blueberry was to provide Arbortext with Import/Export functionality for their new Epic Editor and Epic E-Content Engine (E3) products. Our technology was to be called Epic Interchange (later called Arbortext Interchange) and would allow users of Microsoft Word, Framemaker, and Interleaf to convert their documents to XML format for posting and disseminating on the Internet.

We were, in Sterken’s words, a “very strategic” alliance.

At the time of the contract signing, Sterken was co-owner of Arbortext and its CEO. His company, located in Ann Arbor, Michigan, despite nearly twenty million dollars of yearly revenue, was running a ten million dollar deficit. Its auditor, KPMG, had just finished its 1999 audit and openly questioned whether Arbortext could continue to survive much longer.  Five years later, in July of 2005, Arbortext would be acquired by Parametric Technology, Inc for the astounding cash amount of $194,000,000.

Yes indeed. Blueberry was “very strategic.”

But not very remunerated. Stolen blind is probably the colloquial term for it.

Flat out raped.

The remuneration part of the strategic equation was sabotaged from the beginning by Sterken and my ex-partner, Kevin Dwan – Sterken by deliberate design; my ex-partner by a combination of sheer stupidity and treacherous intention.  A lethal mix.

I was guilty of gross naivete. Wishful thinking. Horseass logic. You name it, I had it smeared across my brain.

The signs were there in abundance. Beginning with my good old ex-partner. He approached me in early February of 2000, while we were still affiliated, with the idea of buying me out of my ownership in Blueberry. Very friendly about it. A purely hypothetical discussion between two life long buddies. College roommates. Fraternity alums. Best friends for life. Thirty-four years and counting.

The alarms that should have sounded, didn’t. When he first broached the idea, I was amused more than anything. To my knowledge, he didn’t have enough money to buy a new bicycle, let alone my early retirement. In addition, he would have to hire a programmer capable of taking over all of my work. But Dwan was an intricate thinker and I was curious what sort of complex scenario he had managed to concoct.

For some inexcusable lapse in sanity, it never occurred to me to wonder why he would want to buy me out.

Blueberry Software had been in the Document Conversion Import/Export business since I founded the company in the Spring of 1986. Our retail product was called Filtrix. Through the years, Blueberry had also developed OEM contracts with companies such as Applix, Island Software, Symantec, Sun Microsystems, Corel/Word Perfect, and now Arbortext, who bundled our technology inside their own programs and paid us royalties on their sales.

The hypothetical, friendly nature of Dwan’s Buy Out offer degenerated quite quickly into a threat to take over the business whether I liked it or not. There was no intricate scenario. Just a naked power play. He was the face and voice of Blueberry; I was the invisible programmer. In his view, I was nothing without him. Replaceable.

End of the Buddy half of our equation. Thirty-four years of friendship into the dumpster.

I mentioned to him that he had somehow grown up to become a worm and that any attempt to squeeze me out of my own business would result in the rearrangement of every bone in his body via my own personal knuckles.

Diplomacy was not my forte.

After three fairly contentious February meetings, the Why of things suddenly appeared. Arbortext.

He had neglected to mention them.

Indeed, it is highly probable that Sterken and Arbortext would never had considered a strategy of simply ripping Blueberry off for everything it owned if Dwan had exhibited anything remotely resembling a functioning power plant inside his skull. The temptation, for a sleaze bag like Sterken, was simply too much to resist. And therein lies the cause of infamy.

Dwan had approached Arbortext in late 1999 to inquire whether they were interested in purchasing Blueberry. Although Dwan and I had agreed it might be a good time to sell the company and get out of the ruthless software business, I was unaware of his contact with Arbortext until it forced itself into view in March of 2000 – a month after Dwan began his effort to force me out of the way.

And no wonder. The Arbortext contract would be a big boost in Blueberry’s fortunes. He wasn’t going to mention it to me at all. Hoping I would accept his buy out proposal before he signed the contract, and then he could advance straight to Go all by himself.

Nice try, Wartface.

There were some serious flaws in his evil strategy that even an armadillo should have been able to notice. The most important one was I had to do all the work to make the Arbortext contract fly. Once the contract was signed, his work was done. My work, the programming necessary to customize and keep upgraded the Blueberry source code, would last for the life of the contract.

Why did he think I would do all this work after he had power played me out of my ownership? While he was marching to his bank with all the proceeds? Excessive drinking had probably rotted quite a few of my brain cells over the years, but what was his excuse? Some degenerative gene inheritance at work that I knew not of?

At any rate, he also failed to clue Arbortext in on his scheme and, in March, their lead programmer contacted me to begin discussions about implementing the customizations to Blueberry’s source code that would be required to make the contract viable. Thus I learned of the impending contract with them.

And that Dwan was no longer trustworthy as a friend or a partner. More than untrustworthy. Traitorous. Pure and simple.

Not much in life surprised me any more, but this revelation did. I was stunned, actually. And, I admit, quite hurt. This was the sort of thing that happened to others, not him and me. We were good people. We valued integrity and honesty. We were not the kind of people who suspended all morality when it came to business.

What in hell had happened?

It got worse. Dwan was remarkably unfazed by this exposure of his idiot attempt at a coup. Unashamed! Even somewhat glad that he no longer had to pretend friendship or fairness. That he could openly enjoy gutting me and proving who was the superior fellow.

This sort of bald, open hatred for me was obviously not a sudden whimsy. It must have been festering for years. And now it was my turn to wonder how I had failed to notice it or even suspect its possibility. Through the years, our friendship had definitely plateaued – perhaps we no longer even liked each other much. But when did this become an enmity? Of totalitarian size and determination? You don’t kill a man just because you don’t like him any more.

It was a shattering moment. We were on the same side in life, the Good side. That was a given. A fact of our existence. When did he crawl across the line and become one of Them? How was it possible? Didn’t he realize he was throwing away everything he stood for? Who could suspect a man would do this to himself?

I didn’t, at any rate. And that’s my only excuse.

But now that the cataracts had been removed from my eyes, nothing between us would ever be the same.

While I went to work on the source code, he continued to discuss his buy out proposal as though it still retained validity. He even huffed himself up enough to let me know he wouldn’t sign a contract with Arbortext unless I first signed one with him.

As I’ve mentioned, we had known each other thirty-four years. How is it possible that he could have missed, in all that time, one of my basic, fundamental character traits? Suicidal bullheadedness. In addition, there was the other simple matter that we were co-owners and either one of us could sign the contract. Apparently, he felt this was over my head, people challenged as I no doubt was.

So, yes, the signs were all there that I was about to enter a long, long journey down into the rabbit hole. A journey that would wend its way through countless lawyers, a well known auditing firm, and two courts on opposite sides of the country. A journey that would leave debris and lives scattered along the trail like so many empty beer cans.

To be continued . . .
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June 9, 2008 - Posted by | Business, Life, News, Software, Technology | , , , ,

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