Dead Solid Pluperfect

A Hot Buttered Guff™ Production

Arbortext Royalty Fraud: Chapter Five

Something Stinky in Rottenburg

Now what.

Blueberry had product, but no Person. Scanning the horizon, it was clear that only one person in the world was qualified to replace my abdicated ex-partner. The qualifications necessary for this replacement were quite simple, but extremely rare. The person had to be someone I knew and trusted. There was only one. My wife, Mary.

She was the mother of six children, five girls and one boy, and didn’t know anything at all about the software industry or even much about Blueberry, other than whatever she could glean from my mutterings and ramblings concerning it. She was, however, an exceptionally sharp and tenacious person who would, in a very short time, teach me more about my own company than I had ever known before. Or wanted to.

After an accidental phone conversion with Mary, Jim Sterken was so impressed with her that he recommended I hire her, not realizing I already had. He would no doubt come to rue that recommendation in the coming months and years. The “little wifey” he imagined would become the “lioness that roared.”

I suppose Mary and I got our first inkling that Jim Sterken was not a Rotary Club CEO soon after she took over and we got our first quarterly royalty report for the third quarter of 2001. The royalty reports previously had been sent to He Who Is Gone. I had never seen one.

Actually, all we received was a royalty check for the minimum guaranteed amount of $7,500. A significant decrease in the $17,500 quarterly guarantees of the contract’s first year. I had paid scant attention to this contractual lessening up to now since I had assumed the royalties would zoom over the minimum guarantee in no time flat. Which they had mysteriously not done. And now they were astonishingly not even greater than $7,500! A mere $2,500 per month!

A contract I had believed would be very lucrative was turning out to be an utter microscopic dribble. The worst contract we had ever signed. Which also entailed the most work on my part to maintain!

Something was definitely stinky in Rottenburg.

The royalty check was accompanied by no royalty report. Upon my partner’s internment, Jim Sterken had sent me an email that stated “In the future, please address all contract/financial/billing questions directly to me.” These matters had always been handled by the Accounting department under Dwan’s watch. Naïve brain that I was, this reassured me. Personal treatment from the CEO himself.

So I emailed him with the information that no royalty report had been sent. He apologized and said, “I’ve asked Jim Haggarty, our head of finance, to prepare a royalty statement.”

Hmm. Mary and I both inkled that we had been sent the minimum payment without Arbortext even bothering to run a report and determine the actuals due. Not exactly kosher, it seemed to us. In fact, it seemed very suspicious.

According to Mary’s Internet sleuthing, Arbortext was roaring along out there making millions of dollars since they’d brought us aboard and begun crowing to the world about the new import/export capability they possessed. It was the first thing they touted in every press release they made about their Epic products.

How come we weren’t roaring along, too?

Further inkles were soon forthcoming.

“Jim Sterken is no longer the CEO,” Mary informed me over coffee one morning. “He’s now the head of the Engineering department. A guy named Ray Schiavone is the new CEO.”

“How do you know that?” I asked.

“It’s on the Internet. I’ve been researching Arbortext and its products and the people who run it. Did you know Sterken is a fierce paddle ball player? He’s described as very competitive. When he was asked if he had it made now, he said he didn’t have a BMW yet.”

“He needs a BMW to signal he has it made?”

“That’s what he said.”

“Is a BMW higher up on the made-it scale than a ten year old Honda Accord? I thought having it made was living long enough to collect Social Security.”

“The point is our royalties are not being handled by the CEO or the Accounting department, but by the Engineering department. Pretty weird, if you ask me. And that’s not all. I’ve examined Arbortext’s web site pretty thoroughly. They list every main product they sell except one. Ours. Interchange is not listed at all, though its functionality is touted in every article and announcement they make. It seems very strange to me that they are experiencing such record growth with all these new products they’ve released which include your technology and yet you are not getting any such growth in your royalties.”

Despite Sterken’s assurance he would have a royalty report drawn up and sent to us, it took another request from me and three whole months before it was finally delivered in early January of 2002.

The report was in the form of a spreadsheet and was a cumulative report, listing all royalties from the inception of the contract. There were no royalties recorded at all for the first five months of the contract, July through November of 2000. The fully approved product had not been released until December of 2000, so this five month gap did not, as I mentioned previously, set off any alarms.

The reason we were getting only the minimums, and not the bountiful flow of royalties I had assumed would come, now became partially clear. Our cumulative sales had not yet caught up with the minimums they had paid. To our surprise, cumulative was being interpreted by Arbortext as continually on going, rather than restarted each year with a minimum amount to be paid each year. The result was that we owed them money, not vice versa.

Working my butt off for negative income. What a novel approach to fiscal well being. This contract was not only the worst we had ever signed, it was total insanity! Was Blueberry destined for a permanent listing in Guiness Records for all time dumbest, by an incredible margin, company? The very thought of it hurt my teeth.

While I slumped inside myself and dwelt on doomsday scenarios, Mary plodded forward with relentless thoroughness. Not content to merely accept the report’s totals at face value, she hauled out a calculator and manually added up all the monetary and numerical columns of the seven page report.

“It’s $464 off,” she announced.

“$46.40 of royalties. For us or against us?” I replied, barely interested.

“Against us. But that’s not the point. The point is the report isn’t automatic. It’s capable of being edited. Somebody blew a spreadsheet calculation. During an edit.”


“Why are they editing it and what are they editing?”

“I see your point.”

“I’m going to call Jim Sterken.”

“What?! You can‘t just call him up.”

“Sure I can.”

To be continued . . . Free Hit Counter website statistics


June 16, 2008 - Posted by | Business, Law, Life, News, Software, Technology, Writing | , , , ,

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