Dead Solid Pluperfect

A Hot Buttered Guff™ Production

Arbortext Accounting Fraud #36: The Plante Moran Cover Up

Chapter Thirty-Six

The Plante Moran Cover Up


After the Christmas holidays, Robinson informed Arbortext he was returning for another forensic poke around to placate our concerns. After one day of poking, Arbortext closed its doors to him for nearly two months. He could not get back in to follow up on his fact finding. A return to the Kessler Barricade philosophy. Whenever any real investigation occurred or threatened to occur to the Arbortext accounting system, they freaked out and locked the doors.

Hey, Mark. Old number head. Seem a little suspicious in your Significant Experience?

And no wonder. His one day in there getting a perhaps unexpected print out of the License Key database, which recorded the licenses given to customers who had bought or been given the right to use our software technology, had, in Robinson’s phone call words with Mary, “significant discrepancies” compared to the licenses reported to Blueberry on its royalty reports.

Arbortext had been fully prepared to snow job him during his non-forensic efforts (forensic was apparently not standard procedure for him, but had to be Begged for), but they were caught off guard by his sudden return and the cracks in the façade of honest books appeared almost immediately.

This was bad enough, but, as we would eventually discover, Arbortext had a much larger concern on its greasy hands. For, coinciding with Blueberry’s audit, a no doubt thorough examination of their company was being conducted by a billion dollar company named Parametric Technology. An examination toward finalizing a $194,000,000 acquisition of Arbortext.

But more on that later. For the nonce, we only knew we had hit a nerve and Arbortext was suddenly not cooperating with the audit and had gone back to stonewalling. I will not suggest that this time was used to purchase shredding machines or to concoct alternative databases. No, that would be irresponsible and unprofessional speculation. More informally known as “Duh, Ya Think So?”

It was enough to make Dick Blair edge away from his 100% espousal of Dave Peralta’s $100,000 deal, though, which was quite an achievement. A year in the making. And even more stunning, old Hippopotamus Mouth Bernheim had not a peep of pop off from the profuse pontificatorium passing as his puss.

Mary and I waited patiently. More or less.

By late February of 2005, we grew restless with the delay and prodded Claudia Rast to send an official demand to Arbortext to re-open its doors. This seemed to do the trick and a week later Robinson returned and soon finished his fact finding forensing.

On March 21, nearly three years after we had first discovered Arbortext chicanery, the Plante Moran audit was issued. In final form. No input from us asked for. Just here it is and I’m done and here’s the bill.

It was a complete white wash. A Cover Up.

No mention was made of the “significant discrepancies” between the License Key Database and the licenses on the Royalty Report. That was apparently just for telephone wires. Not for the actual audit report. The Report itself can be viewed at the end of this chapter.

Robinson spends the first eight pages of his eleven page report explaining how he familiarized himself with Arbortext and its products vis a vis Blueberry. Then he begins to deal with the issues. My comments inserted between brackets ([ ]).


5. Specific items that were reviewed at the request of Blueberry.

19 SKUs from an old SKU listing

We were requested by Blueberry to investigate 19 specific SKUs that were part of an older SKU list that is in the possession of Blueberry. Exhibit D lists the 19 SKUs, an indication as to whether the SKU is still a current SKU, a description of the product, and the Arbor-text sales, by year, for the products.


Stressing the word “old” here is irrelevant and purposefully misleading. If an SKU existed, it was used and products were sold that required royalty payments to Blueberry. This list of SKU revenues amounts to $711,945. None of it was reported to Blueberry. Mark Robinson has no further comment on our “request” to investigate these SKUs or why none of this revenue was reported to Blueberry. In addition, it appears as though only ONE Site License was ever sold to a customer!

Mark, the words needed here are: More Investigation Called For.


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 (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 (refer to Exhibit D for amounts).


E-Catalog (a.k.a. Intermarket) relates to much more than, Mark. As the evidence we sent to you (see Exhibit E and Exhibit F) most surely indicates. However, the $100,000 received from is paid in 2001 and not reported to Blueberry, which you do not mention. Your comments regarding the agreement and its abandonment come straight from the emails of Karen Sharplin, the new Arbortext Controller and Head of Finance – not from your forensic efforts.

Her first email informs you that this product was never developed and never sold. After we provided you with an SKU to look for, you discovered the MRO sale, and then Ms. Sharplin emailed you the baloney you are repeating here.

What you don’t mention Mark is that she lied to you in the first email which denied the existence of the Intermarket product, and attempted to cover up the lie and confuse the issue in the second email. See Exhibit P for the first email. The second email will not be discovered by us until later when we gain access to the Working Papers.

The MRO joint effort may have been abandoned in September of 2000, but Intermarket itself was not. Zoltan Gombosi and eleven other programmers continued to work on this product for another year. It was released in January of 2001. You can type “Arbortext Intermarket” into your Google search bar as I type these words and find pages and pages of references to this product. Hurry! They’re disappearing fast.

Or you can simply visit this web site page and enjoy the splendid PowerPoint presentations concerning E3 and Intermarket. We recommend E-Content Power-Hour #7. You will come across a suggestion therein to phone up Vice-President of Product Marketing Mr. P. G. Barlett for information on Purchasing Intermarket. If this site has somehow disappeared when you click on it, just drop me an email at and I will get it restored.

Robinson’s statement that the MRO sale reflects the “total revenue that Arbortext received that was related to E-Catalog” is totally false.

More Investigation Needed would not suffice to flesh out your comments here, Mark. This section goes beyond a White Wash and amounts to a Cover Up, plain and simple.


Arbortext Partners

We selected 15 Arbortext Partners in order to examine the quantity of software that was distributed to those Partners. The Partners that were reviewed and the type of relationship to Arbortext are as follows:

. . . list of partners . . .

Exhibit E shows the quantity and type of software that has been distributed as demos to each Partner as well as any software sales. In the two cases where a Partner purchased the software, we verified that software purchase in the Cumulative Royalty Report sent to Blueberry, Exhibit A.


So, in only two of fifteen cases on your Exhibit E did an Arbortext Partner actually purchase the software and generate a royalty for Blueberry. The other thirteen were evidently given away for free. Demos. Scaled Up Opportunities. Whatever.



In order to review the software distribution and the recording of sales, we reviewed the customers listed in Exhibit F. Exhibit F shows all products that were distributed to the particular customer as well as the associated revenue. We verified that the Active Licenses identified in the “Key Database” (WP-19) had revenue associated with them in the Total Arbortext Sales Database (WP-1), We also verified the number of Active Licenses with the number of licenses reported in the Cumulative Royalty Report sent to Blueberry, Exhibit A.

During our preliminary review of the “Key Database” we found several instances where a customer had additional licenses available to them as compared to purchased licenses. This discrepancy was mainly attributable to poor record keeping practices at Arbortext prior to 2003. The current key distribution system is linked with the current product sales and is automated versus manual and is less prone to errors.

After our initial findings Arbortext performed a review of the “Key Database” to fix these errors. We reviewed the corrections to the key database with a sample of customers that had been recorded in error. Testing included matching active license keys to purchased license keys for the sample (WP-19).

In reviewing the revised active license keys database (WP-19) related to Blueberry software, we identified a total of 2,245 active licenses through Q3 2004. Based on the Blueberry royalty report (Exhibit A) there were a total of 2,284 purchased licenses through Q3 2004.

The discrepancies from purchased licenses to active licenses are mainly attributable to customers not utilizing all products purchased (one specific customer accounts for a substantial portion of this difference). Additionally, Arbortext has put procedures in place to review purchased licenses to active licenses as each renewal maintenance occurs.


So, Mark Robinson essentially allowed Arbortext to clean up their accounting system “errors” without providing any information as to what those errors were and what impact they had had on Blueberry’s royalties. Mark, Blueberry is not concerned with how many licenses were in the database after Arbortext cleaned it up, we are interested in how many were there before they cleaned it up.

And the current “automatic” system, which now has replaced the old “manual” system is still prone to errors! In fact, the active licenses still did not match the royalty report.

Robinson focuses on the words “active licenses.” This is irrelevant except for purposes of a cover up. Whenever a purchase is made, a license is recorded in the License Key database. It remains there whether the license is ever “activated” by the customer or not. Blueberry itself has unactivated licenses in this database. All of these licenses have been purchased and royalties are owed. This is the only fact of relevance to Blueberry and Robinson does not address it. Even though it is obvious that the License Key Database and the Royalty Report do not match. Not even a hint that More Investigation Is Absolutely Imperative!


Your Conclusion here is missing this point, Mark: Blueberry’s contention that Arbortext’s Royalty Report is not accurate is CORRECT. That is an inescapable fact and if you had mentioned it, it would have vastly changed the impact of this entire audit report.


Specific Customers

Exhibit G lists five specific customers that are believed to have Blueberry software based upon references found by Blueberry on the internet. Exhibit G also shows the results of our comparison of the Key Database, the Total Arbortext Sales Database, and the Cumulative Royalty Report.

 LRN – The Internet reference suggests that LRN has Interchange. The Key Database, the Total Arbortext Sales Database, and the Cumulative Royalty Report are in agreement that LRN purchased Interchange and Blueberry was paid a royalty (WP-15).


Blueberry did not ask about this customer. It was merely part of an email thread in an exhibit we sent to Robinson about a customer (Trellis Neutech in Singapore) that we did ask about. Making this the first entry here smacks of an attempt to trivialize Blueberry’s concerns. IMO.


• Planetgarden – In a description contained on Arbortext’s website under “Our Customers,” it is suggested that has the ability to achieve results that are the same as what is accomplished with Interchange. From a review of the Key Database, there are no active licenses with for a Blueberry product. The Total Arbortext Sales Database shows that they did, however, purchase Adept Editor, Epic Editor, training, and consulting services from Arbortext (WP-16).


Well, since Adept Editor, Epic Editor, training and consulting do not provide Interchange capability, yet Planetgarden has this capability, perhaps it should be noted that More Investigation Is Needed.


• U.S. Coast Guard – A solicitation notice from the U.S. Coast Guard requests maintenance on 2 E3 single processor licenses and 2 E3 quad processor licenses (WP-18). Our review of the Key Database and the Total Arbortext Sales Database both agree that only one E3 single processor license and 1 E3 quad processor license were ever sold to the U.S. Coast Guard. This finding agrees with the Cumulative Royalty Report as well.


In other words Mark, the solicitation notice from the Coast Guard (which we sent to you) requests maintenance on 4 E3 licenses, yet only 2 are in the Sales Database, the Key Database, and the Royalty Report. Thanks for glossing over this point that Blueberry did not receive royalties on HALF of the Coast Guard sales. In fact, these sales seem to be missing from Arbortext’s records entirely, just like the $4,000,000 in Intermarket sales. You don’t seem to be mentioning that this is a PROBLEM.


• DFAS SB/FPA (Hill AFB) – This was another customer that was serviced by the same distributor that handled the U.S. Coast Guard order. Our review of the Key Database and the Total Arbortext Sales Database both agree that only one E3  Print/Web/Interchange license was sold. This finding agrees with the Cumulative Royalty Report states as well.


Once again, Blueberry did not stress this customer as a problem.


• Trellis Neutech S. Pte Ltd (Singapore) – The internet reference suggests that Trellis Neutech has E3. Our review of the Key Database and the Total Arbortext Sales Database both agree that Trellis Neutech has never been a customer of Arbortext. It is uncertain as to how Trellis Neutech may have obtained E3.


The “internet reference” does not “suggest” that Trellis Neutech has E3. It flatly states it, via a Trellis Neutech employee asking for internet tech support (from LRN) for his on going use of E3. If it’s uncertain how he got E3, perhaps More Investigation Is Needed.

Are we seeing a Pattern here of the need to Investigate Arbortext’s books and records? I’m sure you’ll mention this in your Conclusions section, right Mark?


Or maybe you won’t.

Robinsons’s Conclusions are quite remarkably bland of, well, conclusions. Except to limit them to only three areas of potential discrepancies! Allocation of E3 Revenue, Maintenance Revenue, and the relationship.

On the first two, if Arbortext’s explanations and reasoning are correct, everything’s fine. Otherwise, it’s not. Gee, Mark. I think we all knew that before we paid you one half of your $28,000 fee to do some actual forensic auditing.

The third conclusion regarding is particularly galling and represents Robinson’s second attempt to cover up the Intermarket product (bold again added):


“ Relationship – As detailed in Exhibit D, Arbortext received revenue from E-Catalog and a Site License. It is unclear as to what software components are contained in E-Catalog or are part of a Site License. Plante & Moran has certain documentation regarding this relationship and sales revenue (WP-10) but will defer to Arbortext as to what information can be provided to Blueberry.”


The above paragraph, carefully disguised, is Mark’s way of discussing our evidence of the $4,000,000 in hidden/missing Intermarket sales. We had not initially sent him any of our evidence about Intermarket, hoping he would just discover it on his own, but in his first examination of Arbortext, he had failed to find any sign of it. Or perhaps didn’t even look for it, even though it was pretty “significant” to us. So, in late February, before he went in for his final forensing, we faxed him Zoltan Gombosi’s resume and our Intermarket evidence. See Exhibit Q for our faxed remarks to Robinson.

Subsequently, he came up with the transaction and how does he address our evidence and our faxed concerns regarding this? By claiming not to know what software is contained in E-Catalog (Intermarket) nor what is contained in a Site License, even though he has documentation regarding it and WILL NOT ALLOW BLUEBERRY TO SEE THIS DOCUMENTATION UNLESS ARBORTEXT OKAYS IT!  

This also finishes off his attempt to limit any investigation of Intermarket entirely to this one sale, just as Arbortext itself attempts to do – after getting caught in a lie about its existence. The fact is, we never asked about The relationship between Arbortext and MRO has no bearing on Intermarket’s existence or sales.

Is it okay for me to suggest that Plante Moran is not behaving as an “independent auditor” here?

Sheesh. What a rip-off. Obviously, our half of Robinson’s fee was not nearly as equal in significance as was Arbortext’s half. In fact, it seems more that Robinson’s report succeeded in pointing out to Arbortext the problems in their accounting system and record keeping so they could fix them and be more presentable for things like an IPO filing or an Acquisition or a day in court. Which meant Blueberry’s money helped fund a clean up of Arbortext!

Exactly 180% from what we spent our money to obtain.

Well, Mr. Robinson, Blueberry will eventually see this documentation and all the other Working Papers you gathered but somehow managed not to address or investigate and we will discuss your audit report in far greater detail at that time. When it “plays out,” so to speak. In Chapter 45: The Smoking Gun to be precise.

For now, you really put the screws to us, Mr. Mark Robinson. Thanks a whole bunch.

It was interesting to note that Jim Sterken, the mastermind behind the fraudulent books, did not appear on the list of Arbortext personnel that Robinson interviewed. Nor was the Controller and implementer, Cherie Van Allen. She had evidently been replaced as Controller by a Karen Sharplin. Jim Haggarty was still around, and so was Cherie Van Allen’s husband, Senior Systems Analyst Philip Van Allen, who had performed the “logic” of the royalty reporting scheme.

Robinson was not going to be the one who sounded the alarm on a local Michigan business. Not during its time of Acquisition. And the audit we had fought through hell to achieve had turned into just one more outrageous abuse of legal and business ethics. 

Toon time for the two of us. Bartender, make that a quadruple double.



See Exhibit R for Mark Robinson’s Plante Moran audit report.

To be continued . . . Free Hit Counter website statistics


August 11, 2008 - Posted by | Business, News, Software, Stories, Writing | , , , ,

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