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That's Incredibly Shady
Joseph Nocera
October 11, 1999
The SEC sacks Fran Tarkenton for his alleged financial faking
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October 11, 1999

That's Incredibly Shady

The SEC sacks Fran Tarkenton for his alleged financial faking

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Since retiring from the NFL in 1978, Hall of Famer Fran Tarkenton has portrayed himself as an "entrepreneurial dynamo," to borrow a phrase from the jacket of his 1997 book, What Losing Taught Me About Winning. As the title suggests, he has built a thriving career by peddling the notion that his "finely tuned business acumen" (that jacket again) is something you, too, can acquire if you heed his pearls of wisdom.

Last week Tarkenton's business reputation suffered a big blow. He agreed to pay $154,187 in fines after the Securities and Exchange Commission accused him of helping direct a multimillion-dollar fraud. Tarkenton did not acknowledge wrongdoing, but the SEC alleges that his software firm, KnowledgeWare, claimed $8 million in phony revenues in 1993 and '94. Toward the end of each quarter, when it became apparent that the company wouldn't reach its revenue goals, the SEC says, KnowledgeWare sent products to resellers and other customers, then booked those transactions as income even though the customers were told they wouldn't have to pay unless they made a sale. That's accounting fraud, designed to hide a struggling company's true condition from investors.

Even before this slap on the wrist from the feds, the three-time Super Bowl loser's reputation as a businessman was wildly inflated. KnowledgeWare, which Tarkenton founded in the early '80s and took public in '89, had degenerated shockingly by the early '90s. "As a software executive, Fran was in way over his head," says Mitchell Kertzman, the former CEO of Powersoft, a competitor. Industry insiders say KnowledgeWare put out a series of products that simply didn't work well, something Tarkenton never acknowledged. When Tarkenton had a chance to unload the company in '92 for $360 million, or $23 a share, he spurned the offer and held out for more than $40 a share. When he was finally forced to sell two years later, he got only $4.77 a share. But Tarkenton took care of himself, negotiating a $300,000 annual consulting fee with the new owner, Sterling Software of Dallas. He also received $6.4 million in Sterling stock options. (He no longer has any relationship with Sterling.)

Last week Tarkenton's lawyer said his client was "pleased to have this matter resolved" and had "long since moved on...to other business ventures." Given Tarkenton's history with KnowledgeWare, that's a scary thought.

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