well, you can just not do the quest for the unfriendly bully nord up in arrille's.
or you could return what you took from fargoth, leaving it silently in his house for him to find
(roleplay option for bad conscience; or look at it this way: he then knows that his hiding place isn't safe anymore, so you did him a favor actually)
never thought about killing him either.
and i only kill people "deliberately" when i carry a morag tong writ
not that anyone would ever care about a poor guy in seyda neen enough to place a writ...
and, well. he rises your reputation with arrille. reason enough to like him?!