Documents, Ammunition: Diebold stockholder suit
Documents, Ammunition: Diebold stockholder suit
Two recent stories indicate that a Diebold stockholder lawsuit is imminent. When a stock drops significantly and cannot rebound for approximately two months, a stockholder lawsuit can result.
Diebold's first "hit" was in late June this year, when the company admitted to mis-stating ATM sales revenues in a stockholder conference call. Diebold's stock dropped again in late September upon the release of a glum sales forecast based on additional problems with its ATM division. http://biz.yahoo.com/ap/050921/diebold_outlook.html?.v=10
An impending stockholder's lawsuit was predicted by Black Box Voting on July 3, with a full blown story on this topic at BBV on Oct. 8. July 3: http://www.bbvforums.org/forums/messages/1954/6804.html Oct. 8: http://www.bbvforums.org/forums/messages/1954/10448.html
Today, Blogger Brad Friedman expanded scrutiny of potential stockholder litigation. http://www.bradblog.com/archives/00002126.htm#comments
AMMO FOR LITIGATION
- Due diligence failure on Global Election Systems acquisition
- Destruction of the Diebold brand name
- Persistent violations of the public trust
DUE DILIGENCE FAILURE
"We expect the U.S. voting marketplace to generate $1.5 to $2.0 billion in hardware revenue during the next four to five years," then-CEO Wally O'Dell was quoted as saying in Diebold's June 25 2001 "425" SEC filing. Sec Filing: http://www.bbvdocs.org/legal/GESNacquisition6-21-1.pdf
O'Dell has now been shuffled out of his CEO position following a series of gaffes, beginning with a letter he sent to Ohio Republicans promising to "deliver the election to Bush."
Diebold has collected less than one-eighth of the voting system revenue O'Dell projected to stockholders.
The SEC documents refer to embarking on a process of due diligence during the Global Election Systems acquisition. This due diligence is more fittingly described as doo-doo diligence. What else can you say when you buy a company whose product MUST elicit trust, yet the head programmer and, SEC documents reveal, the LARGEST STOCKHOLDER is a 23-count convicted embezzler? Something stinks.
Somehow Diebold let prison records for programmer and main stockholder Jeffrey Dean get by them, and also forgot to look at the prison records of John Elder, who they put in charge of their ballot printing facility.
Jeffrey Dean prison records:
John Elder prison records:
Their doo-doo diligence managed to miss some of the shoddiest voting software on the market. Here's how Dr. Herbert Thompson, a security expert and adjunct professor of computer science at the Florida Institute of Technology, describes the software: When asked what he would do if one of his students turned in a program like Diebold's, he said he would have to give them an "F".
DESTRUCTION OF THE BRAND NAME
Diebold's brand name has become a source of mockery. The New York Times featured a one-half-page photo of a chimpanzee altering a Diebold voting system -- yes, the chimp actually achieved this after a one-hour training session video of chimp hacking Diebold machine:
Diebold is lampooned in comic strips, bumper stickers and popular media. Hustler magazine published a full-page satire ad lamenting Diebold's role in the loss of democracy.
This is Diebold now. Just four years ago, this company had an untarnished brand name dating back to the 1850s. For some reason, Diebold decided to expend its excellent brand name on a tiny rogue division providing less than five percent of its revenue.
PERSISTENT VIOLATIONS OF THE PUBLIC TRUST
- Poor security
- Secretive practices
- Ethical violations
Diebold's ethical failures include funky and improperly disclosed lobbying, lying to at least three different secretaries of state, and bait and switch tactics with its voting system customers.
Link to Rose & Kindel under-reporting:
Undisclosed lobbying by Juan Andrade:
It is Diebold's ethical violations that we will explore further in this article. Let's look at "the story behind the story" on just one incident, chosen from of a veritable cornucopia of selections.
Documents were provided by Black Box Voting's Bev Harris and Jim March to the California Secretary of State's office and to the state Attorney General's office (on behalf of a courageous source). These documents prove legal misconduct, not just on Diebold's part, but on the part of their law firm, Jones Day. In these legal documents, Jones Day writes of plans to lie to the California secretary of state.
Jones Day lies about votercard encoder (see #9):
Jones Day prepping Diebold to lie about San Luis Obispo Election Day database leak :
more about San Luis Obispo:
After delivering the documents to state law enforcement authorities, the Jones Day documents were provided by Black Box Voting to Ian Hoffman of Ang Newspapers.
Hoffman was brave enough to take on the story, though it led to an unsuccessful lawsuit by Diebold's Jones Day law firm against his publication. Hoffman's newspaper prevailed on First Amendment grounds. The information was of critical importance to the public interest.
Harris also received a tip from an inside source from California named James Dunn. It had that authentic feel, so she turned it over to March, who lived near Dunn. March hopped on his motorcycle to take a declaration from Dunn(1). Dunn's testimony, also delivered in person to the secretary of state's Voting Systems and Procedures Panel (VSPP) proved that Diebold's lawyers lied about the votercard encoder, that Diebold had been warned that it would fail in the March 2004 California primary. Of course, it DID fail, and it represented the THIRD time Diebold used uncertified and unauthorized software after being explicitly told not to by the secretary of state. Declaration from Dunn:
The California VSPP grilled Jones Day (Diebold's law firm). "Were you lying, or simply trying to mislead us?" they asked.
Diebold lied. Jones Day lied. Diebold brought in a damage control expert, at a cost of over $100,000 in just a single quarter.
Then-secretary of state Kevin Shelley decertified Diebold's TSx machines, recommending the case to the California attorney general for prosecution.
Diebold directly caused the disenfranchisement of thousands of San Diego voters during a presidential primary, yet this company continues to ask for our trust.
The likely stockholder lawsuit is a positive sign. Attorneys for the stockholders will cream Diebold, because we'll be able to prove that Diebold failed to perform appropriate due diligence when they acquired Global Election Systems, failed to follow their own lawyer's advice, failed to follow the law, and marketed knowingly shoddy software using false claims.
If we do not consequate this kind of behavior, it will certainly result in civil unrest. Stockholder litigation should be followed by a nationwide recall of defective GEMS central tabulators. Also likely: A recall of the flawed optical scan system, which provides the opportunity for poll workers and other election officials to tamper with elections through credit-card-sized removable media.
(1) Take a moment to read the Dunn Declaration.
We would suggest that the Dunn Declaration be considered a blueprint for how a genuine insider's information should be treated. Even if not using a formal declaration format, the factual information has more power when sticking with just the facts, rather than interspersing commentary and opinion.
Black Box Voting is a nonpartisan, nonprofit 501c(3) elections watchdog. We are fighting for your right to oversee your own elections, for removal of secrecy, and for fair, honest and trustworthy elections. Black Box Voting is developing evidence and documentation to help you, as a citizen, fight effectively for clean elections.
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