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:
http://www.bbvforums.org/forums/messages/2197/14323.html
John Elder prison records:
http://www.bbvforums.org/forums/messages/2197/14320.html

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:
http://www.bbvforums.org/forums/messages/2197/2368.html

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:
http://www.bbvforums.org/forums/messages/1954/4447.html
Undisclosed lobbying by Juan Andrade:
http://www.bbvforums.org/forums/messages/1954/5595.html

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):
http://www.bbvdocs.org/legal/JonesDayLies.pdf
Jones Day prepping Diebold to lie about San Luis Obispo Election Day
database leak :
http://www.bbvdocs.org/legal/JonesDaySLOprepLies.pdf
more about San Luis Obispo:
http://www.blackboxvoting.org/bbv_chapter-13.pdf

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:
http://www.bbvdocs.org/legal/dunndeclaration.pdf

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.

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FOOTNOTES:

(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.

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