Wednesday, December 21, 2005

CA Secretary of State kicks Diebold certification back to the feds

I'm interrupting my vacation time to share some breaking news....yesterday California Secretary of State Bruce McPherson issued this press release announcing he is returning Diebold's latest voting system application to the federal testing authorities for further evaluation. Here is an excerpt from the letter the SoS sent to Diebold:


Unresolved significant security concerns exist with respect to the memory card used to program and configure the AccuVote-OS and the AccuVote-TSX components of this system because this component was not subjected to federal source code review and evaluation by the Independent Testing Authorities (ITA) who examined your system for federal qualification. It is the Secretary of State's position that the source code for the AccuBasic code on these cards, as well as for the AccuBasic interpreter that interprets this code, should have been federally reviewed.


There are several news stories today about this development. For further details, see John Wildermuth's article in the San Francisco Chronicle, Ian Hoffman's article in the Oakland Tribune, and Greg Kane's article in the Stockton Record, excerpts from which are featured below.


At issue is the software language Diebold uses in the memory cards for both machines, according to a letter from state elections chief Caren Daniels-Meade. Critics say it contains a security flaw that allows outsiders to access and manipulate ballots.

Jennifer Kerns, a spokeswoman for McPherson's office, said Tuesday that the source code wasn't reviewed in a previous federal inspection of the OS and TSx machines. A Finnish computer expert reportedly used the flaw twice to hack into OS memory cards during separate tests in Florida this year.

San Joaquin County Registrar of Voters Deborah Hench said Tuesday that she doesn't believe a new round of testing would reverse the government's approval of the equipment. However, the latest delay in the state's certification of the TSx system leads Hench to wonder if the 1,600 machines the county agreed to purchase for $5.7 million will be available for elections in 2006.

"It makes it less and less likely that we'll be able to use it for the June election," Hench said. "What else are they going to make Diebold do to get certified?"

Friday, December 16, 2005

On vacation until the new year....

I'll be on vacation for the holidays and back to work at the beginning of the new year. My blog will be on hiatus during this time. I hope everyone has a happy and restful holiday season!

Thursday, December 15, 2005

Securities fraud class action filed against Diebold

A class action filed against Diebold may have contributed to Wally O'Dell's departure as the company's CEO. This news release from the Connecticut law firm Scott+Scott provides further details. Excerpts are below.


COLCHESTER, Conn., Dec. 13 /PRNewswire/ -- Scott+Scott, LLC (, at the direction of clients, has filed a securities fraud class action in the United States District Court for the Northern District of Ohio against Diebold Inc. ("Diebold" or the "Company") (NYSE: DBD - News) and individual defendants. Presently, the class is defined in the complaint drafted by Scott+Scott as those who purchased Diebold securities between October 22, 2003, and September 21, 2005, inclusive (the "Class Period").


The complaint alleges that defendants violated provisions of the United States securities laws causing artificial inflation of the Company's stock price. According to the complaint, during the Class Period, the Company lacked a credible state of internal controls and corporate compliance and remained unable to assure the quality and working order of its voting machine products. It is further alleged that the Company's false and misleading statements served to conceal the dimensions and scope of internal problems at the Company, impacting product quality, strategic planning, forecasting and guidance and culminating in false representations of astonishingly low and incredibly inaccurate restructuring charges for the 2005 fiscal year, which grossly understated the true costs and problems defendants faced to restructure the Company. The complaint also alleges over $2.7 million of insider trading proceeds obtained by individual defendants during the Class Period.

Finally, investors learned the truth about the adverse impact of the Company's alleged defective and deficient inventory-related controls and systems on Diebold's financial performance. As a result of defendants' shocking news and disclosures of September 21, 2005, the price of Diebold shares plunged 15.5% on unusually high volume, falling from $44.37 per share on September 20, 2005, to $37.47 per share on September 21, 2005, for a one- day drop of $6.90 per share on volume of 6.1 million shares -- nearly eight times the average daily trading volume.

Tuesday, December 13, 2005

Controversial Diebold CEO resigns

Yesterday Wally O'Dell, chairman and CEO of Diebold, Inc., announced he is resigning effective immediately. This news comes at a time when Diebold's prospects for future sales of voting machines in California are up in the air pending the state's certification of its TSx electronic voting machine. Another blow against the company came last week, when the Electronic Frontier Foundation sued North Carolina for certifying voting equipment from Diebold and other manufacturers that failed to meet state certification requirements.

Excerpts from Dave Scott's article in today's Akron Beacon Journal are featured below.


Controversial Diebold Inc. Chairman and Chief Executive Wally O'Dell resigned Monday, only a few days after meeting with the company's board.

A company statement cited personal reasons for the resignation, which took effect immediately.

Thomas W. Swidarski, a rising star in the company recently put in charge of an important restructuring, was named O'Dell's successor. John N. Lauer was named nonexecutive chairman.

Diebold's stock has fallen out of favor as it has dealt with poor results from its voting machine business and disappointing cost-cutting efforts in the automated teller machine division.

Monday's announcement came after the market closed with Diebold shares up 11 cents to $37.73, but down 32.3 percent for the year. The shares reached a high of $57.81 earlier this year.

``The board of directors and Wally mutually agreed that his decision to resign at this time for personal reasons was in the best interest of all parties,'' Lauer said in a news release issued after markets closed Monday.

O'Dell, 60, had been with Diebold since 1999. He was not quoted in the release and was not available for comment. The company did not elaborate on the ``personal reasons.''


On Monday, Swidarski, 46, also was named to the board of directors.

``I will have more to report on our progress and plans for 2006 and beyond during our fourth-quarter and year-end conference call with investors in January,'' Swidarski said in the release. He was unavailable for additional comment.


Swidarski joined Diebold in 1996. He held a variety of banking positions before that, including a stint as a senior executive of PNC Bank.

Green-based Diebold went into business in 1859 making bank vaults. Most of its sales these days come from automated teller machines. But much of the attention the company has received recently came from its relatively new business of making election machines.

O'Dell gained national attention when he invited people to a fund-raiser for George Bush with a 2003 letter stating he planned to help ``Ohio deliver its electoral votes to the president.''

Critics howled that the maker of voting machines should not be involved in partisan politics. The company has since forbidden its top executives from making political contributions.

The company has been disappointed as legal and technical problems and political issues have prevented boards of election from buying election machines as quickly as first anticipated. The company also announced in October that Hurricane Katrina slowed the sale of ATMs to some Gulf Coast states.

Friday, December 9, 2005

Survey: Internet can help people gain political power

A new survey by the USC/Annenberg Center for the Digital Future finds that a growing number of people in the U.S. are using the Internet to be informed and involved in the political process. Excerpts from Grant Gross' Computerworld article on the survey are featured below.


Just under 40% of U.S. Internet users believe people can increase their political power by going online, up from 27% of Web surfers who thought that when surveyed in 2003, according to an Internet research center.

This year marked the first increase in the percentage of U.S. users who believe the Internet can help people gain political power, said the Annenberg School Center for the Digital Future at the University of Southern California. The center has been conducting surveys on Internet use for five years.

"Print and broadcast forever changed politics," said Jeffrey I. Cole, director of the center. "They certainly made the audience feel more informed, but print and broadcast never made the audience feel more empowered politically."

Until this year's responses, Internet users didn't feel politically empowered either, Cole said. But a number of factors, including the growth of blogs and Democrat Howard Dean's Internet-centric presidential campaign in 2004, seem to have increased the visibility of the Web as a political tool, Cole said during a teleconference.


Cole pointed to growth in the number of Internet users who post their own content. This year, 6% of regular Internet users said they have their own blogs, 16% said they post pictures on the Web, and more than 10% maintain their own Web sites. In 2003, 3% of Internet users said they blogged, 11% posted photos, and less than 9% maintained Web sites.

Nearly 14% of Internet users under age 18 said they post their own content, compared with about 6% who did so in 2003. The growth in posting personal content is "reversing 450 years of media trends that was largely one way, from the source to the audience," Cole said.

The survey of people residing in 2,072 U.S. households during early 2005 found more than 60% of Internet users saying they believe the Web can be a tool to learn about the political process. That's up from 53% who said that in 2003. Just under 35% of nonusers agreed. The center defines nonusers as people who access the Internet less than once a month. The survey also found that 41% of Internet users went online to gather information about the 2004 U.S. presidential campaign.

Wednesday, December 7, 2005

Court hears Riverside County e-voting recount appeal

I've been offline for the past few days attending the Council on Governmental Ethics Laws' (COGEL) annual conference in Boston. Meanwhile, yesterday in Riverside a state appeals court heard Riverside county supervisorial candidate Linda Soubirous' case involving her request for a recount of the votes from her 2004 contest. Excerpts from Dave Downey's article in the North County Times are featured below.


Lawyers for the county and a candidate who lost a bid for county office clashed in court Tuesday over whether an electronic-vote recount was mishandled.

The hearing ended with state judges saying they would rule shortly in Linda Soubirous' appeal of a 2004 Riverside County Superior Court decision, which found that the county's former elections chief did not abuse her authority when she refused to consult certain information for the recount.

A three-judge panel from the California Court of Appeal, 4th District, has 90 days to issue a decision, and observers said a ruling is likely within 45 days.

Soubirous, a Lake Mathews resident, finished a distant second to Supervisor Bob Buster in a three-way primary race in March 2004 that also featured former Lake Elsinore Mayor Kevin Pape. If Buster had finished with less than 50 percent of the vote, she could have forced a November runoff between the two of them, but Buster finished with just a few dozen votes more than half and avoided the runoff.

Then, Soubirous demanded a recount.

The recount upheld Buster as the winner with a bare majority of votes. Soubirous then filed suit in July of last year, asserting officials did little more than "press the reprint button" when they rechecked ballots cast on electronic touch-screen machines.

Riverside was the first large county in the nation to adopt electronic voting in 2000, when it purchased 4,250 touchscreen machines for $14 million.

Early on, few concerns were expressed about them. As their popularity spread, so did concern that the machines could malfunction or be hacked into. That led California officials to pass a law requiring counties using touch-screens to keep backup paper records of electronic votes starting next year and use them for recounts.

Soubirous' attorney Gregory Luke, however, argued in court Tuesday that the new state law didn't erase all concerns about electronic voting. Luke contended there is still a need for a court to compel Riverside and other counties to consult all relevant backup information to make sure a recount is accurate.

When Soubirous asked former Registrar of Voters Mischelle Townsend to recount votes in the 2004 race with Buster, lawyers asked to see ballot information stored in the touch-screen machines used in the election. But, the county refused and, instead, chose to recount electronic votes solely by consulting the cartridges that recorded people's votes.

Attorney Charles Bell, arguing on behalf of Riverside County, maintained Townsend had wide latitude to decide what information sources to use for the recount.

"What you seem to be suggesting is that this is totally up to the discretion of the registrar," said Justice Jeffrey King, who asked Bell several pointed questions on that subject.

Bell said it would not be a good idea to open up all records because that would subject the county to the scrutiny of anti-electronic-voting groups seeking to find anything wrong with the touch-screen system to advance their cause.

"Is there anything wrong that?" King asked.

At the same time, the justices questioned why Soubirous was still pursuing the case, because the election ended long ago and Buster started his fourth term more than a year ago.

"So what are we going to do? Move Mr. Buster out? Isn't she out of luck?" asked King. "This is something that this court can't remedy. It's just water under the bridge."

Luke countered that his client wasn't looking to boot Buster out, but rather to prevent Riverside County from keeping vital electronic-vote information from people who request recounts in the future.

Friday, December 2, 2005

North Carolina illegally certifies Diebold e-voting system

The Electronic Frontier Foundation issued this news release today about important developments in North Carolina, where Diebold has been awarded certification despite failing to comply with the state's election law requiring the company to provide source code and the names of all its programmers.

EFF was an intervenor in a court case that was decided earlier this week, in which Diebold lost a lawsuit against North Carolina's disclosure laws. Excerpts from the EFF news release are featured below.


The North Carolina Board of Elections certified Diebold Election Systems to sell electronic voting equipment in the state yesterday, despite Diebold's repeated admission that it could not comply with North Carolina's tough election law.


"The Board of Elections has simply flouted the law," said EFF Staff Attorney Matt Zimmerman. "In August, the state passed tough new rules designed to ensure transparency in the election process, and the Board simply decided to take it upon itself to overrule the legislature. The Board's job is to protect voters, not corporations who want to obtain multi-million dollar contracts with the state."

Last month, Diebold obtained a broad temporary restraining order that allowed it to evade key transparency requirements without criminal or civil liability. The law requires escrow of the source code for all voting systems to be certified in the state and identification of programmers. Diebold claimed that it could not comply because of its reliance on third-party software.

Monday, responding to EFF's arguments, a judge dismissed Diebold's request for broad exemptions to the law and told Diebold that if it wanted to continue in its certification bid, it must follow the law or face liability. Diebold had told the court that it would likely withdraw from the bidding process if it was not granted liability protection. But instead, Diebold went forward with the certification bid.

Diebold's certification now means it is permitted to sell e-voting equipment in North Carolina. But Zimmerman says that any county that buys from Diebold is taking a risk.

"If Diebold's certification is revoked, counties using their equipment could be left holding a very expensive bag," Zimmerman said.

Thursday, December 1, 2005

More coverage of the Secretary of State's Voting Systems Summit

Today's Oakland Tribune features an article by Ian Hoffman on this week's voting system summit in Sacramento hosted by Secretary of State Bruce McPherson. Excerpts are below.


Uncertainty clouds future of e-vote tests

Despite movement toward new standards for machines,

change may be years away

For 11 years, most states have relied on voting systems tested to minimal federal standards, the results withheld from public scrutiny and given the green light by a nongovernmental agency working on a shoestring budget.

The era of approving tools of democracy on the cheap is coming to an end, and judging by talk at a national gathering of voting experts here this week, few will be sorry to see it go.

Carnegie Mellon University computer expert Michael Shamos, a state voting-systems certification official for Pennsylvania, is one of the staunchest advocates for new, fully computerized electronic voting systems.

But judging by what he has seen emerge from secretive, private labs known as "independent testing authorities" and approved by the National Association of State Elections Directors, Shamos said, "There's stuff in there that's so horrible, I can't understand it."

He found a quarter of the voting systems presented to Pennsylvania unsuitable for elections, with such "glaring failures" as an inability to tally votes correctly. A recent study led by the University of Maryland showed all of six voting systems tested did not record 3 to 4 percent of the votes. What does pass state muster often can break down.

"I have good reason to believe that 10 percent of systems are failing on Election Day. That's an unbelievable number," Shamos told an assemblage of voting-system makers, elections officials and scientists. "Why are we not in an uproar about the failure of (touch-screen voting) systems?"


Vendors can spend several hundred thousand dollars getting a state's OK. Many states rely on the national testing alone and start buying approved voting systems almost immediately. Florida and Georgia rely almost exclusively on their own testing.

California uses both the national testing and its own, which under McPherson has grown in rigor.

His office now requires every voting-system maker to supply dozens of machines for a massive, mock election to ferret out manufacturing or reliability problems. McPherson also has agreed to let a computer expert try hacking into a Diebold system, and state officials are weighing whether to require the same kind of security testing for all voting systems.

Diebold and some local elections officials are frustrated that it has taken more than two years to get the firm's latest touch-screen approved for sale and use in California.

Partly because of the testing and Diebold's own delays, a quarter of California's counties, including Alameda, Marin and San Joaquin, probably will miss Jan. 1 federal and state deadlines for offering new, handicapped-accessible voting machines with a paper record. Local elections officials want several months of lead time getting used to the new machines before the June primary.

"He's risking another huge meltdown for counties," said Los Angeles County Registrar Conny McCormack, head of the state association of local elections officials. "It's a setup for failure."

But the testing has disclosed security holes, as well as a bug that caused one in five Diebold touch screens to crash if a voter slid a finger on the screen, and forced Diebold to fix frequent paper jams in a printer for ballot records. Fixing the "sliding finger" bug alone cost the firm at least $250,000.

McPherson said this week that deadlines will have to take a back seat to making sure voting systems are secure, accurate and reliable.

"There is no compromise where election integrity is concerned," he said. "I cannot in good conscience certify systems that are not fully tested. This is a one-time show, and we're going to do it carefully."