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This story came out in the Contra Costa Times (CA) a few days ago but got little national attention. I find it quite fitting in the face of today's UC Berekeley Study pointing to potential problems with the voting machines in  Florida. see go down the page a bit - it's right under VOTING.

So, here's the scoop:

"Diebold agreed to pay an unprecedented $2.6 million fine after the state attorney general found it had lied about equipment sold in California and violated state laws...

State Attorney General Lockyer and Alameda County prosecutors accused the company of making false statements about the security of its electronic voting systems and its compliance with federal and state certification requirements.

the article is below

The settlement, announced Wednesday, would be the first such punishment of a touch-screen manufacturer. Other costs related to the agreement could force Diebold Election Systems of North Canton, Ohio, to pay out an additional $1.7 million.

The company would be required to beef up the security on its electronic voting machines and to provide the secretary of state with additional information about the development, testing, installation and operation of its equipment.

"This settlement holds Diebold accountable and helps ensure the future quality and security of its voting systems," Attorney General Bill Lockyer said in a statement.

Lockyer and Alameda County prosecutors had accused the company of making false statements about the security of its electronic voting systems and its compliance with federal and state certification requirements.

If approved by a judge, the settlement would end a lawsuit filed by two whistle-blowers and later pursued by Lockyer and the county prosecutors. A hearing in Alameda County Superior Court is tentatively scheduled for Dec. 10.

Diebold admitted no wrongdoing. In a statement, the company said that it believed it had "strong responses" to the charges but preferred to avoid prolonged litigation.

"This is a step we needed to take to move forward in California and hopefully work to rebuild trust in the state," said company spokesman Mike Jacobsen.

Jim March, a computer technician who filed the initial lawsuit, criticized the settlement for ignoring security flaws in vote-counting software that is used around the country. March is expected to ask the judge to postpone the deal at least six weeks until it is clear how Diebold's equipment performed in the Nov. 2 presidential election.

March and Bev Harris, a Seattle publicist who exposed the security risks of electronic voting through her book "Black Box Voting" and Web site, filed an initial false claims suit against Diebold in November 2003. Lockyer and Alameda County prosecutors intervened in that lawsuit Sept. 7 and crafted the settlement with company attorneys.

Under the settlement, Diebold would pay $1.62 million to the state of California and $475,000 to Alameda County. Another $500,000 would go to the Institute of Governmental Studies at UC Berkeley to fund research aimed at training poll workers to use new voting technology.

March and Harris are entitled to claim a portion of those fines and to recover attorneys fees and other costs.

In addition, the settlement requires Diebold to compensate Kern, San Joaquin and San Diego counties, which were forced to pay for optical-scan equipment for this month's election after Secretary of State Kevin Shelley banned the use of a new Diebold touch-screen voting machine they had purchased.

And Diebold must reimburse Alameda, Plumas and Los Angeles counties, which were forced to implement additional security measures to use an older model Diebold touch-screen.

In a statement released Wednesday, Diebold estimated the settlement, combined with the additional cost of reimbursing California counties and other associated expenses, would cost 6 cents per share -- or $4.3 million.

Diebold's earnings per share for the third quarter were 5 cents below forecasts as a result of the company's legal woes. Its shares rose 64 cents, to $53.20, on Wednesday's news.

Separately, a former Diebold employee named Kenneth Ray Reyes pleaded no contest Thursday in San Mateo County Superior Court to embezzling money from multiple ATMs. In addition to electronic voting machines, which form 5 percent of Diebold's business, the company manufactures ATMs and safes.

Jacobsen said Reyes, who had been responsible for maintaining ATM machines, was dismissed from the company some time ago.

Originally posted to Severn on Thu Nov 18, 2004 at 12:15 PM PST.

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Comment Preferences

    because it shows that (Bev Harris) and Jim March were steamrolled into this:

    One thing that I failed to add was that the Diebold stock jumped upon the announcement of this pending settlement earlier this week.

    Who are the real winners?

    Separation of Church and State AND Corporation

    by Einsteinia on Thu Nov 18, 2004 at 12:42:14 PM PST

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