Who Makes the Voting Machines

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U.S. CHUCK HAGEL NOW ADMITS OWNERSHIP IN VOTING MACHINE COMPANY
SENATE ETHICS COMMITTEE DIRECTOR RESIGNS

CONTACTS:
Bev Harris, "Black Box Voting," 425-228-7131 http://www.blackboxvoting.com
Dan Spillane, Senior Test Engineer for voting machines: 206-860-2858
Chuck Hagel: 202-224-4224 -- Senate Ethics Committee: 202-224-2981
Charlie Matulka, ran for office against Chuck Hagel: 402-228-1009
Rebecca Mercuri, expert on computerized voting machines 215/327-7105
The Hill Article: http://www.thehill.com

U.S. CHUCK HAGEL NOW ADMITS OWNERSHIP IN VOTING MACHINE COMPANY
SENATE ETHICS COMMITTEE DIRECTOR RESIGNS
"Hagel's ethics filings pose disclosure issue" -- "The Hill" 1/29/2003

On October, 10, 2002 Bev Harris, author of the upcoming "Black Box Voting: Ballot-Tampering" in the 21st Century, revealed that Republican Senator Chuck Hagel has ties to the largest voting machine company, Election Systems & Software (ES&S). She reported that he was an owner, Chairman and CEO of Election Systems & Software (called American Information Systems until name change filed in 1997). ES&S was the ONLY company whose machines counted Hagel's votes when he ran for election in 1996 and 2002. The Hill, a Washington D.C. newspaper that covers the U.S. national political scene, confirmed her findings today and uncovered more details.

Hagel's campaign finance director, Michael McCarthy, now admits that Senator Hagel still owns a beneficial interest in the ES&S parent company, the McCarthy Group. ES&S counts approximately 60 percent of all votes cast in the United States. According to the Omaha World-Herald which is also a beneficial owner of ES&S, Hagel was CEO of American Information Systems, now called ES&S, from November 1993 through June 2, 1994. He was Chairman from July 1992 until March 15 1995. He was required to disclose these positions on his FEC Personal Disclosure statements, but he did not.

Hagel still owns up to $5 million in the ES&S parent company, McCarthy Group. But Hagel's office, when interviewed by Channel 8 News in Lincoln, Nebraska for the evening news on October 22, 2002, said he had sold his shares before he was elected. His office issued a fact sheet claiming that he had made full disclosure.

Last week, Hagel's campaign finance director, Michael McCarthy (currently an owner and a director of ES&S) admitted to Alexander Bolton of The Hill that Hagel is still an owner of ES&S parent company, the McCarthy Group, and said that Hagel also had owned shares in AIS Investors Inc., a group of investors in ES&S itself. Yet Hagel did not disclose owning or selling shares in AIS Investors Inc. on his FEC documents, a required disclosure, nor did he disclose that ES&S is an underlying asset of McCarthy Group, in which he lists an investment of up to $5 million in 1996, 1997, 1998, 1999, 2000, and 2001.

SENATE ETHICS COMMITTEE CHIEF COUNSEL / DIRECTOR RESIGNS

Harris spoke with Victor Baird of the Senate Ethics Committee office January 9, and asked him who is responsible for ensuring that FEC disclosures are complete. She asked whether anyone had followed up to see why Senator Hagel did not list his positions with the voting machine company, and she asked about his characterization of the McCarthy Group as an "excepted investment fund" and his failure to disclose that it owned ES&S. Baird was silent, and then said "If you want to look into this, you'll need to come in and get hold of the documents."

Unfortunately, according to Alexander Bolton, a reporter at The Hill, when he went to the Senate Public Documents Room to retrieve originals of Hagel's 1995 and 1996 documents he was told they were destroyed. "They said anything over five years old is destroyed by law, and they pulled out the law," says Bolton. However, when he spoke with Hagel's staff, they said had obtained the documents from Senate Ethics Committee files. Copies of the documents are available at www.OpenSecrets.org/pfds   -- a repository for FEC disclosures.

In 1997, Baird asked Hagel to clarify the nature of his investment in McCarthy Group on his 1996 FEC statement. Hagel had written "none" next to "type of investment" for McCarthy Group. In response to Baird's letter, Hagel filed an amendment characterizing the McCarthy Group as an "Excepted Investment Fund," a designation for widely held, publicly available mutual funds. He never disclosed his indirect ownership of ES&S at all, but apparently no one questioned this omission, nor his curious characterization of the McCarthy Group, a privately held company that is not listed on any public brokerage.

Baird told Bolton that the McCarthy Group did not seem to qualify as an "excepted investment fund." He reportedly met with Hagel's staff on Friday, January 25 and Monday, January 27, 2002. Then, also on Monday, he stepped down. On Monday afternoon Baird's replacement, Robert Walker, provided a new, looser interpretation of "publicly available" (though experts disagree, saying that a privately held company like the McCarthy Group cannot be called "publicly available" in order to avoid disclosing underlying assets.)

Hagel's challenger in the Nebraska Senate race, Charlie Matulka, wrote to Baird in October 2002 to request an investigation into Hagel's ownership in and nondisclosure of ES&S. Baird replied, "Your complaint lacks merit and no further action is appropriate with respect to the matter, which is hereby dismissed," in a letter dated November 18, 2002.

SENATE CANDIDATE QUESTIONS HAGEL'S CONFLICT OF INTEREST

Charlie Matulka, the candidate who ran against Chuck Hagel in Nebraska's U.S. Senate race in November 2002, also wrote to the Nebraska Secretary of State and to state elections officials in October 2002. He pointed out that his opponent had ties to ES&S, and asked them to look into the conflict of interest, but received no answer.

Several Nebraska ES&S machines malfunctioned on Election Day, and Matulka filed a request for a hand count on December 10, 2002. It was denied, because Nebraska has a new law that prohibits election workers from looking at the paper ballots, even in a recount. The only machines permitted to count votes in Nebraska are ES&S.

CAN VOTING MACHINES BE TAMPERED WITH THROUGH ACCESS TO PROGRAMMERS?

The Washington Post characterized Hagel's election in 1996 as the biggest upset of the election season. At the time, voters did not know that he owned and had held key positions with the company that counted his votes. But is it improper for a candidate to have ties with voting machine companies?

Harris examines the issue of tampering security in the upcoming "Black Box Voting" book. One of her sources, Dan Spillane, a former Senior Test Engineer for a voting machine company, believes that the computerized voting machine industry is riddled with system integrity flaws.

"The problems are systemic," Spillane says, and he contends that the certification process itself cannot be trusted. Despite industry characterizations that the code is checked line by line, this does not appear to be the case. Spillane points to frequent, critical errors that occur in actual elections and identifies omissions in the testing procedures themselves. His own experience as a voting machine test engineer led him to address his concerns about integrity flaws with the owner of the voting machine company, who then suggested that he resign. He did not, but shortly before a General Accounting Office audit, Spillane was fired, and so was his supervisor, who had also expressed concerns about system integrity.

Election Technology Labs quit certifying voting machines in 1992. Its founder, Arnold B. Urken, says that the manufacturers, specifically ES&S (then AIS), refused to allow the detailed examination of code needed to ensure system integrity. Wyle Labs refused to test voting machine software after 1996; testing then went to Nichols Research, and then passed to PSINet, and then to Metamor, and most recently to Ciber.

But even if certification becomes adequate, nothing guarantees that machines used in actual elections use the same programming code that was certified. Machines with adjusted code can be loaded onto delivery trucks with inside involvement of only ONE person. To make matters worse, "program patches" and substitutions are made in vote-counting programs without examination of the new codes, and manufacturers often e-mail technicians uncertified program "updates" which they install on machines immediately before and on Election Day.

Both Sequoia touch screen machines and Diebold Accuvote machines appear to have "back door" mechanisms which may allow reprogramming after votes have been cast. Diebold's Accuvote machines were developed by a company founded by Bob Urosevich, a CEO of Diebold Election Systems and Global Election Systems, which Diebold acquired. Together with his brother Todd, he also founded ES&S, where Todd Urosevich still works. ES&S and Sequoia use identical software and hardware in their optical scan machines. All three companies' machines have miscounted recent elections, sometimes electing the wrong candidates in races that were not particularly close.

For more information, call 425-228-7131.

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Who Makes the Voting Machines?

Appearance of Impropriety — New Questions About the Integrity and Security of USA Elections

The story is not about allegations of fraud — it's about an appearance of impropriety that is stunning in its magnitude.

Unfettered by any disclosure regulations about ownership or political affiliations, just a few companies create and control almost all the voting machines in the U.S. Do the people who own them have conflicts of interest? We don't know, they won't tell us. Do they employ anyone with a criminal record? We don't know, they say it's private. Can we have someone check the vote-counting code to make sure no one tampered with it? Nope, they say its proprietary.

Election Systems & Software, the firm whose machines were involved in the 2002 flubbed Florida primary election — and the company that now makes the voting machines for most of America — is a private company that does not like to tell the public who owns it. But at least one major shareholder is Michael R. McCarthy, who runs the McCarthy Group. The McCarthy Group has been a primary owner of Election Systems & Software, including its predecessor, American Information Systems for more than a decade. Michael R. McCarthy is the current campaign Treasurer for Republican senator Chuck Hagel. [See Hagel and McCarthy Documents] Prior to his election, Republican Senator Hagel was president of McCarthy & Company. In fact, he decided to run for office while his own company was making the vote-counting machines!

Who cares? Poll workers count the votes, not election machines, right?

Wrong. The machines count the votes, and if you have any doubt about how critical it is for owners to disclose their information (as they must if they run lottery companies) read this: article by Ronnie Dugger, who will show you how easy it is for a single insider to fudge the vote-counting on these machines, in ways that can never be detected.

Why isn't tampering detectable?

Well, for one thing because the voting machine-makers fought in court to make their computerized vote-counting code "proprietary." Only their own programmers, it seems, are allowed to look at the innards of the code. Independent computer consultants almost unanimously cite the voting machine's impenetrable code as a security flaw. Difficult to detect tampering, yet relatively simple to implant an undetectable Trojan Horse to change counting algorithms.

And many of the new machines don't have paper trails

In Florida when votes were lost, election workers had to retrieve the hard drive as a back- up, because there were no paper ballots. But, if there was mischief in the computerized counting code, there would be absolutely no way to prove it. In California, thousands of votes just disappeared due to a computer glitch. What's up with this? Even the tax guys insist on a paper trail. (Just try telling an IRS auditor that your computer ate it.)

The other owner: Databases, personal information, mass communications, voter registration and vote-counting machines

The World-Herald Company, who owns the largest part of Election Systems & Software, likes to offer up a warm, fuzzy, "family and employee-owned" newspaper company as the owner. The company is actually something quite different. The newspaper is a small part of the overall business — the real business of The World Companies is controlling a vast nationwide communications network: elections services, including all forms of voting machines (punch card, optical scanning and touch-screen); databases containing personal information on almost everyone in the USA, huge direct mailing firms, phone message broadcasting, fax blasting, mass e-mailing, publicity, advertising, Internet services and printing, and affiliations with cellular communication systems. The World Companies have operations in Texas, Illinois, Georgia, Nebraska, California, Iowa and Arizona — and most have nothing to do with newspapers.

Wouldn't it be prudent to obtain names, political activities and corporate affiliations of major shareholders, directors and executives of the privately held companies who make our vote-counting machines? And could it be a bit reckless for Democracy to hand voter registration assignments over to a firm with active ties to political campaigns, which also has access to databases containing the race and political preferences of almost everyone in the USA?

Seventy percent of Election Systems & Software is owned by a partnership of the World Companies and the McCarthy Group. But who owns the McCarthy Group (besides Republican operative Michael R. McCarthy)? World Investments, a wholly- owned subsidiary of the Omaha World-Herald Co. (the conglomerate, not the newspaper), is a primary investor in the McCarthy Group. Round and round we go.

But speaking of newspapers, thank goodness a thoroughly objective organization like the Omaha World-Herald is involved with Election Systems & Software. "The delays [in the fall 2002 Florida primary voting] were the result of start-up errors by poll workers, not malfunctions by the company's election equipment," the Omaha World-Herald reports.

Who are these people, anyway?

We could go on for a week on this, and probably will. We've collected over 58 pages of information and there's more to come. Let's get started:

Election Systems & Software was formed by a merger of American Information Systems (AIS), a huge election company featuring several Republican owners, and Business Records Corp., part of Cronus Industries, in turn partially owned by a member of the Hunt oil family of Texas.

World Companies, Inc.: This is a wholly owned subsidiary of the Omaha World- Herald. It is a holding company with substantial ownership in Election Systems & Software, and it also controls World Marketing Inc., which operates gigantic databases and mammoth direct marketing companies. Election Systems & Software is also involved in voter registration services, and no one has questioned whether there is a conflict of interest with voter registration activity and access to the nation's largest databases containing race, political affiliations and other demographics.

Let me amend that: Investigative reporter Greg Palast can fill you in on exactly how to embezzle an election using tainted voter registration procedures. Jump to the bottom of this article for a list of "Six Ways to Fix Pesky Votes" uncovered by Palast. And by all means read Chapter 1 of his new book, The Best Democracy Money Can Buy, very carefully.

Questionable associations and relationships abound in the conglomerate that owns Election Systems & Software. One person with shares in the World Companies Inc. is Harold W. Andersen, who is on the board of directors for The Williams Companies — yes, that Williams Energy, recently exposed by CBS for creating a sham energy crisis in California. CBS cites tapes, now sealed by the government, that prove Williams Energy turned off the juice, faking an energy shortage.

M. Gene Aldridge, the president and CEO of Omaha World-Herald subsidiary World Marketing, Inc. (the one that runs all those databases — he knows if you've been black or white, he knows if you are poor...) is part of a conservative think tank, the New Mexico Independence Research Institute, and when he's not busy running the jumbo- sized database and direct marketing company, he is writing letters to Congress advocating that we take the huge future tax cuts and give them to the rich RIGHT NOW.

Here's more information on how Election Systems & Software came about, and who owns it:

From a 1996 article in The Omaha World-Herald:

"An Omaha company would become the nation's No. 1 ballot counter in a planned $59.3 million combination with a Dallas-based competitor...

"BRC is headed by a former Omahan, P.E. "Bill" Esping, who was a founder of First Data Resources.

"Under the agreement, American Information Systems would acquire the election division of Business Records. Both companies sell election counting and voter registration equipment and services based on optical scanners and paper ballots marked with pencils.

"Of the purchase price, $35 million would be in cash, $17.5 million in a note and the rest in stock of American Information, giving BRC about 20 percent ownership of the Omaha company. Stock owned by American Information employees would account for an additional 10 percent [OUR NOTE: This would include William L. Welsh II] with the remaining 70 percent owned by a partnership of the Omaha World-Herald Co. and the McCarthy Group, an Omaha investment banking company. American Information's share of the U.S. election automation market would increase to more than 50 percent..."

Let's have happy thoughts:

Before the 2002 Election, let's get disclosure from the handful of companies who make the voting machines that count our votes. These companies have nothing to hide (right?) so they should do this voluntarily. Then, Senator Hagel will lead the charge (won't he?) and he'll protect us from a situation that is, frankly, dangerous to Democracy, by getting some regulations in place:

(1) Require that any company who makes voting machines publicly disclose identities and political activities. And while we're at it, maybe criminal background checks are a nice idea, because if Republicans can control the big corporations that make the voting machines, just think what would happen if some crooks got into it. But I repeat myself.

(2) Require that all voting machines produce tamper-proof audit trails — and that means retaining a paper trail — using transparent computer code so that independent experts can investigate allegations of election tampering whenever needed.

More info:

Before Repiglicans start the squealing ("How DARE you bring this up so close the the
election, you know we have no time to rebut this") — well, you can verify the facts yourself, in most cases using their own documents, if you go to google and run the following search terms:
"Election Systems & Software"
"McCarthy Group"
"Michael R. McCarthy"
"Charles T. Hagel"
"World Marketing Inc."
"World Investments Inc."
— You'll find enough traceable leads to keep you busy for a week, if you run searches on the names and other related companies. * * * * *

Six Ways to Fix Pesky Votes

1. Scrub the lists too clean: if Andersen commits a felony, Anderson loses his vote.

2. Hire a firm to check voter eligibility, pay them 27 cents a name instead of the going rate (2.7 cents a name). When they contract to verify accuracy for people they remove, write them a friendly note: "DON'T NEED."

3. "Reform" the flawed voting system by purchasing millions of dollars in new, automated voting machines. Order them from a private company in Omaha that refuses to divulge who its owners are, or reveal their political connections.

4. Don't do any big stuff (switching 5,000 Dem votes to Republican). Do little things. Lots of them. Diversify.

5. Choose methods that will be boring or hard to understand.

6. Make sure people have to use math or statistics to see what you did. (Raise your hands: Who loves math?)

And if you want specifics of what happened in Florida, where over 50,000 votes disappeared in election 2000, start running google searches on Greg Palast's articles, aired on BBC and printed in the Guardian, and belatedly, picked up by major media outlets in the USA like the Washington Post.

To be continued. Next: How Election Systems & Software and the second biggest voting machine maker, Sequoia Pacific Systems, are actually related.

About the Author

The author of this report, Bev Harris, is the owner of Talion.com, a publicity company.

Here's how it came to be that a publicist wrote an investigative piece on election machines: While checking out an author as a potential guest for Talion's "Featured Guest" page, Harris did a media search and, by accident, realized that no one had disclosed who the owners are for the USA's main voting machine companies. The potential for conflicts of interest, and abuse disturbed her. Under her pen name, BJ Dudley, Bev had previously written a special report called "How to Unbezzle a Fortune" in which she details how to unravel and recover embezzled funds. Using some of the same techniques she used to unravel accounting frauds, she began to investigate voting machine ownership. All of the information in this article is readily available on the Internet, if you know where to search and what names to enter. This is a huge story, with thousands of leads to follow, and much of the information is findable.

...posted by KTR, 10/9/02

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Ex-secretary of state profits from counties' touchscreen buys-- MIAMI — A former Florida secretary of state profited by being a lobbyist for both the state's counties and the company that sold some of them touchscreen voting machines used in last month's botched primary election.-
Sandra Mortham, who served as the state's top elections official from 1995 to 1999, is a lobbyist for both Election Systems & Software and the Florida Association of Counties, which exclusively endorsed the company's touchscreen machines in return for a commission.-
Mortham received a commission from ES&S for every county that bought its touchscreen machines. The exact terms have not been disclosed. 10/8/02

Voting Machines' Maker Blamed
TALLAHASSEE - With Election Systems and Software's voting machines at the center of confusion in South Florida last week, critics are again scrutinizing the company's use of well- connected lobbyists and an unusual ``kickback'' deal to woo counties to buy its touch- ... Few lobbyists were as well- positioned to help ES&S as Sandra Mortham. A former Pinellas County legislator and Bush's original choice as running mate in 1998, Mortham also oversaw the Division of Elections as Florida secretary of state six years ago. ... Mortham was also a lobbyist for the Florida Association of Counties last year when an unusual ``rebate'' arrangement drew criticism from election officials. -
The deal gave the Florida Association of Counties a cut of ES&S sales. Critics said the plan gave county commissioners with little knowledge of voting machines a reason to choose ES&S without fully considering their quality. 9/17

Cheaper touch-screen equals system failure- It was common knowledge among Florida election officials that the million- dollar voting machines produced by elections giant Election Systems & Software were ill-suited for large, urban counties.--
That didn't stop price-conscious Miami-Dade and Broward counties from buying the ES&S system and putting it to its biggest public test yet in Tuesday's statewide primary.... 9/15

And...

Something sent to me from last year that may provide some insight on the current fiasco....Galloway, 9/17/02 :

Pinellas delays decision on new voting machines

St. Petersburg Times; St. Petersburg, Fla.; Oct 31, 2001; LISA GREENE; DEBORAH O'NEIL;
Pinellas delays decision on new voting machines Abstract: Stung by an 11th-hour revelation about its top bidder, the Pinellas County Commission on Tuesday delayed voting on a $15.5- million voting machine system and demanded further investigation of the two companies vying for the multimillion-dollar contract. For some contracts, that may change. Gay Lancaster, interim county administrator, said she isn't satisfied with the county's purchasing checks. "I think we'll be making changes in that area," she said. Last summer, the county decided that the companies' proposals would be publicly reviewed by a citizens committee. That decision followed the revelation that the husband of Pinellas Supervisor of Elections Deborah Clark had worked for ES&S. In Baltimore, Sequoia accepted blame and apologized for computer failures that delayed November 1999 election results. ES&S has had similar failures. In Hawaii, the state said faulty ES&S machines forced a vote recount in 1998. Last year, counties in Virginia and West Virginia said ES&S optical scan ballots were defective. Full Text: Copyright Times Publishing Co. Oct 31, 2001

Stung by an 11th-hour revelation about its top bidder, the Pinellas County Commission on Tuesday delayed voting on a $15.5- million voting machine system and demanded further investigation of the two companies vying for the multimillion-dollar contract. Chief among their concerns: Several county staffers with some knowledge ofthe problem failed to ask more questions or report what they knew to the commission. "I don't want any more surprises," Commissioner John Morroni said at Tuesday's meeting. The county learned from St. Petersburg Times reporters Monday that a key employee for Sequoia Voting Systems, the company likely to get the contract for a new Pinellas voting system, was indicted in January on conspiracy charges in a Louisiana election kickbacks scandal. That employee, Phil Foster, is awaiting trial and came to the Pinellas meeting Tuesday to proclaim his innocence.

"I decided to hold my head high and be there and available" for commissioners' questions, Foster said afterward. But commissioners didn't ask him anything. Commissioners seemed more concerned Tuesday with what else the county doesn't know about Sequoia and the other finalist, Election Systems & Software. They are worried about whether there is time to make the right choice and still try out the new voting machines in a city election in March. Staff members asked for a week to investigate, but Morroni said he's ready to wait longer, even if it means missing the March vote. elections. Pinellas staff members said Tuesday that they routinely do legal and financial checks against companies but haven't checked employees' criminal records. For some contracts, that may change. Gay Lancaster, interim county administrator, said she isn't satisfied with the county's purchasing checks. "I think we'll be making changes in that area," she said. Last summer, the county decided that the companies' proposals would be publicly reviewed by a citizens committee. That decision followed the revelation that the husband of Pinellas Supervisor of Elections Deborah Clark had worked for ES&S.

Also Tuesday, Clark said the Times incorrectly reported that she knew about Foster's legal problems. She said she knew about a voting scandal in Louisiana but didn't hear about the charges against Foster until he told her Monday. But she did not mention that when she talked about him Monday. Asked then why she didn't pass along what she knew, Clark said: "I didn't think it had anything to do with voting systems. "Other troubling information about both companies has been reported in newspapers. In Baltimore, Sequoia accepted blame and apologized for computer failures that delayed November 1999 election results. ES&S has had similar failures. In Hawaii, the state said faulty ES&S machines forced a vote recount in 1998. Last year, counties in Virginia and West Virginia said ES&S optical scan ballots were defective.- Times staff writer Thomas C. Tobin and researchers Caryn Baird, Kitty Bennett and Cathy Wos contributed to this report, which also includes information from the Baltimore Sun and Associated Press. Pinellas delays decision on new voting machines t. Petersburg Times; St. Petersburg, Fla.; Oct 31, 2001; LISA GREENE; DEBORAH O'NEIL;

Abstract:
Research Information Related to Sequoia and Phil Foster kickback allegations:
Factual basis, plea agreement in Fowler case

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA versus JERRY M. FOWLER
FACTUAL BASIS

From about 1991 through 1999, JERRY M. FOWLER used his position as Commissioner of Elections for the Louisiana Department of Elections and Registration to obtain illegal kickbacks from vendors who wanted to do business with the Louisiana Department of Elections and Registration. FOWLER conspired with Pasquale "Pat" Ricci and others to cause the state of Louisiana to pay inflated prices for the purchase of AVM voting machines, AVM voting machine counters, and the installation of the AVM voting machine counters. The vendors used the receipts from the inflated invoices to pay kickbacks to FOWLER. The illegal kickbacks were paid through various means including direct cash payments to FOWLER and payments on FOWLER'S behalf. FOWLER knowingly and willfully filed materially false income tax returns for the years 1996, 1997, and 1998, by not reporting any of the kickbacks as income.

FOWLER'S 1996, 1997, 1998 U.S. Individual Income Tax Returns, Forms 1040, and 1997 Amended U.S. Individual Income Return, Form 1040X, and were signed and mailed from the Middle District of Louisiana.

FOWLER'S 1996, 1997, and 1998 U.S. Individual Income Tax Returns, Forms 1040, reflect adjusted gross income of $157,949.54; $185,938.00 and $165,272.00, respectively. FOWLER'S corrected adjusted gross income including kickback income is $482,053.54; $487,891.29; and $419,312.00 in 1996, 1997, and 1998, respectively.

AVM Voting Machines

The AVM voting machine is a mechanical voting machine used by the Louisiana Department of Elections and Registration. The machines were manufactured by Automatic Voting Machines, a corporation that ceased operations during the early 1980's. In 1998, Louisiana had approximately 4,200 AVMs in use.

FOWLER and Pasquale Ricci devised a plan by which FOWLER circumvented state bid laws in the purchase of voting machine products and services. FOWLER requested that Ricci find an exclusive agent that FOWLER could declare as the sole source for buying AVM voting machines. With only a sole AVM source, FOWLER was not required to request bids and he and his co-conspirators controlled and inflated the price paid by the state for voting machines. David Philpot, owner of Birmingham, Alabama, based Election Services, Inc., agreed to the scheme proposed by FOWLER and Ricci and was declared the exclusive agent for Sequoia Pacific Voting Equipment, Inc., for AVM machines in the state of Louisiana. FOWLER declared Philpot the sole source of AVM machines even though FOWLER was aware that there were other sources from which to buy AVM machines. From 1991 through 1999, all AVM purchases by Louisiana were from Philpot's Election Services, Inc., at inflated prices.

Machine Counters

One of FOWLER'S duties as Commissioner of Elections was the purchase of voting machine counters for voting machines. Ricci, through his New Jersey based company, Independent Voting Machine Services Company, Inc., was FOWLER'S source for many voting machine parts. FOWLER wanted to make some money on these deals. FOWLER and Ricci conspired to have the state buy a large amount of counters through Ricci at inflated prices so a kickback could be made to FOWLER even though they both knew the large number of counters were not needed by the state.

To facilitate the machine counter scheme, Ricci contacted Glen Boord and Ralph Escudero, the owners of Fort Lauderdale, Florida, based, Uni-Lect, Inc., and Harold Webb, the owner of Mount Holly, New Jersey, based Garden State Elections. Ricci conspired with them and got them to participate in the inflated price scheme by charging him an inflated price for the counters so he could sell them to the state of Louisiana at inflated prices. Phil Foster facilitated the same counter scheme through David Philpot and Election Services, Inc. At all times FOWLER, Ricci, Escudero, Boord, Webb, Foster, and Philpot knew that they were using their companies to inflate prices to facilitate the payment of illegal kickbacks to FOWLER.

Installation of Counters

One of FOWLER'S duties as Commissioner of Elections was the maintenance of voting machines including the installation of parts and counters when necessary. Both FOWLER and Ricci knew state employees were skilled in installing counters and did in fact install counters. However, during the years of 1993 through 1998, FOWLER and Ricci conspired to let Ricci's company install the counters. FOWLER and Ricci always changed all counters in machines. The machines varied in size from either a 40 counter machine to a 50 counter machine. The price paid by the state for the service was greatly inflated.

FOWLER and Ricci knew that there was no legitimate reason to always change all of the counters in a machine. The counters were replaced in machines that had never exhibited any counter problems. FOWLER described the practice as a preventative maintenance program even though the true reason for the counter replacement was to generate kickbacks for FOWLER.

FOWLER'S admissions about the amount of kickbacks he received were corroborated through several means.

1. All known bank accounts of FOWLER were subpoenaed and the cash deposits to those accounts were analyzed. The annual cash deposits to FOWLER'S accounts are consistent with the $400,000 in kickbacks that FOWLER estimated that he received each year.

2. Most of FOWLER'S co-conspirators have already pled guilty in state court to paying kickbacks to FOWLER. The co-conspirators' factual bases were evaluated and the amount of kickbacks they admitted paying to FOWLER are consistent with the amount of kickbacks that FOWLER admitted receiving. Additionally these amounts are consistent with the cash deposits to FOWLER'S bank accounts.

3. In addition to the cash deposits to FOWLER'S bank accounts, FOWLER worked out a deal with Ricci to receive substantial amounts of cash that were not always deposited to his bank accounts. FOWLER introduced Ricci to bankers in North Louisiana. FOWLER, Ricci, and two bankers, at two banks, worked out a plan for Ricci to borrow money from the banks and give the money to FOWLER. At each bank Ricci borrowed $25,000.00 for a six-month term. The $25,000.00 was given to Ricci in the form of five cashier's checks payable to Ricci in the amount of $5,000.00 each. Ricci gave the five cashier's checks to FOWLER who placed them in a safety deposit box controlled by him at a financial services business in the Middle District of Louisiana. The owners of the financial services business are personal friends of FOWLER. The financial services business is a finance company whose offices are located in a former bank building. When FOWLER needed cash, he would go to the financial services business and place one of the cashier's checks in another safety deposit box which was accessible by him and the owners of the business. The owners retrieved the cashier's check from the box, converted the cashier's check to cash, and placed the cash in the safety deposit box. After one or two days, FOWLER would return to the financial services business and retrieve his $5,000 in cash. FOWLER got the cashier's checks in $5,000 increments thinking that the money would last longer rather than getting $25,000.00 all at once. Ricci borrowed $25,000.00 from each of the two banks every six months for approximately a ten-year period. FOWLER received approximately $100,000.00 per year from this single source.

FOWLER willfully and intentionally did not report the illegal kickback income on his 1996, 1997, and 1998, U.S. Individual Income Tax Returns, Forms 1040. FOWLER willfully and intentionally did not disclose his kickback income to the preparers of his 1996, 1997, and 1998, U.S. Individual Income Tax Returns, Forms 1040, because he did not want to alert them to his criminal actions. Each of the above described tax returns which FOWLER signed contained a written declaration that it was being made under penalties of perjury.

FOWLER has admitted that he knew that the kickbacks he received while he was the Commissioner of Elections should have been reported as income on his personal federal income tax returns. FOWLER further admitted that he did not report the kickback income because he did not want to report his criminal activity to the Internal Revenue Service.

This investigation disclosed that FOWLER made and subscribed to his 1996, 1997, and 1998, U.S. Individual Income Tax Returns, Forms 1040, which he knew were false as to material matters. FOWLER did not report any of the illegal kickback income in the amounts of $324,104.00; $301,953.29; and $254,040.00, for 1996, 1997, and 1998, respectively.

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA versus JERRY M. FOWLER

PLEA AGREEMENT

1.
The Office of the United States Attorney for the Middle District of Louisiana, through undersigned counsel, and the above-named defendant agree that the defendant will waive indictment and enter pleas of guilty to a Bill of Information, charging three (3) counts of willfully making and subscribing false tax returns, in violation of Title 26, United States Code, Section 7206 (1).

2.
The United States Attorney and the defendant agree that, if the Court accepts the guilty pleas, no additional criminal charges related to the violations contained therein will be brought against the defendant in this district.

3.
The defendant agrees to provide complete and truthful information to any law enforcement agent or attorney of the United States, and at any grand jury proceeding or trial. The defendant waives the Fifth Amendment privilege against self-incrimination. The defendant will also cooperate with the Internal Revenue Service in a good faith effort to resolve his tax liabilities. This Plea Agreement, however, is not conditioned upon any obligation of the United States to receive, or act upon, information which the defendant may now or in the future provide or stand ready to provide.

4.
The United States Attorney agrees to inform the Court of defendant's actions pursuant to this Plea Agreement. The United States, however, is not obliged, as a condition of this Plea Agreement, to file any motion with the Court either for a downward departure under Section 5K1.1 of the United States Sentencing Commission Sentencing Guidelines, or to reduce the defendant's sentence under Rule 35 of the Federal Rules of Criminal Procedure. If a motion is filed, the Court, in it's discretion, may or may not reduce the sentence below the guidelines' range otherwise applicable.

5.
Except for use in this case, and as otherwise provided herein, no truthful testimony or other information provided by the defendant, or any information derived therefrom will be used against the defendant in any criminal trial.

6.

If the defendant refuses to provide truthful information or testimony, or provides false or misleading information or testimony, he may, after a judicial finding of such, be prosecuted for any offense covered by this agreement, and all statements and information provided by the defendant may be used against him. The defendant's pleas of guilty may not be withdrawn.

7.
The defendant hereby expressly waives the right to appeal his sentence, including, but not limited to, any appeal right conferred by Title 18, United States Code, Section 3742. The defendant, however, reserves the right to appeal any punishment imposed in excess of the statutory maximum.

8.
The defendant agrees to fully and truthfully complete the Financial Statement provided to him by the Office of the United States Attorney and to return the financial statement to the undersigned Assistant United States Attorney within 10 days of this agreement being filed with the Court. Further, upon request, he agrees to provide the Office of the United States Attorney with any information or documentation in his possession regarding his financial affairs and agrees to submit to a debtor's examination when requested. The defendant agrees to provide this information whenever requested until such time any judgment or claim against him, including principal, interest, and penalties is discharged or satisfied in full. This information will be utilized to evaluate his capacity to pay the government's claim or judgment against him, whatever that claim or judgment may be. If the defendant refuses to comply with this paragraph or provides false or misleading information, he may, after a judicial finding of such, be prosecuted for any offense covered by the agreement, and all statements and information provided by the defendant may be used against him. The defendant's pleas of guilty may not be withdrawn.

9.
The defendant agrees to enter the pleas of guilty to the Bill of Information herein, and the United States Attorney agrees to these pleas pursuant to Rule 11 (e) (1) (C), Federal Rules of Criminal Procedure, with the provision that the Court will sentence the defendant to a term of thirty-six (36) months imprisonment on Count 1, a term of thirty-six (36) months imprisonment on Count 2, to run concurrent with Count 1, and a term of twenty-four (24) months imprisonment on Count 3, to run consecutive to the terms imposed on Counts 1 and 2. It is further agreed by the parties that the defendant will enter his pleas of guilty to the Bill of Information and the Court will sentence the defendant prior to December 19, 2000. In addition, the Court will not impose a fine nor the costs of prosecution in this case. The Court must impose a special assessment of $100, per count, which defendant agrees to pay at the time of sentencing. The Court may also order restitution in accordance with law. The defendant understands that he must receive a term of supervised released after imprisonment of not more than one (1) year.

10.
Pursuant to Rule 11 (e) (2), Federal Rules of Criminal Procedure, the Court may accept or reject this Plea Agreement. If the Court rejects the Plea Agreement, the Court, on the record, will so inform the defendant and advise the defendant that the Court is not bound by the Plea Agreement. The Court will advise the defendant that, if he chooses to continue in the guilty pleas, the disposition of the case may be less favorable to the defendant that contemplated by the Plea Agreement, and afford the defendant the opportunity to withdraw the pleas of guilty.

11.
The defendant acknowledges that the terms herein constitute the entire agreement and that no other promises or inducements have been made. The defendant acknowledges he has not been threatened, intimidated or coerced in any manner.

12.
The defendant acknowledges that this Plea Agreement has been entered into knowingly, voluntarily and with the advice of counsel and that he fully understands the agreement. The defendant has no objection to the legal representation he has received.

This Plea Agreement is entered into this ------ day of ------------, 2000, at Baton Rouge, Louisiana.

UNITED STATES OF AMERICA, by

---------------------- ----------------------

JERRY M. FOWLER L.J. HYMEL
DEFENDANT UNITED STATES ATTORNEY

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RICHARD CRANE BRIAN A. JACKSON
ATTORNEY FOR DEFENDANT FIRST ASSISTANT U.S.
2200 Hillsboro Road, Suite 310 ATTORNEY
Nashville, TN 37212
Telephone: (615) 298-3719

----------------------

JAMES STANLEY LEMELLE
ASSISTANT U.S. ATTORNEY
CHIEF, CRIMINAL DIVISION
777 Florida Street, Suite 208
Baton Rouge, LA 70801
Telephone: (225) 389-0443

----- Original Message ----- From: Chris Hood To: Fred@miamidade.gov Sent: Thursday, October 25, 2001 10:41 AM Subject: Question about Vendor presentations

To: Fred Simmons Procurenent Officer

From: Chris Hood Compliance Research Group Inc.

Fred Please advise as to the vendor who may have failed to meet your mlti-langue requirement. Also do you require a local office to (if awarded) service the contract. Is any one vendor favored at this point, based on the objective requirements of Miami Dade County.
Thank You, Christopher Hood President Complianse Research Group Technology Consultant to: Miriam Oliphant Broward County Supervisor of Elections

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