On Sunday, April 13th, following our Thursday April 10th exclusive investigative report revealing that the nation’s 4th largest voting machine vendor, Hart InterCivic, was on the verge of a successful hostile takeover of the nation’s 3rd largest voting machine company, Sequoia Voting Systems, in order to become the nation’s 2nd largest powerhouse in the “election industry,” Sequoia quietly issued a press release on their website, publicly confirming our report.
The release is not linked from their main page, but we were able to trip across it this morning nonetheless. We post it in full at the end of this article since Sequoia’s website has been frequently hacked at times of late, and the company also has a history of revising, scrubbing and doctoring officially published material on their website without noting those changes.
While officials at both Hart and Sequoia have now confirmed our report, Sequoia has yet to fully inform its voting system clients around the country — or even its own employees — as to what’s actually going on, even while a “high-priority” company-wide email was distributed immediately after our report went public, attempting to instruct employees to field no “calls from the media”…
Sequoia’s confirmation of the attempted takeover comes as officials inside of both companies were forced to do so in the wake of our detailed exclusive, as published here at The BRAD BLOG (along with a greatly condensed version filed at ComputerWorld).
Yet, in the ten days since our report was filed, no other media outlets have covered the potential merger, despite the fact that jurisdictions across the country — including New York state, which is in the middle of a $100 million deal with the company — could be adversely affected by the takeover of the cash-poor Sequoia, whose equipment currently controls elections in some 20% of the United States. (Hart now controls some 8% of that market.)
The clients with whom Sequoia has contracts, and pending contracts, were wholly unaware of the possible merger prior to our report. As well, they had no idea that they might soon find themselves in business with Hart — a company currently facing federal fraud litigation — instead of their chosen vendor, Sequoia.
While Sequoia’s CEO and President Jack Blaine was forced to give an explanation to some of those clients who became quite curious after reading details of the attempted takeover here at The BRAD BLOG, Blaine failed to disclose to them the full depth of Sequoia’s woes, complete details of the possible merger, and that the fact that the company, in its current form, may not be long for this world.
Sequoia’s clients are not the only ones caught off-guard by the potential sea change coming in the election industry. The majority of the company’s employees, whose jobs hang in the balance, had similarly been left in the dark, even about Sequoia’s planned move out of Oakland, which had been in the works for some time.
Our report came as news to most of their employees, who may find themselves soon out of work, whether or not the company is able to fend off the Hart takeover. We had revealed, in that April 10 story, the company’s plan to shut down their Oakland, CA, headquarters in order to move their full base of operations to their Denver hub.
Facing a severe cash crunch, made even worse by the Hart takeover attempt, the move to Denver is currently underway as Sequoia’s lease on their Oakland office space is up at the end of May. A smaller space will be sought in Oakland for a number of company engineers, but it’s currently unclear — since Sequoia has failed to inform workers — how many of the California employees will find themselves out of a job after the move.
As previously reported, last Tuesday, April 15th, was “Match Day” at Sequoia. That was the deadline for the consortium of company executives — incorporated as SVS Holdings, Inc. last year in order to claim “ownership” of Sequoia in the wake of a Federal investigation of their parent company Smartmatic, a foreign-based consortium with ties to Venezuelan President Hugo Chavez — to offer a “match” to the proposal Hart had given to Smartmatic. The deal would give control of SVS Holdings’ $2 million note, currently being held by the off-shore firm, to Hart.
Our report caused a subsequent panic at Sequoia, leading company VP, part-owner, and press spokesperson Michelle Shafer to issue a company wide email, just minutes after the report was published here, instructing employees within the company not to respond to media inquiries on any aspect of the impending deal.
Sent:Thursday, April 10, 2008 [redacted] To: [redacted] Subject: Reminder: Calls from the Media
Importance: High
All –
As a reminder, please direct any and all calls from the media, and the like to me at the phone number and email address below.
Thanks for your cooperation,
Michelle
Michelle M. Shafer
Vice President, Communications & External Affairs
Sequoia Voting Systems
7677 Oakport Street
Suite 800
Oakland, CA 94621
phone: 800.347.4702
mshafer@sequoiavote.com
www.sequoiavote.com
We had sent a number of queries to Shafer for comment, in regard to our report, prior to publication. She failed to respond at all, unlike Hart’s spokesperson Peter Lichtenheld, who had the courtesy to reply, at least, with a “no comment.”
Shafer, who lists her address as being in Oakland, doesn’t actually have an office there, so she’ll not have to worry about moving anything when the Oakland site shuts down. She works largely out of her Texas home, where she was based while working for her former employer…Hart InterCivic.
The press release issued Sunday by Sequoia echoes both the sentiment from Shafer’s email and the generally secretive nature of the company which controls the votes of millions of Americans. In the release, they promise, “We will have more information to share in the coming weeks. However, until that time, we do not expect to have further comment on this matter.”
Despite the attempted media lock-out, over the past week The BRAD BLOG has been able to learn the companies, Hart, Smartmatic, and Sequoia/SVS, have been engaged in brutal, and often contentious, inside negotiations, as SVS tries desperately to stave off losing control of the company to Hart.
While no official actions have yet been taken, at least publicly, the next key date in the matter will likely be May 15th, the currently set “closing day” for the proposed deal, when either Hart or SVS will have to “pay Smartmatic $7 million on closing, as well as 40% of the net income of [the company] for the next 5 years, with a promise to pay at least $9 million in those 5 years,” according to court documents obtained by The BRAD BLOG [PDF] during the reporting of our original story.
As we also reported at the time, the office of Rep. Carolyn Maloney (D-NY) has told us they are keeping a close eye on the possible deal, since the Congresswoman was instrumental in bringing the original concerns of Smartmatic’s ownership and control of Sequoia to the attention of federal investigators at the Committee on Foreign Investment in the United States (CFIUS). That commission is responsible for overseeing foreign ownership of key domestic infrastructure, such as our election system, and their investigation of Smartmatic/Sequoia’s shadowy ties to Venezuela had prompted Smartmatic’s apparent divestiture of the company.
The proposed Hart deal, however, as the Delaware court papers describe the potential business arrangement, reveals that Smartmatic still retains direct control of both the Intellectual Property of the Sequoia firm, as well as rights to strike an agreement with Hart that they are “not to compete with Smartmatic (who remain in the election business) in Latin America, the Philippines, and Belgium.”
In light of the possible compact, questions may return for Maloney and federal investigators, as to whether or not Smartmatic truly divested from the company last year when they had claimed to, or whether it was a deal ‘on paper only’ in order to bring an end to the CFIUS investigation which had been getting close to the root of Smartmatic’s true ownership. The sale of Sequoia to SVS was successful in ending the CFIUS review at that time, prompting Sequoia/SVS to boast, in a November 2007 announcement of “New Corporate Ownership” for the firm, resulting in a “100% American-Owned and Independent Company.”
Though Smartmatic is carefully referred to as their “former parent company” in Sequoia’s press release last week, the foreign firm clearly retains — and is in the process of exercising — the ability to determine far-ranging aspects of both Sequoia’s future, and those of American elections in the bargain.
We will, of course, continue to follow developments in this story.
Sequoia’s quietly posted press release, issued just after, and confirming, our original report, follows in full below…
DENVER – April 13, 2008 – Hart InterCivic has made an offer to purchase the outstanding loan and earn-out provision agreement that Sequoia Voting Systems maintains with its former parent company.
It is yet to be determined whether a transaction between these two companies will be completed. However, both companies are fully committed to their customers and to the elections industry.
We will have more information to share in the coming weeks. However, until that time, we do not expect to have further comment on this matter.
Sequoia and our employees remain focused and dedicated to servicing our valued customers, as we have throughout our century of service to election jurisdictions throughout the nation.
Thank you for your continued patience and support.
About Sequoia Voting Systems (www.sequoiavote.com)
Sequoia Voting Systems is an American-owned election technology company with major offices in Denver, Colorado; Jamestown, New York and Oakland, California with over a 100-year history of providing accurate, reliable and innovative voting solutions dating back to the nation’s first lever-based mechanical voting equipment in the 1890s. Sequoia provides comprehensive election technology products, customized training options, ballot layout and printing services and complete implementation and support programs to its state and local government customers throughout the United States. Sequoia’s product suite is includes a comprehensive election management system, precinct-based optical scan voting units, high-speed central count optical scan ballot readers, and full-face and paginating touch screen electronic voting equipment with optional printers that produce voter verified paper records. Sequoia’s voting equipment is currently used by hundreds of jurisdictions throughout 17 states and the District of Columbia.
UPDATE 4/25/08: Sequoia CEO Blaine admits in “confidential” company-wide phone call that Smartmatic, not Sequoia, controls the Intellectual Property (IP) rights for Sequoia’s voting machines. Details now here…
Thanks, Brad. You left us swinging in the wind for a week, but you finally came through.
Shafer’s press release exudes the fragrant aroma of defeat. “Both companies [Smartmatic & Hart, in context] are fully committed to their customers…”. Since when does Shafer issue PRs touting a competitor’s committment to their customers? “In the coming weeks…”. If they had fended off the threat she would have said so.
Looks like it’s a done deal.
The lack of disclosure to employees doesn’t surprise. Jack Blaine is an old-school Unisys suit who wouldn’t hesitate to smile and shake your hand while easing a hot poker up your… business. What goes around comes around, Jack. Bend over.
It is sad that no other media has picked this up. I’d invite anyone to Google it and you’ll see. Nada. This story has serious implications for the election supply industry and the quality of U.S. elections going forward. All the more so with the prospect of at least 40% of the profits from almost 30% of the market headed offshore and thus being unavailable for future development, improvement and innovation.
Sometime down the road, reflective folks will no doubt look back and wonder if pushing the CFIUS angle didn’t have some harmful, unintended side-effect.
Great work Brad! Thanks
Info commercial at 3am. “Smartmatic, we’ll chop your ___ into little pieces and make them disappear.”
Great, handing over the keys to the kingdom to caught-red-handed goons, and not a peep anywhere but here! If that doesn’t prove the need to take back our election system and pubic airwaves, I don’t know what planet I live on! Thanks Brad for shinin the light!
I second that ..shine the light Brad. I wonder who exactly in Venezuela owned Sequoia. If it was truly Chavez or the rich elite. It would seem to be in Chavez’s best interests to have fair elections. As the neocons would love another war for oil there. Since he has enough money to help the poor in America…one would think he could plunk in a few million to save his company.
Brad, can you possibly locate or make a map that shows which companies are programming which state’s elections? The assumed combo of Hart and Sequoia just concentrated some power that was separated, at least in theory.
What would be interesting to track is which voting machine companies, were they so inclined, could via their programming of local elections control which electoral votes?
We have to stop being confused about this and get clear on the presidential election implications.
Is there a map of voting machine types out there done by an EI group that could be a starting place for trying to get this clarified?
We are having our problems with “control freak” PM Harper. Elections Canada had the RCMP raid the Conservative headquarters and the search warrants suggest Tories overspent by $1-million on the 2005/6 campaign. The affidavit alleges the Conservatives’ national headquarters transferred money to 67 local candidates – who immediately transferred it back as “payment†for campaign advertising. ( He did call Elections Canada “jackasses who are out of control” in 2001. I love Karma :-).
He tried to cover his ass yesterday and would only allow “selected” media into a “secret” briefing. (Sound familiar) The competing media demanded access to the documents and threated to crash the private briefings… to be con’t
globeandmail
Creid –
I believe that VerifiedVoting.org has such a map, though I’m running out right now and can’t find it.
Here, however, is a graphic of a map from a May 2007 Sequoia demo showing where they were operating at the time.
NOTE: Things have changed in some places since then! Though while there have been a few changes, the above Sequoia map is largely still accurate (at least as accurate as their voting machines anyway.)
Creid-
Do you really think the voting companies are competent enough to orchestrate a massive conspiracy to control the elections?
In fact all of you conspriacy theorists are nuts. Either the voting companies are incredibly adept at hiding their control of the elctions or they are not capable of counting to three. Which is it?
Kleenobe
I think if you take a little time to familiarize yourself with the issue you will find that it doesn’t take anything like a “massive conspiracy” to throw an election with these machines. One measly little criminal is all it takes. That’s been shown over and over and over again.
Agent99, that has NOT been shown over and over again. An election may be thrown theoretically, but we have yet to have a proven case where anyone has significantly affected the outcome of an election on purpose by gaming an election system. It’s doable in theory, but only under extrememly narrow circumstances that rarely or never exist in the real world. Sorry guys, but that’s really the truth.
Does that mean it won’t happen in the future? Not at all. It COULD happen and, under any circumstances, elections must be closely monitored to ensure accuracy.
What HAS happened is gross incompetence and criminal activity on the part of election officials and sloppy design and implementation on the part of the manufacturers who are supplying what is poorly specified by law. THAT’s where we should be focusing our attention. Better laws with stricter enforcement are what’s needed. Continual whining about equipment suppliers is futile, wasteful and in the long run potentially damaging. If election officials don’t do their jobs with electronic voting, do you think they’d do them any better with pure paper? Not a chance.
Kleenobe, you’re much closer to the truth with your comment.
Jack
I’m not going to get into a does-not/does-too match with you, but you also need to look more closely. A lot of people have been working their butts off to show exactly how dangerous these EVMs are, and it really is NOT hard to think of perfectly ordinary, or perfectly out of the ordinary (that have already been reported) circumstances where ONE person could easily have thrown an election. That we have no proof who has or how many actually have done it, does not make your position tenable.
Jack Nauti said:
And sorry, Jack, but if you’re going to suggest 99 is wrong (when, in this case, she is right) because you believe that the circumstances to allow such manipulate “rarely or never exist in the real world,” when in fact that always and ever exist in the real world, then I’ll have to hold you to at least as high of a standard.
That you aver, because you hope it’s true, that we “yet to have a proven case where anyone has significantly affected the outcome of an election on purpose by gaming an election system,” I’ll point out you’re wrong, unless you’re referring to an electronic system.
If you’d like me to stipulate the above is true, then I’ll hold you, as a supporter and/or apologist for such systems to the same standard: It has yet to be proven that a single vote, ever cast on a DRE system during an actual election has ever accurately recorded a choice for a candidate or initiative on a ballot as a voter intended.
If you have a shred of proof to show that’s not the case, please share it. Until then, you are clearly joining Kleenobe in his/her conspiracy theory alleging that electronic voting systems, such as DREs, accurately count election results, without having an iota of proof to support that whacked out contention.
I don’t expect that election officials will ever do their job. Which is why we have to be able to do ours: Observe elections and ensure they are accurately counted.
With the systems that you seem to support, as indicated by your comment above, there is no way for us to do that. Thus, bad election officials and bad vendors will be allowed to ply their trade, and bad guys (criminal) will be allowed to ply theirs forever more.
its a tritecycle … can’t tell if its a three-wheeler or not …
I just reread Agent99’s statement and realize that I misread it the first time. I originally took her to mean that there were numerous instances of real elections having been stolen by hacking electronic systems. Now that I reread it I see that she said, “One measly little criminal is all it takes. That’s been shown over and over and over again.”
This is true – Agent99 is correct. There have been many occasions when someone has demonstrated the manner in which an election might be stolen. But it’s always been done “offline”, not during a real election. My point was that I am not aware of a single case where a real election has been significantly altered on purpose by covertly manipulating (hacking) an electronic system. I do not contend that it is not doable, but I do know that as long as the election officials actually do their job, the chances of it happening without detection are very slim. The problem we all have is that those chances should be zero, not slim, and they’re not, and that’s why we’re all here.
And yes, Brad, I do agree with you that nobody can prove that an election has NOT been covertly altered. But I would extend that to ANY election, electronic or otherwise. Even with hand counted paper ballots, how can you prove later that ballots and/or ballot boxes were not swapped or tampered with? You can’t.
Another problem we have is that there have been numerous cases where real elections have been affected, not on purpose, but through equipment failure, malfunctions and improper use. The congressional race in Florida a year or so ago with the statistically impossible undervotes is a prime example. Obviously something went wrong. The machines either failed to register votes or poor ballot design caused voters to not see the race at the top of the screen. Whatever actually happened, it was a failure of the system as a whole, but not a purposeful, covert “hack” of the equipment and certainly not undetected. Nevertheless, a serious failure that should never be repeated.
I myself have personally demonstrated how an electronic system could be hacked, but in all scenarios I’ve come up with it would be detected by even a semi-competent election staff adhering to best practices. And by system, I mean the entire system, including not only the hardware and software, but certification, security, pre-election testing, post-election reporting, random sample auditing, and all the other things mandated by law but often ignored, neglected or done executed by election officials. No system of any kind will work if those running it fail to do their jobs. It’s our responsibility to hold them accountable.
And yes, Brad, I was referring to electronic systems. Paper systems were manipulated often. With a paper system you have no backup, no secondary record to audit. If someone switches a ballot box, as in the case of LBJ in the 40’s in Texas, and no doubt many, many others, you have no recourse whatsoever. At least with a well-designed electronic system there are multiple data stores and multiple media that must all agree. This can, theoretically, in that theoretical well-designed system, make undetected tampering extrememly diffifcult, unlikely or impossible.
Please take a moment to read about Lyndon Johnson’s Ballot Box 13 here: http://www.reformation.org/president-lyndon-johnson.html. How many people died decades later in Viet Nam due to that one ballot box?
That’s not at all to say that we now have good electronic systems. We do not. The current state of the art is depressingly disappointing. I have no doubt such a sytem is designable, but I have no delusion that one has yet been designed, built, marketed and deployed.
Brad, I am not a supporter of the current selection of election systems, electronic or otherwise, as you justifiably seem to perceive from my comments. But I think that in 2008 and beyond it is not possible or reasonable to expect, nor do I think it desireable, that we do not use technology to make our elections better. So our emphasis should be on demanding that our election systems and methods be, not just good, but as close to fool-proof as possible.
One more point: Part of my support for electonic tabulation, at least on the back end, is due to my strong support for some form of rank choice voting. I believe firmly that THE biggest problem we have in this country has nothing to do with how elections are run. Our biggest problem is that two private organizations have taken over total control of our country: the Democratic and Republican parties. If we’re ever to return to anything close to goverment of the people, by the people and for the people the influence of political parties must be severely curtailed, both in the election process and behind the closed doors of our legislative bodies. Our biggest enemies are these two “companies” who own us. If we’re ever to get them out of our business we will need to do away with primary elections and move to some form of rank choice voting. And this will almost certainly require computing technology to implement. Therefore, our best course of action is to demand better laws, stricter enforcement and damn good systems. This is America and it is unacceptable that we don’t have the very best voting systems conceivable.
Please excuse the extended rant.
Coffee is a dangerous, mind-altering drug.