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Attorney General Lockyer Announces $2.6 Million Settlement with Diebold in Electronic Voting Lawsuit

Settlement Would Resolve False Claims Allegations, Strengthen Security of Equipment
Wednesday, November 10, 2004
Contact: (415) 703-5837

(OAKLAND) – Attorney General Bill Lockyer today announced a proposed $2.6 million settlement with Diebold Election Systems, Inc. (Diebold) to resolve a lawsuit that alleged the Texas-based firm provided false information to obtain payments from the state and counties for its electronic voting equipment.

"There is no more fundamental right in our democracy than the right to vote and have your vote counted," said Lockyer. "In making false claims about its equipment, Diebold treated that right, and the taxpayers who bought its machines, cavalierly. This settlement holds Diebold accountable and helps ensure the future quality and security of its voting systems."

Lockyer filed the proposed settlement simultaneously with the complaint in Alameda County Superior Court. He filed both jointly with Alameda County District Attorney Thomas J. Orloff and Alameda County Counsel Richard E. Winnie. Before it becomes final, the settlement must be approved by the court.

The complaint is an amended version of a false claims lawsuit originally filed November 21, 2003 by James March and Bev Harris. Lockyer and the local prosecutors, after conducting their own investigation, intervened on September 7, 2004 and took over the case. March and Harris are entitled to claim a portion of the proceeds from the proposed settlement. The court will determine how much they receive. Additionally, if the court determines March and Harris are entitled to recover attorneys fees and costs, Diebold will be responsible for reimbursing those expenses.

The proposed settlement calls for Diebold to pay a total of $2.6 million. The payment would be allocated as follows: $1.25 million to the state and $100,000 to Alameda County to resolve alleged violations of the state's False Claims Act (FCA); $375,000 each to Alameda County and the state to resolve alleged violations of the state's Unfair Competition Law; and $500,000 to the UC Berkeley Institute of Governmental Studies (IGS). The IGS would use the $500,000 to fund research aimed at training poll workers in the use of electronic voting technology.

In addition to the $2.6 million, the settlement would require Diebold to pay the costs of providing optional paper ballots to voters in Alameda and Plumas counties in the November 2, 2004 general election, if the counties request such reimbursement. Diebold's obligation under this provision would be limited to the cost of providing paper ballots for up to 25 percent of the registered voters in the two counties.

Under the settlement, Diebold also would: pay for optical scan equipment and ballots used in the November 2, 2004 general election in Kern, San Joaquin and San Diego counties; pay for storage of electronic representations of each ballot cast on touchscreen voting units in the November 2, 2004 general election in Alameda, Plumas and Los Angeles counties; upon Alameda County's request, pay for tamper-resistant tape used by the county in the November 2, 2004 general election; install, and pay the cost of installing, upgraded touchscreen firmware in Alameda, Plumas and Los Angeles counties, and upgraded vote tabulation software in all counties using Diebold voting systems in the November 2, 2004 general election; upon Alameda County's request, pay for 750 expanded memory cards for the county's touchscreen voting units.

Additionally, the settlement includes important provisions that would require Diebold to strengthen the security of its touchscreen voting machines and vote tabulation servers. During the course of negotiating the proposed settlement, Diebold took steps to implement some of these "injunctive relief" requirements.

One provision would require Diebold to replace hard-coded, "supervisor" passwords with dynamic passwords, and provide directions and training to enable election officials to change the dynamic passwords. Diebold also would have to encipher data transmissions between touchscreen terminals and vote tabulation servers, and replace hard-coded data encryption, standard security keys with encryption keys programmable by counties.

Additionally, the settlement would require Diebold, upon request of the counties using its voting equipment, to reconfigure the vote-tabulation server to better secure the systems in those counties. In the alternative, Diebold could instruct the counties on how to complete such a reconfiguration. Under the settlement, Diebold would be prohibited from connecting voting systems to specified networks, transmitting official election results through use of such networks, or downloading software or firmware through use of specified networks. The settlement also would require Diebold to offer training materials to the counties on how to use its voting systems.

Further, Diebold would have to provide the California Secretary of State, upon demand, documents from independent federal testing authorities, and information related to the development, testing, installation and operation of its voting systems. The information would allow the Secretary of State to further analyze the Diebold systems used in California elections.

The amended complaint filed by Lockyer and the Alameda County officials alleges Diebold made false claims about the security, and state and federal certification, of its touchscreen machines and vote tabluation system. As a result of those false claims, the complaint alleges, Alameda and other counties spent taxpayer money to buy the equipment. The state then reimbursed six counties for a portion of their payments with funds provided under the Voting Modernization Bond Act of 2002 (VMBA), according to the complaint. Those counties included Alameda, Kern, Lassen, Plumas, Santa Barbara and Siskiyou.

In the case of Alameda, the county spent about $11.8 million on Diebold equipment, some of which failed during the March 2004 primary election. Alameda County recouped roughly $8.8 million from the state-provided VMBA funds.

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