Wednesday, June 2, 2010

Canadian Company Buys Allen-based Diebold/Premier Election Solutions

Updated June 2, 2010 @ 11:58 P.M.
The company that markets the old Diebold/Premier electronic voting machines, used by Collin County voters, finally found someone to buy its failed Allen, Tx based Diebold/Premier Election Solutions business unit. Canadian-based Dominion Voting Systems, Inc has acquired the primary assets of Premier Election Solutions, including all intellectual property, software, firmware and hardware for Premier’s current and legacy optical scan, central scan, and touch screen voting systems, and all versions of the GEMS election management system. Dominion also has the right to hire former Premier employees.

Diebold's failed election division (renamed Premier Election Solutions in 2007) was purchased from Diebold for a pittance by Election Systems & Software, Inc. (ES&S) in September 2009 following a long three search for a buyer.

The Department of Justice's Anti-trust division later determined that the purchase of Diebold's Allen, TX based "Premier Election Solutions," by ES&S, resulted in a voting systems monopoly.

Collin County voters have been voting on Diebold Election Solutions DRE AccuVote touch screen voting systems, like the machine pictured left, since the March 4, 2004 primary election.

In 2008 Collin County purchased 410 of a newer version of the AccuVote voting booth machines (pictured right) to use for early voting. The newer AccuVote machine was used for the first time in Collin Co. during early voting for the November 2008 general election. Collin County continues to use the now antiquated "2004" AccuVote voting machines for Election Day voting. Collin Co. currently has a total inventory of about 1400 AccuVote voting booth machines.

On March 8, 2010 the U. S. Department of Justice, along with nine state attorneys general, filed an antitrust lawsuit in U. S. District Court in Washington, D.C. alleging that ES&S’ 2009 acquisition of Premier harmed competition. In settlement of that lawsuit ES&S agreed to look for someone willing to buy the assets of Premier.

In May 2010 Canadian-based Dominion Voting Systems, Inc agreed to acquire the assets of Premier Election Solutions from ES&S. From the Press Release announcing the acquisition:


Dominion Voting Systems, Inc. Acquires Premier
Election Solutions Assets From ES&S

Transaction Approved by the U. S. Department of Justice, Will Significantly Increase Competition in the United States Voting Systems Industry

Dominion’s Engineering and Customer Service Expertise Will Support Premier’s
Voting Products Throughout the U.S.

JAMESTOWN, New York .... Dominion Voting Systems, Inc. today announced that it has acquired from Premier Election Solutions, Inc. (Premier) a wholly owned subsidiary of Election Systems and Software (ES&S), the primary assets of Premier, including all intellectual property, software, firmware and hardware for Premier’s current and legacy optical scan, central scan, and touch screen voting systems, and all versions of the GEMS election management system.

As part of the transaction, Dominion also acquired an irrevocable, perpetual license for the AutoMark voting terminals used by voters with disabilities, a similar license for the VoteRemote absentee vote-by-mail processing solution, and rights to spare parts, supplies and other resources necessary to support and service these installed systems. In addition, Dominion will acquire a percentage of existing Premier inventory.

Under terms of the agreement, which was approved by the U. S. Department of Justice (DOJ) and nine state attorneys general, Dominion has secured the right to hire current and former Premier employees and to enter into agreements with Premier dealers experienced in deploying and supporting these systems. In addition, the transaction requires that current Premier customers be provided with the opportunity to assign their existing contracts to Dominion without penalty. As part of the transaction, Dominion granted license rights back to Premier, subject to certain restrictions. The transaction also provides limitations on the ability of ES&S to continue to sell the Premier equipment going forward. Premier voting systems are currently in use in over 1,400 jurisdictions in 33 states and serve nearly 28 million American voters.

Included in the acquisition are Premier’s legacy products as well as Premier’s new ASSURE 1.2 solution suite which includes hardware, software and firmware with enhanced functionality and strengthened security and auditability features.

Updated March 8, 2010 @ 11:45 A.M.
The Department of Justice's Anti-trust division has determined that the purchase of Diebold's Allen, TX based "Premier Election Solutions", by Election Systems & Software, Inc. (ES&S), has resulted in a voting machine monopoly.

A settlement has been struck, pending approval by a federal judge, between the DOJ, nine states, and ES&S requiring that the private company find a DoJ-approved purchaser of the Diebold/Premier assets. The proposed settlement, signed by the DoJ, ES&S, and representatives of state attorneys general in Arizona, Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee, and Washington has been posted here [PDF]. Announcement of the DoJ-ordered unwinding of the merger and proposed settlement is also posted here.

Updated March 4, 2010 @ 4:49 A.M.
This story is again in the news with a just released AP news article. The AP story does not report much new news, but since it puts the story in circulation again, we'll pull our old post back up to the top of the list. The AP story includes this quote:
"If you end up with 70 percent of the voting machines and the people rely on them, and if entry into the market is difficult or impossible, it would certainly seem to be a legitimate target for antitrust enforcement," said Charles "Rick" Rule, a longtime Washington attorney who ran the Justice Department's antitrust division from 1986-89 during the merger-friendly Reagan administration.
Updated December 20, 2009 @ 10:22 A.M.
In September 2009 privately owned Omaha, Neb. based Election Systems & Software Inc., the largest voting machine company in the country, bought its biggest competitor, Diebold's Allen, TX based "Premier Election Solutions," without advance public notification.
The New York Post reports today that the U.S. Dept. of Justice and 14 states are actively investigating the already-completed merger of the two biggest makers of voting machines in advance of possible anti-trust legal action to unwind the merger as soon as next month.

The Miami Herald reports that Florida's AG office launched an investigation into the acquisition for possible violations of Florida's anti-trust statutes.
The U.S. Dept. of Justice joins Florida and 13 other states in similar investigations to investigate the merger that put privately held ES&S in control of the voting machines in nearly 70 percent of the nation's election precincts. (Separate from Justice's review, competing voting machine firm Hart InterCivic Inc. has sued ES&S, alleging that the company holds an unfair anti-competitive monopoly on the U.S. voting machine market.)

Given ES&S is a privately held company it issues no financial reports and it was not required by law to give advanced notice to the Securities and Exchange Commission (SEC) or the Dept. of Justice about its acquisition of the Premier Election Solutions unit of Diebold. However, the government does have jurisdiction to take action in such transactions, if they create unfair anti-competitive monopolistic markets.

In a letter sent to Attorney General Eric Holder in September 2009, just after ES&S announced its acquisition of Premere, U.S. Senator Charles E. Schumer (D-NY), the Chairman of the Senate Rules and Administration Committee and a senior member of the Senate Judiciary Committee, expressed concerns over the deal and requested that the Justice Department’s Antitrust Division launch an investigation. In the September 2009 letter Schumer writes:
“If this acquisition proceeds, one company could control over three-quarters of the U.S. market for voting systems. Given other factors, including high barriers to entering the market, I am deeply concerned that local governments and taxpayers will not be getting a fair deal because too much market power will be held in too few hands.”

“It is in the public interest to maintain a range of choices in voting systems” -- noting that increased consolidation in the election-machine market could make elections more susceptible to fraud.
Originally Posted on September 3, 2009 @ 9:49 A.M.
After a three year search Diebold has at long last found a buyer for its Allen, TX based "Premier Election Solutions" business unit. The company announced Thursday that Premier Election Solutions, Diebold’s beleaguered voting machine division, had been acquired by Election Systems and Software (ES&S).

Collin County voters have been voting on Diebold Election Solutions DRE AccuVote touch screen voting systems, like the machine pictured left, since the March 4, 2004 primary election.

In 2008 Collin County purchased 410 of a newer version of the AccuVote voting booth machines (pictured right) to use for early voting. The newer AccuVote machine was used for the first time in Collin Co. during early voting for the November 2008 general election. Collin County continues to use the older "2004" AccuVote voting machines for Election Day voting. Collin Co. currently has a total inventory of about 1400 AccuVote voting booth machines.

In 2006, Diebold began attempts to distance itself from its election solutions division because controversies swirling around its computerized voting system line of business tarnished its mainline banking ATM business, plus, the added profits Diebold envisioned when it purchased the elections systems business never fully materialized. Diebold endured numerous lawsuits in addition to its PR problems over its Election Systems product.

Wired Magazine: Diebold, an Ohio-based maker of ATMs and security systems, purchased the elections business from Global Election Systems for $31 million in January 2002, just as Congress was passing the Help America Vote Act, which allocated billions to states to purchase new voting machines.
Instead of reaping the flow of federal HAVA funds the new Diebold Elections Systems division immediately ran headlong into controversy when Diebold Inc. CEO Walden O’Dell, a fundraiser for former President George Bush, wrote in a letter to Republican supporters in 2003 stating that the company was “committed to helping Ohio deliver its electoral votes to the president” in 2004.
[Diebold's AccuVote computers were widely used throughout Ohio and O’Dell's letter suggested to some that Diebold might install software on the AccuVote machines "rigged" to throw the Ohio vote to Bush.]
The company then became a target of additional bad "PR" after it inadvertently put its AccuVote computer source code on a public internet access FTP computer. This gave computer scientists an opportunity to examine the AccuVote software code. The computer scientists who studied the software code said they discovered numerous security problems with the voting system [that might allow someone to hack and change votes recorded on the voting machines].

Criticism of Diebold Elections Systems' voting equipment remained constant as the voting system experienced numerous problems in election districts around the country, and reports surfaced that company officials had applied untested and uncertified software updates to voting computers. [Did E-Vote Firm Patch Election?]
[Atlanta Progressive News' Matthew Cardinale filed a report reviewing the history and concerns about software patches illegally installed on Georgia's Diebold touch-screen voting systems.]
Wired Magazine: The most recent problem with the company’s system occurred in the 2008 presidential election in Humboldt County, California, when Diebold’s tabulation software randomly deleted nearly 200 votes. An examination of the system revealed that its audit logs failed to record significant events, such as someone deleting votes from the system; it also contained a delete button that allowed anyone with access to the system to erase the audit logs.

Diebold began looking for a buyer for the troubled touch-screen and optical scan voting, and electronic voter registration business in early 2006. Following a year-long failed attempt to find anyone willing to buy the e-voting business, Diebold spun it off as a wholly owned subsidiary business, renamed the subsidiary "Premier Election Solutions" and gave the business unit its own separate management team and board of directors in August 2007.

Diebold continued to actively search for someone to buy for its election system business unit until Election Systems & Software, another company in the election systems industry, finally aggre Diebold has at long last found a buyer and has sold its controversial U.S. election systems business to competitor Election Systems & Software, another company in the election systems industry. The sale closed Wednesday September 2, 2009 and consists primarily of Diebold’s Allen, Texas-based subsidiary, Premier Election Solutions.

Diebold reportedly agreed to sell the business for $5 million in cash, plus payments representing 70 percent of any cash collected on outstanding accounts that were receivable as of Aug. 31. Diebold expects to recognize a pre-tax loss in the range of $45 million to $55 million as a result of the transaction. The pre-tax loss includes the assets and liabilities of the business, certain retained legal liabilities, and other transaction costs.
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