Foreign-Owned Parent Company Smartmatic Has a Whole Lot of Denying to Do...
EXCLUSIVE: Letter From Company President to Customers Announcing Sale, Withdraw from Voluntary Cooperation with Federal Investigation
By Brad Friedman on 1/19/2007, 10:05am PT  

And speaking of Sequoia's hackable voting systems...I wrote a piece with John Gideon published by ComputerWorld a week or two ago on the news that Smartmatic, the parent-company to Sequoia had announced to their clients they were trying to unload the liability recently purchased voting machine firm. It was a busy week, and I forgot to link to the story from here when it ran.

By way of apology for the oversight then, here is the unedited version of the story (with the originally submitted headline as you see above) which I find a fair bit more entertaining than CW's somewhat softened and certainly much nicer version. Though Sequoia's ubiquitous spokesperson, Michelle Shafer, may not be happy about it. Oh, well. Enjoy...

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Anyone want to buy a slightly used voting machine company? On behalf of a very used country?

In a surprise announcement late last week, Smartmatic, the company who owns a controlling interest in Sequoia Voting Systems, announced they are withdrawing from a federally mandated investigation by the Committee on Foreign Investment in the US (CFIUS) because they will now be selling Sequoia. If they can find a buyer, that is.

The announcement, made by the company on a Friday --- just before a long holiday weekend --- certainly leaves one to suspect that there may be more to this story than Smartmatic cares to reveal, or that has yet been uncovered by federal investigators.

Sequoia Voting Systems President Jack A. Blaine sent a letter to their customers late last week with the announcements. The BRAD BLOG has obtained Blaine's letter even though we have been unable to find it posted on either the Sequoia or Smartmatic company websites (the letter is posted in full, apparently exclusively, at the end of this article.)

Since they released the information when few would notice it --- on the last working day before the Christmas, New Year vacation week --- we figured we'd at least be kind enough to wait to run the story this week, rather than over the weekend, in hopes that more interested citizens might read it. You're welcome, Sequoia and Smartmatic.

"Both Sequoia and Smartmatic will keep doing the same things they do today: provide the most reliable, secure and auditable voting solutions to the marketplace," Blaine's letter reads.

(We'll pause here for a moment to allow you... finish...



In March of 2005 DeLaRue, the British money printing giant, announced that they were selling their controlling interest in Sequoia Voting Systems, for $16M to Smartmatic. Smartmatic is a US corporation with their home office in Boca Raton, Florida but with a trail of ownership that --- when followed as far as the trail can be tracked --- points to interests in the Netherlands. However, the officers of Smartmatic are of dual Venezuelan/Spanish citizenship with rumored ties to the Chavez regime in Venezuela.

Smartmatic denies any ties to Chavez. As well, they have also denied recent allegations that they paid some $91 million in bribes to Venezuelan officials to secure the contract to supply electronic voting machines for the country's recent Presidential Election.

They also deny "allegations involving tax evasion, an excessive commission to a lobbyist in Caracas and alleged death threats by Smartmatic President Antonio Mugica," according to the Miami Herald.

That's a whole lotta denial going on. As well, in the same Herald article linked above from earlier this month, Smartmatic's recently retained D.C. attorney actually has the temerity to say: ''The company's policy is one of full and open disclosure."

(Pausing again to allow the laughter... die down... a dull roar...)


At the time of the sale of Sequoia to Smartmatic the question was "why so cheap?" Why only $16 million for the sale of a company with nearly as much as that in assets and contracts, along with the potential for hundreds of millions of dollars of sales and contracts leading up to the 2006 election. Everyone knew there would be a feeding frenzy for voting machine vendors as they plied their wares to every unsuspecting state and county official that felt the need to meet the new mandates of the Help America Vote Act (HAVA) and receive their piece of the $3.8 billion in free money available to them for "upgraded" voting equipment.

In fact, that feeding frenzy, so far, has brought in some $200 million for Smartmatic, along with future contracts for licensing, technical support, fees, ballot printing and other incidentals which will be worth at least $16 million every year for Sequoia over the next several years.

The Financial Times covered the story on Friday, as did WaPo on Saturday, as well as a number of other outlets.

So far, however, the one point we haven't seen mentioned in any of the coverage, is; What firm in their right minds would buy this company given the extraordinary amount of liability these voting machine companies may well be facing in the not-too-distant future via legal suits of all kinds and from all quarters. As more and more flaws are shown in their systems, more whistleblowers step forward to reveal the company new well that their systems were insecure and inaccurate, and as new elections officials come in to office and hope to cover their own asses, we suspect that there will be lawsuits aplenty for all of the voting machine companies.

Despite Blaine's claim in his letter to customers last week ("we have already had some interest!" --- yes, that exclamation point was theirs) that they they are "confident there will be many potential buyers for our company," we wonder who would be foolish enough to wade into these waters with the legal baggage that will undoubtedly come along with any such acquisition of such a company.

We'd suggest that this may be one reason why we haven't heard much about the sale of Diebold's Election Division which was rumored to be on the possible agenda after the former CEO Walden "Deliver Ohio's Electoral Votes to Bush" O'Dell was pushed out of the company and new CEO Tom Swidarski came in.


Sequoia is obviously very concerned about the appearance of all of this, and so they're bringing out the big guns in the form of reliable company spokesliar, Michelle Shafer, who has come in handy of late with buckets full of bullshit ready for any and all media outlets willing to unquestioningly reprint her unsupported statements garbage in their pages.

In fact, we suspect she's the one who wrote this chestnut into Blaine's letter:

Sequoia voting equipment was used successfully by hundreds of customers throughout 16 states and the District of Columbia during the November mid-term elections here in the U.S.

We guess it all depends on what your definition of "successful" is. It's true, that nobody caught fire or actually died while using their systems this year (that we know of), so perhaps their systems were "used successfully" in that sense.

On the other hand, the fact that it was disclosed (via The BRAD BLOG, natch) that all Sequoia touch-screen systems allow voters to vote as many times as they might like merely by pressing the yellow button on the back of each machine, or that their systems can be easily, even accidentally hacked; or that votes tend to disappear on their machines; or that Sequoia refuses to stand behind the failed technology used in their own machines to transmit "results" to election headquarters; or that the company doesn't seem to want any actual independent security testing done on their systems; not to mention the failures on Sequoia touch-screen machines that led to New Mexico banning them completely; and the 100,000 "errors" found on Sequoia systems in Palm Beach in 2004...well, there may be reason to believe their systems don't perform quite as "successfully" as the company tries to lead folks to believe.

...And well, gosh, whaddaya know?! When checking the "document properties" of the PDF of Blaine's letter, look who is specified as the "author" of the document: "mshafer". Well, go figure.

Shafer's been quoted quite a bit of late, and seems to be making herself a very handy asset for Sequoia these days as they come under fire from all quarters for their unsecured, easily gamed, inaccurate voting equipment, as well as their questionable business ties and practices.

So Blaine, in his letter to customers --- as written, apparently, by Shafer --- makes no secret of the fact that she is ready and willing to lie as needed on behalf of any election official who may need some backup:

If you are asked any questions about this matter by members of the media and need assistance, please contact Michelle Shafer, Sequoia’s Vice President of Communications & External Affairs at or 800.347.4702

We'd have contacted her ourselves with a few questions, but frankly, it's Christmas weekend as we're writing this and doubt she's available. Aside from that, we have a reputation to keep for accuracy and truth-telling. We've read what Shafer has said elsewhere and, frankly, she is not a credible source worth quoting on this website.

The complete 12/22/06 letter, signed by Jack F. Blaine, President of Sequoia Voting Systems, to his customers, may be downloaded here [PDF], it also follows in full below...

December 22, 2006

Dear Sequoia Customers -

As you are likely aware, Sequoia and Smartmatic voluntarily filed for review of Smartmatic’s acquisition of the company with the U.S. Committee on Foreign Investment in the United States (CFIUS) in an effort to put to rest the baseless but persistent rumors about our company’s ownership.

The CFIUS process has been very time consuming, expensive and draining on our intellectual capital, distracting both Smartmatic and Sequoia from our critical core business goals of enhanced growth in the world marketplace.

More importantly, given the current climate of the United States marketplace with so much public debate over foreign ownership of firms in an area that is viewed as critical U.S. infrastructure --- election technology --- we feel it is in both companies’ best interests to move forward as separate entities with separate ownership, while intending to remain business partners.

Therefore, we are announcing via the attached press release that Smartmatic has withdrawn from CFIUS review process with the approval of CFIUS, a U.S. government inter-agency group led by the U.S. Department of Treasury.

Smartmatic is also announcing its intent to seek an acquirer for Sequoia Voting Systems.

In spite of this announcement, it is important that our customers know that Sequoia and Smartmatic intend to work together as business partners, leveraging our companies’ mutual strengths after the sale of Sequoia. Going forward, Sequoia will be able to buy new products from Smartmatic, and Smartmatic will be able to address the U.S. market through Sequoia. The major visible difference in the future will be new, separate U.S. ownership for Sequoia which will enable Sequoia and Smartmatic to work together as true business partners rather than as subsidiary and parent. To have Sequoia owned by U.S. investors will be in everybody’s best interest in the end.

Our goal in communicating this information is to assure you that we fully intend to maintain the value of both the Sequoia and Smartmatic enterprise. Both companies will continue to operate with the same management teams in place and we expect any changes to be completely transparent externally to you. We will go forward [sic] "business as usual during the Sequoia sales process which we expect to take between 6 and 12 months to complete. Both Sequoia and Smartmatic will keep doing the same things they do today: provide the most reliable, secure and auditable voting solutions to the marketplace.

I am very proud of all of the tremendous work the Smartmatic and Sequoia teams have accomplished this year; Sequoia voting equipment was used successfully by hundreds of customers throughout 16 states and the District of Columbia during the November mid-term elections here in the U.S. Smartmatic worked with their CNE customer in Venezuela to conduct a very accurate, smooth and auditable presidential election on their renowned SAES electronic voting equipment with Voter Verifiable Paper Audit Trail (VVPAT) earlier this month. Thus, I am making these arrangements in conjunction with Antonio Mugica, Smartmatic’s CEO, to best position both companies, our team members and all of our customers for future growth.

As you certainly know, Sequoia is one of the nation’s leading providers of voting solutions, and we are confident there will be many potential buyers for our company. In fact, we have already had some interest! Sequoia has exceptional market share growth and the company’s revenue has increased four-fold during our ownership by Smartmatic. It has the strongest product line in the market and it’s considered by many to have the best customer service.

Sequoia’s future is extremely bright and both Antonio and I are committed to building upon the great work that has been done by Sequoia during the last two years, as well as the last century.

If you have any questions at all about this matter, please don’t hesitate to contact your Sales Representative, Account Manager, a member of our management team or myself. If you are asked any questions about this matter by members of the media and need assistance, please contact Michelle Shafer, Sequoia’s Vice President of Communications & External Affairs at or 800.347.4702.

Best wishes to you and your families for a happy holiday season and a joyous new year.

Best regards,

Jack A. Blaine
Sequoia Voting Systems