The BRAD BLOG can now report that a Securities Fraud Class Action suit has been filed against Diebold, Inc. (stock symbol: DBD) naming eight top executive officers in the company as co-defendants. The suit has been filed by plaintiff Janice Konkol, alleging securities fraud against the North Canton, Ohio-based manufacturer of Voting Systems and ATM machines on behalf of investors who owned shares of Diebold stock and lost money due to an alleged fraudulent scheme by the company and its executives to deceive shareholders during the "class period" of October 22, 2003 through September 21, 2005.
The suit was filed today in U.S. Federal District Court in Ohio and alleges the company "artificially inflated" stock prices through misleading public information designed to conceal the true nature of Diebold's financial and legal situation. The defendants are also alleged to have attempted to disguise well-known and ongoing problems with Diebold's Voting Machine equipment and software. Additionally, the suit alleges insider trading by defendants resulting in proceeds of $2.7 million. Remedies are sought under the Securities Exchange Act of 1934.
The suit, filed by the law firm Scott+Scott, LLC on behalf of Konkol and the plaintiff class, names former Diebold CEO and Chairman, Walden O'Dell as a co-defendant along with seven other current and former officers of the once-venerable company.
News of the pending litigation was first reported as imminent in an exclusive report by The BRAD BLOG late last week.
Yesterday, in a surprise announcement, O'Dell unexpectedly resigned from the company. A Diebold press release described O'Dell as leaving the company for "personal reasons". He was immediately replaced by the company's president and chief operating officer, Thomas W. Swidarski, who had directly overseen Diebold's Election Systems subsidiary division for some time. Swidarski is also named as a co-defendant in today's class action suit.
After news was released of weaker-than-expected third-quarter earnings on September 21, Diebold stock prices plummeted 15.5% in unusually heavy trading that resulted in a one day sell-off costing investors more than $40 million dollars. The complaint describes Diebold and the co-defendants as having "failed to disclose adverse facts known" to the company and that they "participated in a fraudulent scheme and course of business that operated as a fraud."
The suit, to be released in full by The BRAD BLOG shortly, (UPDATE: Full suit now available for download here) alleges Diebold and the eight co-defendants failed to alert investors to adverse facts known to the company, choosing instead to participate in a "fraudulent scheme and course of business" that operated as a fraud or deceit on the company's shareholders.
The suit describes the liabilities of the company and co-defendants as follows...