The BRAD BLOG has received exclusive detailed information about a developing potential class action securities litigation against Diebold, Inc. (stock symbol: DBD). The class for the suit will involve shareholders who purchased or owned stock in the Ohio-based company any time from October 22, 2003 through September 21, 2005.
Though we are not at liberty at this time to discuss the specifics of the potential litigation and the causes of action in the complaint being compiled, The BRAD BLOG has learned that the class action lawsuit, currently being drawn up, will involve securities fraud violations and other troubling matters for the controversial company, its CEO as well as current and former members of its Board of Directors.
VelvetRevolution.us (an organization co-founded by BRAD BLOG managing editor, Brad Friedman) is seeking additional individuals and groups who may qualify as plaintiffs in the specified class. Those who owned or purchased Diebold stock, or mutual funds which carried Diebold during the period mentioned, are asked to contact LawSuit@VelvetRevolution.us where information submitted may be turned over to attorneys for possible addition to the plaintiff class.
Union groups who own or owned shares of Diebold or mutual funds which invest in the company are specifically urged to contact VR about joining the class action.
Diebold, Inc. is the controversial Voting Machine and ATM manufacturer who was recently compared to Enron by an anonymous company insider The BRAD BLOG dubbed "DIEB-THROAT" in a series of exclusive reports. The Internet news site, RAW STORY ran a new exclusive interview with DIEB-THROAT yesterday revealing additional details on the inner-workings of the company and potential legal issues they may face.
Shortly after our first report on DIEB-THROAT, Diebold's stock price plummeted some 15.5%. The company attributed their troubles at the time to shortfalls in the wake of Hurricane Katrina and on the same day announced the resignation of their chief operating officer (COO) and President, Eric C. Evans. Our source, DIEB-THROAT, challenged the company's response to the falling stock prices in the wake of lower than expected earnings by suggestion that "Using Hurricane Katrina is a poor excuse for bad products - the last time this kind of deception occurred it was called Enron."
Diebold CEO Walden O'Dell has come under harsh criticism for his statement to Republican fundraisers that
Diebold he (see explanation for correction below) was committed to delivering the electoral vote of the state of Ohio to George W. Bush prior to the 2004 Presidential Election. O'Dell was part of Bush's "Rangers and Pioneers," a group of individuals who had raised at least $100,000 each for Bush/Cheney's 2004 re-election campaign.
As well, the company has been facing other mounting troubles, legal and in the court of public opinion, over their implementation of software, hardware and various Elections Systems contracts around the United States as has been reported in have charged the company may be in violation of a court order stemming from that agreement. In North Carolina, Diebold recently lost an attempt in the court system to receive exemption from parts of a state law requiring the escrow of their voting system's software source code. They were certified anyway the next day in North Carolina, and some activists have questioned whether or not the certification was done according to state law and whether or not new legal proceedings may be launched there. And in California, a debate rages on concerning the possible re-certification of Diebold's touch-screen voting machines here after some 20% of their machines failed in a recent mock election test.
According to internal "Privileged and Confidential" documents of "Attorney Work Product" originally obtained and reported by Ian Hoffman of The Oakland Tribune in 2004, an estimate of legal costs in California for the Voting Machine giant was pegged by their attorneys at $535,000 - $925,000 for just a single two month period in order to fight mounting legal troubles in the state. Diebold's law firm, Jones Day fought in Los Angeles County Superior Court to keep those leaked memos from being further circulated.
The document estimating legal expenses [PDF] lists costs in regard to the Qui Tam Action filed (and eventually settled) by election watchdogs at BlackBoxVoting.org, the costs for fighting "Criminal Exposure" such as "legal analysis of potential criminal violations" and "White collar criminal law attorney pre-grand jury investigative advice" and even costs to the firm to "Monitor selected Web sites to gain key intelligence."
Concerning the potential of a new lawsuit against the company, DIEB-THROAT is not surprised, and expressed hopes to The BRAD BLOG in a recent email that some good may come from the possibilities of upcoming litigation:
"The denial of every documented problem with Diebold's voting system was bound to unravel sooner or later. I am not surprised that such a lawsuit has developed [as] the company consistently offered Wall Street deceptive information. Perhaps with the help of few patriotic plaintiffs our nation will be saved from Diebold's corporate takeover of our right to vote - and have that vote counted free from corporate and political influence."
The BRAD BLOG will, of course, continue to follow this story as it develops...
UPDATE 12/12/05: Diebold CEO, Walden O'Dell resigns in wake of imminent fraud litigation! MUCH MORE...
CORRECTION: A reader correctly pointed out that O'Dell promised that he, not necessarily his company, Diebold, as we originally reported, was committed to delivering the state of Ohio to George W. Bush in the 2004 election in his now-infamous fundraising letter to Republicans. More details here on that letter, here....