Friday, September 15, 2006


Hitting Diebold Systems in their Achilles Heel

By now you have probably heard about the Princeton Video that shows yet again how easy it is to compromise the Diebold systems.  Here is a picture of our heroes: Dr. Felten and his students, Feldman and Halderman

As you can see, not all patriots are firebrands from central casting.  They are normal folks like you and me.  And that is important because Diebold is starting to push back... and it is going to take normal folks like you and me to help our heroes keep Diebold's feet to the fire.  Let's look at where Diebold is vulnerable and how Diebold is trying to defend itself.

Diebold is a publicly traded company, trading under the stock symbol DBD.  First some facts about the company.   The vast majority of the stock is traded in large blocks by institutional investors.  It's currently trading around 42 bucks.  Yet its book value (what you would get if you sold it off as parts) is only about 16 bucks a share, so the trading value includes future expectations of great earnings.  If those expectations are not met, or there is serious reason to question them...for example if there is a hidden liability that may come out down the road... folks are not going to want to be holding the bag when it comes time to pay the piper.  You can be sure Diebold is aware of this potentially devastating problem.

Here's how Diebold is pushing back in the public relations arena.  They are certainly issuing press releases designed to obfuscate the issue.  For example, they claim the system hacked by the Princeton group outdated and thus not relevant.  cough cough.....say WHAT!??!  You are telling me they admit the systems used in the 2004 Presidential Elections were security sieves?  Or was it the 2000 Presidential Elections that were flawed? Or both? Remind me again, how is that not relevant?  

Of course that sort of defense is for the wonks like us and to keep the press off their ass... it allows them to be "balanced" by presenting the damning evidence and then watering it down by saying "Diebold, in an official statement countered these charges by ....."   Doesn't matter if they are irrelevant or not, Middle America hears "it's complicated like global warming ...blah blah blah blah ...change the channel."  This is not the first time they have done this.  Here's an example from Ohio as recently as August, 2006.

Here's an idea: How about they let the Princeton group test their current generation of machines and software before they get certified?  Gee .... is that the sound of crickets I hear?

Another way they fight back is more subtle.  It's called "editorial placements."  These are pieces written by agencies for Diebold which are then provided as filler to local papers around the country.  They generally run as editorials and "news you can use" type pieces which appear to be informing the public about something of general interest, but they are really designed to position the product/service/company in a positive light.  It's one of the most cost-effective forms of publicity out there.

Here's an example of a pro-Diebold editorial from earlier this week titled

.... wait for it.....

"Diebold system could cut down fraud."  Can you say "chutzpah"?  Sure you can.  I won't say they are lying here... I mean it could cut down fraud... or not... who knows, right?  Expect more of the same to blanket the nation between now and November.  Diebold has more at stake here than their rapidly expanding e-voting business.  I have no doubt that Diebold's marketing department is keenly aware of the potential meltdown they could face if institutional investors started to dump their stock.

Why do I think that a concern for them?

Institutional investors hold the vast majority of Diebold's stock (about 83% of all its publicly held stock).  This means that their holdings are concentrated in relatively few hands and even fewer decision makers.  Even if they are held by a mutual fund or a pension fund, very few people are making the decision of whether they hold it or sell it.  These are not sentimental people.  Do they really want to be the ones riding DBD down?  Do they want to explain why they chose DBD over competitors like NCR and GLYT, when the competitors have better financials?

And who are some of the big institutional holders?
Glad you asked. The Morgan Stanley Mid Cap Value funds, for starters.  DBD is in the top ten of holdings in several Morgan Stanley funds.

Ticker Name  % of Fund
BNSMX  Banknorth:Sm/MC Core  4.02%
AVEDX  Ave Maria Rising Div  3.26%
RCMFX  Schwartz Inv:Value  2.85%
MDFBX  Morg Stan MC Value;B  2.58%
MDFCX  Morg Stan MC Value;C  2.58%
MDFDX  Morg Stan MC Value;D  2.58%
MDFAX  Morg Stan MC Value;A  2.58%
MPMIX  Morg Stan Inst:MCV;Inv  2.57%
MPMVX  Morg Stan Inst:MCV;Ins  2.57%
MMCAX  Morg Stan Inst:MCV;Adv  2.57%

Take those together and I think you can see how Diebold's problems could spread and become Morgan Stanley's problems -- especially if they are not willing to divest.

Lest you think that is a fanciful scenario, here's a recent demonstration of how problems for a corporation can lead long term financial supporters to abandon it; I am talking about the campaign targeting potential advertisers for this season's Survivor on CBS.  Here's part of an email that arrived earlier yesterday from a Mistubishi executive:

"In light of this information and our genuine interest in promoting positive ethnic relations -- [Mitsubishi] has decided to withold advertising on this program unless the plot changes dramatically.  Thank you for bringing this to our attention."

Still think longterm business allies will stand behind a corporation suffering from a public relations catastrophe?

I suggest we get busy and look for every opportunity to turn the financial pressure hose on Diebold and its financial supporters.

Why? Because it works.

"Brothers and sisters, if you and I would just realize, that once we learn to talk the language that they understand,
they will then get the point. You can't ever reach a man if you don't speak his language.
- Malcolm X

Wednesday, September 13, 2006


To err is human. To really screw things up, use Diebold

I'm a technically savvy guy. I've had my own PC since the 8088 days when DOS was putting the final nails in the coffin of CP/M and Leading Edge was getting flak for cracking the compatible wars wide open. I was online before BIFF stole his brother's Commodore 64. Before spam. Before nuking. Before Gopher. I think UNIX is a nice place to live, but I wouldn't want to visit. I even know the plural for VAX (hint:it's not VIXEN).

When it comes to computers, I know Jack. So trust me when I tell you, "To err is human, to really $#@#!!*& things up you need a computer." I say all that to underscore the fact that my discomfort with electronic voting machines is not borne of ignorance. My contempt is a direct result of my familiarity with the technology. The only reason I use Diebold machines is because I have no choice. In the last election cycle (2004) I screwed up my Diebold machine from the interface. No programming tricks, no hardware hacks, no wifi attacks... I found an "undocumented feature" on the touch screen. I'm not claiming any special powers, I used to get paid to crash systems from the screen (User Interface, or UI, to those in business).

I don't know who is blowing who, but someone is definitely trading favors when entire voting districts (and in some cases, entire states) are converting to a system that has documented security problems. Sure, folks can ignore this stuff as long as it is geeks and techies talking shop. Who listens to geeks and wonks? Well, I'm here to tell you there is new unambiguous documentation of how easy it is to hack these systems, implant malicious code, steal votes, and cover your tracks.

For all the folks who dismissed people like Bev Harris at BlackBoxVoting.Org, or The TrueVoteMD crowd, or the folks at VerifiedVoting at Stanford, or Rebecca Mercuri from Bryn Mawr, or Doug Jones at University of Iowa, or Avi Rubin at Johns Hopkins because you had to actually read what they wrote to realize how screwed up these systems are, things just got a lot easier.

The good people at Princeton's School of Engineer and Applied Science have taken their engineering expertise and applied it to these machines. Fortunately for you, they made a video!

All I'm saying is, if you watch that video and still don't see how the very foundations of our democracy are being threatened, then you deserve the gummint you git. For the rest of you, it is time to write your representatives, senators, local officials, and election boards to let them know Hell No! If you are still at a loss of where to start, remember Google is your friend. Try searching the keywords "local election boards list" and add your state's name to the search string. For example: local election boards list maryland.

What are you waiting for? It doesn't matter whether you are Republican or Democrat, liberal or conservative, Yankee or Southern Belle, metrosexual or Marlboro Man. If we don't demand reliable, verifiable, valid and accountable voting systems, this most fundamental aspect of our democratic process will be wiped from the face of the earth as surely as they can wipe out votes on a Diebold AccuVote running MS Access.

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