US: Diebold Sued by Two Groups of Investors

Publisher Name: 
Associated Press

Two groups of investors are suing Diebold Inc., claiming that misleading comments about the company's electronic voting machine business artificially inflated share prices.

The lawsuits filed this week in U.S. District Court in Cleveland claim Diebold was "unable to assure the quality and working order of its voting machine products," which are being scrutinized by election officials in several states.

The plaintiffs claim that the company tried to conceal the problems from investors and that Diebold lacked the internal controls necessary to accurately monitor its financial performance.

Both lawsuits seek class-action status.

The North Canton, Ohio-based company denied the allegations Friday, saying in a statement that "the lawsuits are without merit."

Colchester, Conn., firm Scott & Scott LLC sued on behalf of investors who held Diebold stock between Oct. 22, 2003, and Sept. 21, 2005. Stull, Stull & Brady of New York also sued, representing people whose employers bought Diebold stock for their retirement accounts during that same period.

The lawsuits claim the company's actions led to poor earnings guidance. Restructuring charges revealed on Sept. 21 caused share prices to plummet 16 percent that day.

Diebold said then that rising fuel costs, poor automated-teller machine sales and unexpected delays of voting machine sales because of Hurricane Katrina forced it to slash third-quarter earnings by more than half.

These suits come just days after CEO Walden W. O'Dell quit. Besides concerns about security and reliability of Diebold's election equipment, O'Dell was criticized in 2003 when he invited people to a Bush fundraiser.

AMP Section Name:Corruption
  • 106 Money & Politics