From a reader: has just sent out the following alert. you will not find it on their web site- probably because it was sent out privately to their paid customers. I just received it from a trusted friend.

The Emerging Capital Report
December 14, 2005

**Flash Sell Alert**

Voting Machine Scam Offers Windfall Profit Opportunity

Back in 2000, the presidential election was decided based on interpretation of hadwritten ballots. Pundits decreed that never again should we depend on a system that allowed “hanging chads,” “dimples” and other such flaws.

Instead, we were to use electronic voting machines. The rush was on to adopt these across the country.

It now turns out that America traded the frying pan for the fire.

Diebold Inc. (DBD: NYSE) is ready for sale. We don’t own it, but it’s so vulnerable that a short-sale is warranted.

While I generally don’t recommend short-selling (borrowing shares and then selling them), I can’t resist doing this with Diebold.

IMPORTANT: Read and thoroughly understand the “Action to take” instructions below. Short-selling is not for the uninformed.

This is a Special Situation, to be done only with extra money, not in lieu of a regularly scheduled Transformational Technology Portfolio purchase. (You’ll have to keep money in your account to cover the risk of losses if Diebold should rise. That money could instead be used to buy Transformational Technology stocks.)

Why am I making my first-ever short sale in the history of The Emerging Capital Report?

Diebold is a company that’s benefited from its political connections to become the largest supplier of voting machines in America. It’s got a market capitalization of $2.7 billion. All that could melt away.

The company’s leading voting machines have now been proven glaringly vulnerable to “hacks.” Hacks, as you may know, are deliberate interferences with software by a person (aka a “hacker”). Usually, it’s not malicious. When it is, it can be costly.

How about a hack that steals an election? This horrifying scenario strikes at the heart of the American system, and it’s been proven possible. Election commissioners are starting to recognize this and drop Diebold.

This has all been pretty technical. The explanations of how to hack these machines have been hard for the average person to grasp, even when simple to do. (In one case, a monkey was trained to change election results remotely. Visit for details.)

A few counties have dropped Diebold already, but there was no “trigger event” to cause mass defections. Until now.

Anyone will understand that a bombshell that has just been dropped. A security expert has shown that Diebold lied to the State Department when it said that votes could not be changed on its memory card.

This is crucial, because the memory card comes loaded with these machines and is available for simple tampering by any election worker. No password is needed. It’s a one-step process that could easily go undetected.

In a test election in Leon County, Fla., on Dec. 13, eight ballots were actually cast. The correct total would have been two “Yes” and six “No” votes.

However, in the test, a memory card preloaded with plus and minus votes was used. This is supposed to be impossible: Diebold claims that such a card would be rejected by the system. (Indeed, its “zero report” at the start of the election showed that zero votes had been cast, despite votes being already loaded into the tally on the card.)

Sure enough, at the end of the mock election, the vote totals were not those actually cast, but rather the pre-engineered total: seven “Yes” and one “No.”

These numbers may seem trivial. But it’s an enormous percentage difference, one that would ensure the swinging of a landslide from Republicrats to Democans, or vice versa.

It also establishes beyond a doubt that elections in America could already have been engineered to give “pre-loaded” results. There is, quite simply, nothing more dangerous to a democratic system.

Upon completion of the above test, Leon County Supervisor of Elections Ion Sancho told that he would never again use Diebold machines. He has asked the county for funds to replace the abandoned machines. You can be sure the county will ask Diebold for a refund and, if necessary, sue to get it. Others will follow suit (literally and figuratively).

He’ll issue a formal announcement soon. That will be picked up in the mainstream media, in all likelihood provoking a firestorm of controversy and a plunging stock price. I learned about it early because of my contacts inside Black Box Voting.

This devastating discovery comes on the heels of research at the universities of Maryland, Johns Hopkins and Rice, which concluded they are “a threat to democracy.” Such research had shown the machines could be hacked and elections rigged, so election supervisors are already nervous.

The new test — right in front of an election supervisor’s eyes under real-
world conditions — provides them with a solid reason to drop Diebold. It is likely to result in the decertification of Diebold machines across America, as well as criminal prosecutions of its management.

Adding fuel to the fire, a class-action stockholder suit was filed by the law offices of Scott & Scott. While such suits are routinely filed when management fails to meet its projections, and in most such cases the damages to shareholders are not huge, in this case, they could well exceed the value of the whole company.

Every investor who bought stock relying on Diebold’s deceitful promises about the reliability of its technology will be able to claim all losses as damages. There is no defense that I can foresee. Rarely is a class action so timely or cut and dry.

It may lead to the bankruptcy of Diebold. (Should that happen, you’ll never have to buy back the stock you sold and you’ll make the maximum 100% return on your investment.)

Action to take: Sell Diebold (DBD: NYSE) at $34 a share or better. Immediately upon confirmation of sale, place an “open” order to buy back your shares at the sale price plus 25%. (Example: You sell a stock at $60 per share. You would place the buyback order at $75 per share. This limits your losses if the stock rises, rather than falls.) Hold this position until I tell you to buy it back, Diebold goes bankrupt or your open buy order is triggered. (Again, if you do not understand everything I have said, do not make this investment. Your broker can explain short-selling to you.)

Short-selling is risky, even with an open stop loss order. Your risk of loss is unlimited if the stop loss order gets canceled and, unlike Transformational Technology investing, this particular trade depends on public realization that a particular technology is really a Trojan horse. Still, be aware that sometimes the Trojans win.

***** Copyright 2005 Agora Financial, LLC

Agora Financial, LLC expressly forbids its writers from having a financial interest in any security recommended to its readers. And all Agora employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation, and 72 hours after publication is mailed.

One Comment to “Is Diebold tanking?”

  • Just got off the phone with Johnson County Election Commissioner Brian D. Newby and aodrccing to him, Johnson County uses version 1.18.24. GEMS version 1.18.24 was “found and determined to be defective or unacceptable and its certification and approval for use in subsequent elections in California” was withdrawn in August 2007 (). Great! Now what do we do? Time to call your representatives and demand scantron voting!

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