WASHINGTON (CN) – Diebold will pay $25 million to settle allegations that it committed accounting fraud to inflate the company’s reported earnings, the SEC said Wednesday. The SEC said it also is pursuing charges against three former Diebold executives in a separate, related complaint in Cleveland. The lawsuits are sure to ring alarm bells among critics who fear that electronic voting systems, such as Diebold’s, could open a Pandora’s box of electoral fraud.
In a statement announcing its settled complaint, the SEC said it “alleges that Diebold’s financial management received ‘flash reports’ – sometimes on a daily basis – comparing the company’s actual earnings to analyst earnings forecasts. Diebold’s financial management prepared ‘opportunity lists’ of ways to close the gap between the company’s actual financial results and analyst forecasts. Many of the opportunities on these lists were fraudulent accounting transactions designed to improperly recognize revenue or otherwise inflate Diebold’s financial performance.”
Ohio-based Diebold makes and sells ATMs, bank security systems and electronic voting machines. Its former CEO Walden O’Dell has agreed to pay back the cash bonuses, stock and stock options “that he received while Diebold was committing accounting fraud,” the SEC said in its statement.
In Cleveland Federal Court, the SEC sued Diebold’s former CFO Gregory Geswein, former Controller and later CFO Kevin Krakora, and former Director of Corporate Accounting Sandra Miller. The SEC described that complaint as “ongoing.”