State officials demand voting system vendors reveal owners after Russian hacks and investments

Image: A man votes in Durham, North Carolina
Election Day 2016 in Durham, N.C. VR systems, a voting system vendor in Durham County, experienced glitches and slowdowns in that election. Sara D. Davis / Getty Images file

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By Ben Popken

Election officials in North Carolina and Maryland are scrutinizing top voting system vendors for potential foreign ownership, demanding more transparency after revelations of Russian penetration into 2016 election systems and a Russian oligarch’s majority investment in an election data firm used by Maryland.

In April, the report by special counsel Robert Mueller revealed that Russian-backed hackers inserted malware into a company’s system for voting registration in Florida during the last presidential election as part of the Kremlin-backed disruption campaign. The company name was redacted but executives for VR systems have said it was probably them, the AP reported. VR Systems disputed it was hacked.

VR systems was also the vendor in Durham County, North Carolina, that experienced Election Day glitches and slowdowns. The federal Department of Homeland Security announced in early June that it will audit the laptops used that day, the government’s first forensic audit of equipment that malfunctioned during the election.

The possibility of foreign involvement in U.S. voting technology became more vivid last year after Maryland officials learned its election data host, ByteGrid LLC, was majority owned by a private equity firm in which Vladimir Potanin, a Russian oligarch with close ties to Russian President Vladimir Putin, had an investment. The U.S. Department of Homeland Security later found no sign of intrusion into the state election system.

Facing national scrutiny and a legally mandated deadline of Dec. 1 to decertify its current paperless voting machines, which security experts say could be more vulnerable to an electronic attack and lack an auditable paper trail, the North Carolina State Board of Elections this month set a Friday noon deadline for the nation’s top voting system vendors vying for the bid to disclose more details about their private ownership structure.

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The three companies responded to the requests, the board told NBC News, but their initial answers appeared to have failed to meet the state’s appetite for additional details about who may be behind the companies making America's voting systems.

“The State Board legal team is communicating with the companies to clarify responses and seek additional information as necessary,” Patrick Gannon, public information officer for the North Carolina State Board of Elections, told NBC News.

In mid-June the state requested the vendors, Election Systems & Software (ES&S), Hart InterCivic Inc., and Clear Ballot, disclose “any owners or shareholders with a 5 percent or greater interest or share in the company, any subsidiary companies and the vendor’s parent company.”

In response to NBC News inquiries, each equipment maker said they were owned by U.S.-based companies or individuals.

“ES&S is owned by Americans and has zero foreign ownership,” Katina Granger, spokesperson for the McCarthy Group, LLC subsidiary, both Omaha-based, wrote NBC News in an email.

“Since 2011, Hart has been owned by HIG Capital," based in Miami, Steven C. Sockwell, vice president of marketing for the Austin-based firm, wrote in an email.

Clear Ballot has “no other parent companies or subsidiaries” the Boston-based company emailed the state, according to a copy reviewed by NBC News.

The email listed four shareholders with a 5 percent or greater stake in Clear Ballot. They were Larry Moore, founder and a former Lotus executive; Tim Halvorsen, an early Lotus developer and board member of various startups; Steven Pappa, partner at private venture capital firm Andreessen Horowitz; and Raging Capital Opportunity Fund V, LLC, a Princeton-based hedge fund.

“A critical part of preserving voter confidence in U.S. elections is providing transparency and assurance that vendors of election technology are not influenced by any foreign interest,” said Eddie Perez, global director of technology development for the Open Source Election Technology Institute (OSET), a nonprofit that conducts election technology research. NBC News has collaborated with the OSET Institute since 2016 to monitor U.S. election-technology and voting issues.

“It’s a matter of national security," Perez said.