California Secretary of State Gives Unprecedented Qualified Certification for CalPERS Board Election; Vendor Everyone Counts Bars Public Viewing and Fails to Tabulate Paper Ballots as Required

We have been tardy chronicling CalPERS’ latest, flagrant violation of the California constitution, state election laws, and even its own regulations in how it ran its board elections, which concluded on October 2. Keep in mind that this is the first time CalPERS used new election procedures that the board voted in last year, with JJ Jelnicic the only one to take issue with the deeply flawed and undemocratic rules. This matter is still live since one of the two seats contested is subject to a runoff that begins on November 10.

Our criticisms have been confirmed via the Secretary of State, who is required to certify CalPERS’ board elections, taking the unheard-of step of issuing a qualified certification, which we will post below. As we will also discuss, two of the candidates for the election went to observe the supposed public tabulation of the paper ballots, where there were more violations of law, starting with the fact that there were no paper ballots whatsoever present and the process was not public.

Background: CalPERS’ Illegal Board Election

For those new to this controversy, see our recent posts, CalPERS Can’t Even Figure Out How to Count Ballots in Accordance With Its Own Election Regulation, Let Alone Comply With California Law and CalPERS Doubles Down on Its Illegal Election, Makes “Absurd” Claim That It Is Above the Law. We’ve also embedded a letter from Michael Flaherman to CEO Marcie Frost. It discusses the ways in which the election procedures were at odds with the law and even worse, looked designed to suppress the votes of union members who wanted to vote against candidates their union endorsed.

The major shortcomings with the election were:

1. Non-secret ballots. The paper ballots, the most popular voting method, required that voters sign the ballot proper. Moreover, each ballot had a bar code which identified each voter. This violates the California Constitution, which says, “Voting shall be secret.”

2. Use of illegal voting method. One of the voting methods CalPERS used for the first time was online voting, which is expressly prohibited by the California election code.

3. Lack of adequate security. This took place on all fronts. The paper ballots were not secured. The envelopes in which they were mailed were opened before the end of the election, the ballots were kept in the open in a room next to vending machines with the door open and another door onto an employee parking lot, as opposed to kept in cages as is the normal practice for paper ballots. The telephone and online voting channels were manned by Everyone Counts staffers working from home, some and perhaps all of which were temps, yet all had access to the full CalPERS election database. Computer security experts have also ridiculed Everyone Counts’ claims about the security of its online voting process.

4. Flagrant violations of CalPERS’ own regulation. The most striking part of this sorry episode was that CalPERS could not be bothered to comply with its own newly-created regulation. We’ll discuss this in greater detail below, but even before the election closed, CalPERS was already out of compliance and made clear it intended to continue to violate its rule. For instance:

Paper ballots were to be tabulated only after the end of the election, yet they were being processed daily, at an out-of-state facility, in Everett, Washington

The tabulation be done the date of the election notice, yet it actually took place the next day, in a different state than where the ballots were.

The tabulation of the paper ballots was supposed to be public, yet the videos we’ve embedded below show, it wasn’t.

5. Lack of an audit trail. Even banana republics operate at higher standards than this. From an LA CityWatch article on the online election that Everyone Counts ran for the LA Neighborhood Councils. It had to be terminated and the process run with paper ballots:

As far as the online voting debacle is concerned, California State Law prohibits electronic or online voting statewide, yet it was deemed by the powers-that-be in the City of Los Angeles that this does not apply to NC elections. The law applies to City elections, County elections, and State elections so why is a City government entity which receives taxpayer dollars excluded?…

A major issue with online voting was the impossibility of doing election verification after the election. No actual ballots were kept for the online votes and no final tally that reconciled the ballot count issued.

Unprecedented Qualified Certification by Secretary of State

So it should come as no surprise that the Secretary of State, which for obvious reasons could not cause a political firestorm by not ratifying an election y a major state agency, instead tried to distance himself from the process. We have embedded the full certification at the end of this post. Below is a screenshot of the critical section:

A search of recent CalPERS election certifications shows that none contain a disclaimer by the Secretary of State about the election methods.

Also bear in mind that the qualified certification is not the result of CalPERS using an outside party to run the election. CalPERS has regularly used third-party vendors.

As you will also see from the vote tally, on the second page of the second embedded document, that a full 5% of votes weren’t counted. This is enough to swing elections in many cases. Given that the second election vendor, Integrity Voting Systems, was “validating” the ballots out of public view, which is extremely irregular, we have no way of trusting these figures.

In addition, the fact that the voter turnout was markedly lower than for the elections for the same seats four years ago, when there was no open seat (as in you’d expect a low turnout) and there were almost certainly more voters eligible this time, raises even more red flags about the integrity of the entire process.

Even More Violations of CalPERS’ Regulations

Margaret Brown, who is participating in the runoff that starts November 10, and Michael Flaherman went to La Jolla on October 3 to witness the public tabulation of the ballots, as stipulated in CalPERS’ regulation:

On the date specified in the Notice of Election at the location designated by CalPERS, the validated paper ballots shall be tabulated publicly by an independent, neutral agent appointed by CalPERS for that purpose.

It would be hard to find more ways to have violated this section than actually took place:

1. The process was not public

2. The paper ballots were not at the location announced by CalPERS

3. That meant paper ballots could not be tabulated. It isn’t clear what was done, although we will speculate

4. CalPERS’ head of operations was regularly in and out of the room where what was purported to be the tabulation took place, calling the independence and neutrality of the agent into question

5. The tabulation was not performed on the “date specified”

The process was not public. It cannot be repeated enough times that the election vendor Everyone Counts’ hostility to transparency and refusal to allow for public oversight, as required by CalPERS’ regulation, should disqualify them for serving as a contractor in any public election.

As we detailed in a earlier post, CalPERS couldn’t get its story straight on how the paper ballots were to be tabulated.

Candidate Margaret Brown had several e-mail exchanges with CalPERS CEO Marcie Frost with the subject line “Public Viewing of Ballot Tabulation” on September 28. It was obvious that Brown and/or allies of hers planned to view the tabulation of the paper ballots. So no one should have been surprised when Brown and fellow candidate Michael Flaherman showed up at the designated location, an Everyone Counts office in La Jolla.

In the video of the so-called tabulation, the woman speaking first is Kim Malm, CalPERS Chief of Operations for the Support Services Division. Even her brief statement contains a Big Lie. She depicts Integrity Voting Systems (a division of K&H Printing) and Everyone Counts a if they were a single vendor, when CalPERS own contract award made clear they were separate companies. CalPERS has been dogged in sticking with this fabrication despite having it called out more than once, which suggest it is somehow very important to them.

Things start getting interesting at 1:08:

Brown comments that there are no ballots visible in the conference room, which is behind not one but two glass walls. There is a glass wall behind the reception area, a corridor between the reception room and the conference room, which has its own glass wall.

A man, which Brown and Flaherman believe was an Everyone Counts executive, then sticks his head out the door to the reception room:

Everyone Counts man: Sorry, no cameras are allowed.

Michael Flaherman: You can call the police, but I’m not putting down the camera.

Margaret Brown: It’s a public viewing.

Flaherman: You’re making a mistake to try to push that story.

Malm: So if they stood right there, then they’d be able to..

Flaherman: No, I’m standing here.

Malm: I’m just saying…

Flaherman: I’m standing here and I’m going to record.

Malm: So they’d be able to see from there and that’s a public area, I think?

Everyone Counts man It’s your call.

Mind you, this exchange is consistent with the entire “make it up as you go along and pay no attention to the rules” posture that has been on evident through this entire process.

A little while later, someone handed this notice to Brown and Flaherman:

If Everyone Counts is so afraid of and hostile to the public, it has no business running public elections.

On top of that:

Whatever was being done in that conference room was secret. No explanation whatsoever was given. This clips shows more clearly the two walls of glass, how far away the Everyone Counts staffers are, and how they have their screens turned away from public view.

There is no reason to believe anything related to the election was happening in that conference room. For all we know, the Everyone Counts staffers were playing solitaire.

As Margaret Brown found out on her site visit to Everett, Washington, where the ballots were mailed, and where they were opened, adjudicated, and scanned in machines that were capable of recording the votes (Brown recognized the equipment as being the same as used to score standardized tests). It is entirely reasonable to surmise that the ballots were being tabulated by computer daily, with the totals sent to the second vendor, Everyone Counts, and potentially, CalPERS, daily. How hard is it to add up the totals for a month of weekday counting for a total of six candidates? To cover up what was actually done, Everyone Counts instead put up a bizarre show of people looking diligently into laptops with nary a ballot in sight, instead of tabulating paper ballots, as required.

And even though Brown and Flaherman could not hear the conversation in the conference room, the audio from the reception area was being piped into the conference room. At one point, Brown commented on how woman who was holding her hands in a prayer position while looking at her screen must be praying to get a different result. She snapped out of that pose. To make sure that wasn’t a coincidence, Brown later commented on how a woman’s skirt had ridden up so high that her private parts were on view. She quickly pulled her skirt down and changed her posture.

If you want to see what a proper public election process looks like, have a look at the video below, which has snippets of the vote counting in the recent UK snap election. Skip over the talking heads bits to watch the counting process:

The media is welcome and, along with the general public, can record the entire process. There is a great show of the ballots being conveyed, in sealed boxes, to the counting station, which as is common in the UK, is in a public gymnasium. The ballot boxes are opened, with cameras on and tons of people in the room. The ballot envelopes are opened and the ballots removed, again in full public view. In one clip, you can see a woman in a black sweater with a big seal on her left shoulder. That seal is a party badge. Members of the various parties get to hover right over the tables where the ballots are sorted and counted to make sure nothing funny is going on.

And when the count has been completed and checked, the candidates line up, in alphabetical order by party name, and the vote for each candidate is announced right there, in the very room where the count just took place. From what I saw live during the snap election, the winner and the runner up both make short speeches.

The paper ballots were not at the location announced by CalPERS. You can see, as Brown points out in the video clip above, that the ballots are nowhere to be seen. They were apparently still in Everett, Washington, safely out of public view, so the manner in which the ballots were handled remains secret. We only know what little CalPERS and the vendors have claimed, which we know may be false, since they’ve been caught lying and have also changed their stories. .

That means the ballots must have been scanned in Washington prior to the close of the election for the purpose of tabulation. That in turn means CalPERS violated its own regulation in yet another way. The mailed-in ballots were to be:

…securely scanned solely for the purpose of validating the ballots and to ensure only one vote is cast per voter.

The scanning was to take place “securely,” which was clearly not the case in the breakout room that Brown visited in Washington. The staffers there told her that Everyone Counts was unable to handle any physical documents. That means the scanned images were made for the purpose of counting, and not just validation.

That meant paper ballots could not be tabulated. As Flaherman pointed out in his letter to Marcie Frost:

However, according to the election contractors, their ongoing procedures include scanning all incoming ballots each day at the Everett, WA facility for the purpose of creating an electronic image record of how each ballot card was voted, with the image then transmitted over the Internet to the San Diego area facility. The purpose of this scanning, which is best understood as a precursor to tabulation, is clearly other than the two purposes4 “solely” for which scanning is allowed.

Critical reasons exist for why §554.8(5)(b) severely limits the purposes for which completed ballots may be processed. First, if election administrators are permitted to undertake activities that verge on ballot counting, which is what is occurring here, they may be tempted to actually count ballots in the midst of the election and to leak that information to favored candidates. Second, §554.8 limits the public portion of ballot processing to those activities occurring at the conclusion of the election, when election observers can ensure the integrity of the process. Allowing substantial ballot processing to occur prior to the end of the election therefore implies allowing ballots to be processed in secret.

It is also contrary to the language of §554.8(5)(b) to create an image of each ballot card and then determine the outcome of the election by tabulating those images rather than tabulating the actual ballots. The regulation states clearly that the actual paper ballots shall be tabulated in order to count votes.

Moreover, the election vendors confirmed in a meeting with candidates partway through the election that they were going to persist with their impermissible procedures despite having been caught out by Brown during her site visit. From Flaherman’s letter:

Despite this plain language [in the election regulation], at the September 20th meeting, the election contractors stated their intention not to tabulate the paper ballots but instead to tabulate electronic facsimiles of them. Again, this is a planned departure from not only the plain language of the regulation but from widely accepted norms of democratic elections, where the marked ballot cards constitute the definitive indication of each voter’s intent and stand as a relatively tamper-proof record.

CalPERS’ head of operations was regularly in and out of the room where what was purported to be the tabulation took place, calling the independence of the process into question. Kim Malm of CalPERS was in contact with Everyone Counts staff throughout the entire process, while the public was by design kept in the dark.

Preferential access by CalPERS, including Malm giving orders to a senior Everyone Counts employees (recall him in the first video asking her to decide what to do about Flaherman recording) proves Everyone Counts was not operating in an independent, neutral manner as required by CalPERS’ own regulation.

CalPERS should either made no appearance whatsoever in La Jolla, or to protect the appearance of impartiality, had a member of the public at the side of any CalPERS staffer when interacting with Everyone Counts employees, let that member of the public see everything the CalPERS employee saw, and let members of the public ask questions about the process.

The tabulation was not completed on the date specified. CalPERS’ regulation stipulated that “Online and telephone votes will be tabulated on the date specified in the Notice of Election”. When you turn to the Notice of Election, it shows that “Paper, online, and telephone ballots will be tabulated” on October 2.

But CalPERS created a mess for itself by allowing votes to be submitted until midnight. It might have finessed this problem by starting the tabulation before midnight, and then adding in any last-minute votes. But CalPERS can’t even be bothered to pretend to follow its own rules.

The reason this matters is that there is a yawning time gap between when the election closed, at the end of October 2, and when the tabulation of the paper ballots was set to begin, at 9:00 AM the next day. After all the other opportunities for mischief that we’ve pointed out, this one may seem minor, but by the standards of election norms, it is extreme. Again, look at the UK election video clip above to see the contrast, in how much emphasis they place on keeping the ballots secure and having it be extremely visible how they are carried from the polls to the counting station.

This sorry episode confirms yet again that CalPERS regards itself as entirely outside the law. This misconduct validates the normally-unhinged-looking attacks of government-hating libertarians who inveigh against greedy, self-interested, unaccountable bureaucrats. This behavior also energizes other right-wing enemies of public pension funds. CalPERS is handing its opponents a loaded revolver. And rest assured, they will use it.

Redacted Michael Flaherman Election Letter to Marcie Frost_Redacted
Official Certified Results
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  1. Sluggeaux

    In a funny coincidence, yesterday evening I attended a talk by NPR correspondent Richard Harris about his new book Rigor Mortis detailing the “repeatability crisis” in biomedical research literature — with a likely 85 percent of all published research since 1980 invalidated by rampant sloppiness and blatant confirmation bias. However, the NIH and the journals, while fully acknowledging the problem, do little more than tut-tutt and issue “guidelines” instead of the banishments and retractions that might change behavior.

    It comes as no surprise in this day and age that CalPERS bureaucrats would attempt to bias the election process in their own favor. What is disgusting is that the California Secretary of State and Attorney General have become such political hacks in a single-party system that they have abandoned any pretense of oversight.

    A generation whose moral compass was calibrated by television sit-coms, reality shows, and cable news treats ethics and political morality as mere theater. As a CalPERS beneficiary, the last paragraph above states my greatest fear: that the cynicism of the public will be energized against the institution with disasterous results.

    1. Tough Love

      Quoting Sluggeaux ……

      “As a CalPERS beneficiary, the last paragraph above states my greatest fear: that the cynicism of the public will be energized against the institution with disastrous results”

      As a Taxpayer, I hope you’re correct, and the consequence is a reneging on the 50+% share of all promised Public Sector pensions (AND healthcare benefits) that was never necessary, just, fair to Taxpayers or affordable …… but simply BOUGHT from our self-interested Elected Officials with Public Sector Union BRIBES disguised as campaign contributions and election support.

  2. Ned

    The same Alex Padilla that was on the Elect Hillary Clinton President Committee and helped assure that tens of thousands of voters in California who would vote for Bernie were disenfranchised?
    That Alex Padilla?

    Watch “Uncounted” on YouTube for a street level view of how this affected county registrars and voters.
    The open abscess of the Democratic Party continues to trap real progressives like a venus fly trap.

    1. Sluggeaux

      Are you referring to the Secretary of State from the same “Democratic” party that burned through a billion dollars ignoring the fact that the candidate who they intended to benefit from their orchestrated voter suppression was even less popular with the voting public who bothered to show up than some political novice who had previously made a career of behaving like a complete a**h*le on national television?

      That Alex Padilla? What could possibly go wrong?

  3. flora

    The SoS’s endorsing the result is a defacto endorsement of the voting system, just as the DoJ’s failure to meaningfully crack down – wrist slaps don’t count – on fraudulent foreclosures is a defacto endorsement of the existing banking practices.

    Banana Republic.

    Thanks for your continued reporting on CalPERS and PE and corruption.

    1. Seesaw Junior

      The SoS’s endorsing the result is a defacto endorsement of the voting system, just as the DoJ’s failure to meaningfully crack down – wrist slaps don’t count – on fraudulent foreclosures is a defacto endorsement of the existing banking practices.
      That was beautiful. I have never seen this unholy alliance between the highest levels of government and Wall Street’s unlawful conduct, and their relationship to each other (campaign $$= no prosecution) stated so perfectly….Bill Black would agree too!

  4. George Phillies

    Are there any legal penalties for any of the things you have described? Or all these rules and laws and the state Constitution to be viewed as being like the prayers of hypocrites (Twain), bundled in thousands to be used to waft missionaries to places where the rule of law might yet be taught.

  5. Plato_in_the_cave

    Seriously, when are people going to be thrown in jail? That’s all I want to know.

    What’s the point of revealing people breaking the law if the law is not going to be enforced? What’s the point of having any laws at all? The people at Everyone Counts have no shame. The administrators of CalPERS have no shame. Alex Padilla has no shame (way to CYA, your cowardly ass, Alex), the State of California has no shame.

    A final thought, if this is just ONE example of the voting process in America’s superior, exceptional, transparent democracy, how many other examples are there in our so-called democracy where the voting process is utilized? How deep and how far does the cancer go? In the meantime, America, keep listening to all the misleading so-called ‘professionals’ and ‘leaders’ out there who keep telling you, “You’re healthy, look great and are doing a great job!”

    1. flora

      Every election season the GOP argues the Dems are weak on law and order. There’s a reason those GOP charges of Dem failure/refusal to enforce law, aka corruption, get a hearing among independents and some Dems.

  6. Wisdom Seeker

    Re: “How deep and how far does the cancer go?”

    My question exactly. But the depth and breadth of this Cancer of Elite Impunity is certainly not limited to elections.

  7. Jess

    Unfortunately, Margaret Brown is the latest example of that old adage that “you only get as much justice as you can afford”, meaning that she needs to get an attorney and file suit, which isn’t all that cheap even if the attorney is willing to work pro bono.

    On a more helpful note, a writer from LACityWatch has indicated that he may be able to help get Brown the legal assistance she needs. Here’s hoping he’s successful.

  8. lyman alpha blob

    Unbelievable. But thank you for continuing to cover this story – I think you got them more than a little nervous at this point.

  9. Enquiring Mind

    Absolutely shameful behavior by CalPERS, made worse by the silence of those elected to represent the citizens. I encourage all California readers to reach out to your contacts in the state Assembly, Senate and other agencies such as the Governor, Treasurer and Controller to voice your concerns.

    How many other boards such as CalSTRS and at smaller pensions (police, fire, others, and in other states like OR, WA, NC) are watching the CalPERS board saga and wondering how they keep clean and transparent, or at least try to become that way for those citizens that they are elected to represent?

  10. Tom Stone

    CalPers is about average for a State agency in California, which is a one party state.
    California Politicians have no respect for either the State or Federal Constitutions and are quite open about it.
    Look at our Poverty rate, incarceration rate ( Highest of any state in history), Schools…Thre’s no money to repair critical infrastructure, however there’s $68 Billion to build high speed rail to nowhere.
    I’ve been too busy to follow NC for a couple of weeks due to the fires here in Sonoma County, it’s a mess.

    1. Rex the Wonder Dog!

      $68 Billion to build high speed rail to nowhere.
      $68 Billion?…HHAHAAHHAHAHA!!!!!!!

      Try $500 BILLION plus…. The new Eastern Portion of the Bay Bridge started out at $250 million, then went to an “official” $1 billion… and guess where the final, end cost came in at??….ended up costing $6.4 billion, off by a factor of over 1,000%…if CA cannot get an estimate correct on BILLION $$$ construction projects they have NO BUSINESS building them.

      Good call on the prison system, in 1982 prison guards made $14K, plus maybe another $4K in benefits, for an unskilled job. Today those same guards today have a base salary of over $90K, have OT that can TRIPLE base salary, and have pension benefits ALONE worth more than their base salary (yes, a 3%@50 pension costs MORE than base salary using a real discount rate of 5%-5.5%)…We will not even add in the 8+ weeks of time off, FAMILY healthcare for close to nothing and bullet proof job security not found anywhere except in gov employment.

  11. Ian

    It’s like the DNC primaries all over again yet more fine tuned. My apologies for the low level gripe.

  12. Salty

    Question(s): If this goes to court, who has to be the plaintiff? Would it be the candidates themselves or would a beneficiary have to sue?
    Also, would both candidates be able to sue at once or would they need to produce separate cases? And, if anyone happens to be a California lawyer in the crowd, what would you estimate the odds of a favourable ruling being? What sort of corruption are we looking at on the bench?

    1. Yves Smith Post author

      After an election, only a candidate could sue, and the regulation forces them into an arbitration process that is guaranteed to be favorable to CalPERS.

      Before an election, a candidate or someone eligible to vote in the election could sue to contest the election methods.

  13. TheCatSaid

    I’m glad NC is paying more attention to election systems and processes. Issues such as those raised here–and worse–have been filmed, documented in gory detail, for literally decades, yet with no legal remedies for a plethora of reasons. (Most states have laws that make it impossible to verify election results in any meaningful way. The laws serve as barriers rather than as aids to accurate, publicly verifiable elections.)

    Please keep educating people about election procedures. The USA has some of the WORST election procedures in the world, and people don’t realize how bad it is. They don’t realize we’ve had faux elections for decades, in many (most?) places. Meaning, unverifiable, shenanigans up the wazoo but no remedies despite the blatant law-breaking and factual documentation.

  14. TroyMcClure

    As Matthew Stoller put it in summarizing the Obama administration’s tacit approval of fraud as a business model, “All is permitted. Nothing matters.”

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