Friday, October 29, 2010

State of Iowa Computers Conflict of Interest?

October 29, 2010, 8:10 p.m.

Senator Kim Reynolds' Role Needs Clarification
(bought to you by*)

It's unlikely there are many Iowans who haven't already voted, or at least made up their minds how they're going to vote, for the state's next governor.

It's less likely that many will make their decision on the basis of the governors' running mates for Lieutenant Governor.

And less likely still that if they still had questions about the Lt. Governor candidates that they would be looking to this blog for answers.

So, notwithstanding the timing, this blog entry is not designed to help or hurt anyone's campaign.

It's simply prompted by a headline in this morning's Gazette that caught my eye: Erin Jordan, "Reynolds' Role in Vendor Selection Questioned," The Gazette, October 29, 2010, p. A7.

Iowa State Senator Kim Reynolds was selected by former Governor Terry Branstad as his Lt. Governor running mate.

Reynolds was elected to the Iowa Senate a year ago, in November 2009. Two months later she was hired by ABC Visual, a software company as the company's "Business Development Manager." ABC Visual has ended up with a lucrative contract from the State for processing "hundreds of millions of dollars in tax payments each year through Iowa Treasurers," according to Jordan. Reynolds had been Clarke County Treasurer for 14 years, and served on the Senior Policy Group of the Iowa State County Treasurers Association until 2008 -- the group that recommended ABC Visual in 2007 (although she was not officially part of the committee that selected the firm after competitive bidding in 2009).

Iowa Interactive, the firm that had the contract for all 99 counties previously, has complained that she let ABC have an unauthorized access to Interactive's web site that could have given ABC an unfair advantage in the bidding process.

On the company's Web site, where she is prominently displayed immediately after the CEO B.J. Do, the company bio says she "was instrumental in the implementation of the Iowa State County Treasurers Website." ABC Virtual/About/Our Management Team.

Another interesting detail is that the ABC Virtual company is in receivership (and probably was when she first recommended it), and that its CEO was successfully sued by a former officer and shareholder for $1.6 million damages for what the court characterized as "a freeze-out of a minority shareholder not tolerated under Iowa law."

The court continued, "Do caused ABC to invest in GSE, a Vietnamese company used for outsourcing, and then refused to provide . . . information concerning the investment . . . [that] leads the court to believe that Do had and has something to hide relative to this investment, most likely because it benefits Do personally rather than ABC as a whole."

So the matter becomes, as Alice said in Lewis Carroll's Alice in Wonderland, "curiouser and curiouser."

Obviously, I'm not charging anything, because I've done no independent investigation. Nor, as I've already explained, would I be so naive as to think this blog entry would have any impact on the election, even if that were my purpose, which it is not.

But I do think, whoever becomes Iowa's next governor on November 2, for Kim Reynold's sake as much as anything, there ought to be some relatively formal and independent effort to ascertain exactly what did and did not go on here. Worst case, perhaps one of the state's major newspapers could put a little more time in on the story after the election.

Meanwhile, here is a report from the online Newton Independent from last September that I came upon only today while trying to find out more. It further supports Erin Jordan's story today, and makes one wonder even more why the state's media were not digging into this months ago.

Reporter's Notebook: Some questions Ms. Reynolds?
The Newton Independent
September 27, 2010

Ever since Kim Reynolds was named as the running mate for gubernatorial candidate Terry Branstad, I've been waiting to pick up the paper and read how the campaign is reacting to what could be a huge potential conflict for the former Clarke County Treasurer.

What? Don't know what I'm talking about? Well, let me spell it out from what I've found in just a cursory look using only Internet sources.

When Branstad announced Reynolds, I, like many other Iowans, had never heard of her. A former county treasurer with just two years of statehouse experience under her belt didn't seem like a logical choice. So I did some looking.

Going to the Iowa General Assembly home page, I found a brief bio, her committee assignments and the fact she was Business Development Manager for ABC Virtual Communications. An external link to the Iowa Republican Party web site provided a little more detail.

The GOP site notes she was appointed by then governor Branstad in 1996 to serve on the Iowa Public Employees Retirement System Board and served as president of the Iowa State County Treasurers Association in 2000.

But there was something that took on a little more importance after I noted the GOP web site was created by ABC Virtual Communications, the same firm her bio says she works for.

"(Reynolds) also served on the three-person Senior Policy Team that was instrumental in the research, development and implementation of the Iowa State County Treasurers Association website which brought online property tax and vehicle registration applications to all 99 counties at no cost."


So off to ABC Virtual Communications. Yup, right there on management team page is a picture of Ms. Reynolds, right under the mug and bio of the company's founder, BJ Do, outlining her background for her position as director of business development for the company. Interestingly, the site says she was hired on at ABC in January 2009, the same time she assumed her duties as a state senator. Again, the site notes her role in the implementation of the county treasurer's association e-commerce web site.

Under ABC Virtual's portfolio section on customers served, the Des Moines area company goes on at great length about the program it "designed, developed and implemented" for the Iowa County Treasurers E-Government Alliance (ICTEA). Basically, it allows for online payments of property taxes and motor vehicle registrations for a small fee to the user. In April 2008, the county treasurers association put out this Request for Proposals concerning bundled banking services.

Starting to get my drift?

But there's a little more. First stop, campaign disclosure reports. Sure enough, in November 2008 Mr. Do of ABC Virtual provided a $1,000 check to Ms. Reynolds campaign. And interestingly enough, in January and February 2008 David Jamison of Ames, the Story County Treasurer running against State Treasurer Mike Fitzgerald in the November election, provided two checks to Ms. Reynolds totaling $150.

So off I went in search of more information on ABC Virtual. What I found makes it appear the company is in a bit of a mess, and has been for some time.

Way back in August 2006, Vinayak Hedge filed suit in Polk County District Court against ABC Virtual Communications Inc. and BJ Do. The online court docket identifies Mr. Hedge as a "property co-owner."

Since that time, there have been hundreds of court filings in the case, including such notable entries as former Iowa Supreme Court Justice Mark McCormick's withdrawal as Do's counsel, the appointment of Paul Juffer of LWBJ Capital Advisers as receiver of the company back in November 2007, an order compelling the release of encrypted e-mail messages (coupled with sanctions against ABC and Do for not doing so), a June 2009 trial, an April 2010 order for judgment against ABC Virtual Communications and BJ Do for $1,626,204, the defendant's appeal of the ruling and judgment to the Iowa Supreme Court (which will now make it difficult to get one's hands on the file to find out what the hub-bub was about in the first place and potential other avenues to explore) and the June 2010 expansion of the receiver's duties with Mr. Juffer taking "charge of all assets of ABC Virtual Communications."

All quite interesting. And it leads to several questions:

* Just how instrumental was Ms. Reynolds in helping ABC secure the contract and who else was a member of that "three-person Senior Policy Team?"
* Any perception problems for Ms. Reynolds in taking a job with the company she (apparently) helped land an account? And just how is ABC paid, and how much?
* Why would a county association select a firm that was under receivership when it was reviewing RFPs? Were association members aware of this fact at the time the decision was made? Are they aware Ms. Reynolds now works for ABC?

Hopefully the answers to these questions, and what likely are a lot more, will eventually come out. The way things stand now, however, they may not. But I'll keep looking.


* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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