Dept. of State signed contract knowing of conflict

Contractor owns condo where ex-elections director sleeps

By Chris Bragg
THE COLORADO STATESMAN

Colorado Deputy Secretary of State Bill Hobbs signed off on a nearly $99,000 contract with the voting data company LEDS on Aug. 29, even though his office knew at the time that a potential conflict of interest existed between the department’s director of elections and the LEDS president, Department of State spokesman Rich Coolidge has confirmed.

Elections director Holly Lowder — who abruptly resigned her position about a week after the August contract was signed — lived in a $480,000 loft leased from LEDS president John Paulsen. Paulsen did $184,000 of business with the secretary of state’s office while Lowder lived there.

The department knew about the arrangement when it signed the new contract with LEDS, Coolidge confirmed.

Furthermore, the relationship between Paulsen and Lowder probably violated a previous contract between LEDS and the Department of State worth $85,000 signed in January. According to the department, that potential violation — which could have voided the January contract — was known before the August contract was signed.

The January contract stated that if LEDS failed to disclose even a “perceived” conflict of interest involving the state and the company, there were “grounds for termination of the contract.” Coolidge said neither Lowder nor Paulsen independently disclosed the relationship, and that the office became aware of it through its own investigation.

The new contract signed Aug. 29 contained a similar provision concerning conflict of interest.

Claudia Kuhns, a voting integrity activist in Denver, expressed outrage that Secretary of State Mike Coffman would continue to do business with Paulsen, even after learning that Paulsen was leasing a condo to the state elections director.

“His sense of propriety and ethics is nonexistent,” she said. “This is so brazen.”

Coolidge said the office had no choice but to go forward with the August deal to obtain data services from LEDS because there were no other bidders for the new $99,000 contract with Paulsen’s company. Coolidge said the August deal had been in the works since mid-July, and that the office was facing a deadline shortly after the November election to “fulfill a statutory obligation after the state’s previous vendor said it would no longer perform this task.”

Coolidge said the contract was “initiated by two SCORE project managers” and that “Lowder was in no way involved in these discussions or decisions.”

Coolidge declined to say when, exactly, the Department of State learned about the relationship between Lowder and Paulsen, investigated it and took action — or what action the office took. However, Coolidge did say that the secretary of state’s office definitely was aware of the potential conflict before watchdog group Colorado Ethics Watch filed an open records request seeking information about the relationship on Aug. 29.

Ethics Watch director Chantell Taylor says that it is troubling — if it’s true — that the secretary of state’s office signed a new contract with LEDS after learning of Paulsen’s relationship with Lowder.

Taylor, however, said she doubts the veracity of the timeline offered by Coolidge. She believes the secretary of state’s office learned of the relationship between Lowder and Paulsen only because Ethics Watch filed an open records request. That request was filed Aug. 29, the same day the new contract with LEDS was signed, and Taylor thinks the office probably was unaware of the situation at the signing.

“I think they’ve been caught in a lie,” said Taylor.

She called the office’s response to the situation “utterly inept” and said that, “the story changes every time a reporter talks to them.”

Taylor argued that it’s more than mere coincidence that Lowder abruptly resigned two months before a presidential election. Lowder resigned on Sept. 4, the same day Ethics Watch was due to receive the opens records request information.

Taylor believes the Secretary of State’s office is fudging the timeline because it doesn’t want to admit it didn’t know about the Lowder-Paulsen relationship.

Details on Lowder and Paulsen’s relationship still sketchy

Although the relationship between Lowder and Paulsen creates at least the perception of a conflict of interest, the exact nature of that relationship remains unclear. That’s one reason Ethics Watch probably will ask the state’s ethics commission this week to use its subpoena power to uncover more details. Taylor wants to know, in particular, if Lowder received free or reduced rent through her lease with Paulsen. The condo’s homeowners’ association also charges a $356 monthly fee.

Voter registration records for June 2006 show Lowder at an address on Cherokee Street in Denver where she appears still to reside. In February 2007, public records show Paulsen purchasing the condo in question for $480,000. In January 2008, Paulsen signed his first nearly $85,000 contract with the secretary of state’s office.

Paulsen is listed as living in Castle Rock with his wife, although the Rocky Mountain News reports that both Paulsen and Lowder have phone listings at the Cherokee Street address. Neither Paulsen nor Lowder’s name is listed on the directory of residents for the Cherokee Street lofts.

Lowder could not be reached for comment, but she reportedly told the Rocky that she offered Paulsen no contracting advantages with the state. She also reportedly said she had “retired” and did not “resign.”

Paulsen did not return phone calls seeking comment. When reached by phone, his adult son, John Paulsen Jr., said he didn’t know enough about the situation to offer an opinion.

Paulsen, 59, operates LEDS out of his Castle Rock home and also owns another tech company, records show. LEDS has installed voting databases in more than 30 counties. The company had a longtime relationship with Alamosa County when Lowder served as clerk and recorder there.

Lowder, 66, was hired as elections director in May 2006, by former secretary of state Gigi Dennis. Brian Balay, the former Chief Information Officer for the Department of State, worked with Lowder for about a year, primarily under Dennis. During that time, he said in an e-mail, “the Department of State issued no contracts directly to Mr. Paulsen (LEDS).”

Coolidge says that under Coffman, who came into office in January 2007, no quid pro quo could have occurred in the relationship between Paulsen and Lowder, because Lowder was not involved in the department’s contracting process.

Even though she was the state elections director, Lowder’s role seemed somewhat limited under Coffman. She worked almost exclusively on the SCORE statewide voter registration system, although she seemed to cede some of her authority even in that regard this spring, when William Browning, an outside contractor from the North Highland group, was brought in to fix remaining glitches in the system.

Taylor, the Ethics Watch director, said that even if Lowder didn’t have the authority under Coffman to choose which companies the department contracted with, she still could have influenced those who ultimately made the decisions.

“[Lowder] could still walk over to their office and say, ‘Hire this guy,’” Taylor said.

The Ethics Watch investigation into Lowder is just the latest in an ongoing battle between the nonprofit group, which claims nonpartisanship, and Coffman. Coffman grew so frustrated with their constant attacks against him and his employees that last April that he wrote a letter to The Statesman calling Taylor a “fraud” and Ethics Watch “a front organization for the Democratic Party.” Ethics Watch has since accused Coffman of engaging in a spin campaign in the media against them.