Machine Politics

The bankruptcy of a tiny voting-machine company ensnares a gaggle of big names.

But Malpass's most lucrative connection by far was Denver's Peter Paul Luce, the son of Henry Luce. Malpass reportedly knew the magazine magnate's son through his--Malpass's--father, who knew Peter Luce through their shared passion of flying airplanes. At one point Luce and the elder Malpass had even teamed up to help finance a small airplane manufacturing company.

Ken Malpass was not shy about approaching his father's friend for money to support USVM--nor was Luce stingy about giving it. According to court documents, Luce ponied up investments--mostly for stock purchases--on 25 separate occasions between October 1988 and June 1995. In all, he plowed $1.1 million into USVM, as well as, according to court documents, "substantial additional sums" in loans. (As late as July 1995, Luce wrote the company a $50,000 check.)

"Once Peter began investing, he just continued," recalls Mark Hogan, a former Colorado lieutenant governor who was vice-president for sales and marketing for USVM until fired by Malpass. "He was in for a dime, and then another, and then another."

Sarner recalls that Malpass and Luce formed a strange bond during the company's first several years. "Ken would go out and try to raise money, fail, and so go back to Peter," Sarner recalls. "Luce didn't want to put in any more money, but he kept doing it anyway. By August 1993, Peter was starting to regularly put in $50,000 at a pop. At that point, Ken wasn't even going after anyone else's money."

Adds Bob Clark, Luce's attorney, "Mr. Luce was virtually the bank." (Luce himself declines to comment for this story.)

Even with Luce's checkbook, however, USVM had problems, Hogan says. He points out, for instance, that Malpass spent tens of thousands of dollars trying to market Sarner's new voting machine before the company had even produced its first prototype.

In a deposition, Hogan charged that Malpass wasted "substantial assets" trying to win a contract with the New York City Election Commission by hiring a high-profile Manhattan law firm to approach city officials and by retaining an expensive public-relations firm in an effort to win a similar contract in Hawaii--all before USVM had even completed testing its technology.

Adding to USVM's problems, Hogan says, was Malpass himself. In the same deposition, Hogan charged that at least two election officials, including Arie Taylor, clerk and recorder of Denver County, suggested that USVM would have better success if Malpass were not involved. Even the Hawaii PR firm allegedly told Hogan that "it would be impossible to assist USVM in marketing its voting system in Hawaii if Malpass were involved, because of his offensive personality."

"To know Mr. Malpass," Hogan concludes in an interview, "is not to love him."

On at least one occasion, Hogan himself seems to have steered the company into controversy. According to Sarner, USVM's directors had to nix a questionable deal the former lieutenant governor struck with the then-head of Mayor Webb's election transition team, King Trimble.

"Hogan, as our director of sales and marketing, came to Ken [Malpass] and started to brag about this deal he had struck with King Trimble," Sarner recalls. "As he explained it, Trimble would use his offices to help USVM to gain this contract [to supply Denver with new voting equipment]. In return, USVM would give Trimble a percentage of other contracts the company got in other states."

Sarner adds that once they heard of the proposed deal, USVM's boardmembers killed it, fearing a conflict of interest with the Webb ally that could come back to haunt the company.

Trimble did not return phone calls from Westword. Hogan acknowledges that Trimble is "an old pal of mine from the Colorado legislature; we still go skiing and so forth." But he denies the two men ever struck any sort of deal.

Despite such troubles, the company didn't begin falling apart until last summer. At the center of its disintegration is Peter Luce, who, depending on who is describing the situation, is either a well-meaning white knight working aggressively to pull the tattered company from a financial abyss or a power-hungry investor who, once he discovered a good thing, became bent on having it for his own.

Although Sarner says that Luce began effectively co-running the company with Malpass as early as late 1993, Luce contends in numerous court filings that he didn't become actively involved in the company's internal affairs until July 1995, when Luce received a memo from nine of USVM's employees complaining about Malpass's management. "Under no circumstances will the authors continue their employment with USVM if Ken retains the title and authority of CEO," the workers wrote.

That's where stories diverge. Luce says he hired a company to investigate USVM and, based on what was discovered, filed a lawsuit against Malpass on August 20, accusing him of "gross negligence and fraudulent conduct."

Sarner's version is different. He claims that a high-profile financial acquaintance of Peter Luce's has pressured him to ditch Malpass. That man, says Sarner, is Juan Rodriguez. Rodriguez, who for years could be found on lists of the country's wealthiest Hispanics, was a co-founder of Boulder's StorageTek computer company. Since then, he has founded several other high-tech companies.

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