George Rebane

[This is the transcript of my KVMR-FM bi-weekly commentary recorded on 21 April 2011.  I have added a relevant addendum about information from a subsequent conversation I had with a Nevada County staffer.]

Not many people have been paying attention to a complicated lawsuit whose defendants include Nevada County, Mr Greg Diaz, its initially appointed then elected Clerk-Recorder, and Aptitude, a Florida software company.  The whole thing would be forgettable, except for two things – the legal bills the county is running up, and the pile of unanswered questions that just seem to be getting more curioser by the week.

Let’s back up.  ATPac, a software company located in Auburn, provided software and services to our county’s Clerk-Recorder office for about ten years before Mr Diaz arrived.  The software was used to handle, store, and retrieve county records.  In 2008 Mr Diaz decided that it was time to re-select the county’s record-keeping software vendor, and the county issued an RFP, request for proposal, and thereby opened up a bidding process which culminated with Aptitude replacing ATPac.  During the migration from ATPac’s software to Aptitude’s software, some irregularities occurred.  As a result ATPac sued, alleging that its intellectual property had been compromised by the county and Mr Diaz by allowing Aptitude to have access to its proprietary computer programs.

The county and Mr Diaz denied doing anything improper, and under advice from county counsel, the Board of Supervisors authorized legal fees for a strong defense as both sides began pre-trial preparations to gather evidence and take depositions from involved parties.  A complication surfaced almost immediately when attorney Barry Pruett decided to oppose the incumbent Mr Diaz in the November 2008 election.  While not involved in the lawsuit, Mr Pruett had worked for the law firm representing ATPac in the lawsuit, he was familiar with the case, and made its already apparent irregularities an issue in the campaign.  Conservative bloggers Russ Steele of NC Media Watch and my Rebane’s Ruminations supported Mr Pruett, and liberal bloggers along with the county establishment supported Mr Diaz.

Mr Diaz handily defeated Mr Pruett, and became the elected Clerk-Recorder.  Meanwhile, the pre-trial activities kept turning up more and more questionable aspects about the conduct of the county’s IT staff and Mr Diaz during the transfer of county data and installation of Aptitude’s software system.  Finally, on 26 February 2010 The Union published a comprehensive look at the lawsuit, and then promptly went silent again.  Meanwhile local bloggers kept up coverage of the case as more and more material was made public.

The main issues alleged in the suit include the county and Mr Diaz giving Aptitude unfettered access to ATPac’s software, the county’s destruction of evidence in the ‘scrubbing’ of its records server, and the mysterious loss of the archive of emails that covered the communications between the county and Aptitude during the critical interval of system conversion.

As a computer professional, it is hard for me to understand how a government server containing evidentiary material to an ongoing lawsuit came to be completely erased, without so much as an archival copy of its contents being made.  And it all happened under an accountability chain that is still shrouded in mystery.  The bottom line here is that the county failed to provide federal court ordered evidence needed by ATPac.  After months of county stonewalling, the court sanctioned the county to the tune of $20,000, and will now instruct the jury that the county has destroyed evidence relevant to the case.  In spite of the internally ordered scrubbing of the server, the county continues to deny any and all culpability.

The assessed $20K fine is chump change compared to the legal bills the county has coughed up and continues to authorize as this tale unwinds.  To date the county has paid over $350,000, and estimates put the total legal costs well north of half a million that could even approach a million dollars.  And the big question that goes begging here is – for what?  Why does the county not settle with the plaintiff ATPac and be done with it?  There is even a rumor that Aptitude is quietly seeking such an out of court settlement.  For timely coverage of these developments, please visit NC Media Watch.

So now the county is telling the court that it withheld no evidence.  But after months of stonewalling and with a ‘scrubbed’ server on their hands that was not backed up, it strains credulity to accept the county’s denial.  Moreover, throughout the time in question the county has employed very astute and capable IT management and staff; therefore it is hard to lay these mysterious mistakes and omissions on their doorstep. 

To many of us it is clear that the longer this case festers and racks up lawyer bills during a cash strapped recession, the more it begins to smell that somewhere here there is a political connection that must not see the light of day.

Maybe some answers will be forthcoming when the Supervisors again meet next Tuesday at the Rood Center.  Somebody might even go there and ask them why we continue to spend all this money.

My name is Rebane and I also expand on these and other themes in my Union columns, on NCTV, and on georgerebane.com where this transcript appears.  These opinions are not necessarily shared by KVMR.  Thank you for listening.

[Addendum]  Since recording this commentary on 21 April, I had a conversation with a very professional and competent sounding county staffer involved with the case who was referred to me by CEO Rick Haffey.   I asked a number of questions about the county’s risk management policy and resources in cases like this, especially as they involved errors and omissions insurance.

It turns out that the county does have an E&O policy that covers such lawsuits, and the county has begun the process to tender a claim.  However, the overall procedure to recover any costs is a complex one, and its details are privileged information at this point.  My interest in the aspect of E&O insurance arose from a separate discussion in which I asked ‘Under what conditions, if any, would the insurance company refuse to honor claims that the county would file pursuant to this lawsuit?’