Kansas Sen. Derek Schmidt (left) and former U.S. Sen. Chuck Hagel discuss plans for additional campaign stops. Hagel endorsed Schmidt in the race for Kansas AG in August 2010. (Photo: Leavenworth Times)

Hagel, Omaha and elections

In 1988, Chuck Hagel met Mike McCarthy on a fishing trip.

They became fast friends and as Hagel later said, “It was one of those things that happens with friends. The chemistry was just right.”

Hagel shortly thereafter accepted an offer from McCarthy to serve on the board of American Information Systems (AIS), a small Omaha voting machine company.

The McCarthy Group and the Omaha World-Herald Co. bought a majority stake in AIS the year before. At the time, the Peter Kiewit Foundation was the largest single stockholder of the Omaha World-Herald Co. It also had ownership in the local Omaha World-Herald newspaper. This meant Kiewit’s Omaha World Co. now had ownership in the state’s largest newspaper and its voting machines.

McCarthy used to work for Kiewit and a Kiewit subsidiary was invested in the McCarthy Group.

AIS was started by Bob and Todd Urosevich and Jim Lane. After Hagel became chairman, Bob later resigned and eventually became president of Diebold voting systems. In 2006, he was named managing director of Scytl’s Americas division. Todd and Jim stayed at AIS.

While Hagel was chairman of AIS and oversaw the building and selling of those machines, he was also working with local and state Republican groups to campaign for party candidates.

He left AIS on March 15, 1995. Two weeks later, he announced his bid for the U.S. Senate. He served as the Republican Nebraska senator from 1997–2009.

Hagel’s first year as senator, was also the same year AIS bought the Election Services Division of the Business Records Corporation (BRC) and renamed it Election Systems & Software (ES&S). The acquisition made ES&S the largest voting system vendor in America.

BRC was started with money from Texas billionaire Nelson Bunker Hunt. He and Howard Ahmanson were large contributors to the Chalcedon Foundation, a think tank for the Christian Reconstruction movement. They also provided financing to the Urosevich brothers for AIS back in 1984. They were the ones that sold their AIS ownership to Kiewit and the McCarthy Group in 1987.

In 2002, Hagel’s finances were looked at by the U.S. Senate Ethics Committee. He omitted references to work and investments with the McCarthy Group and AIS on his federal financial disclosure forms. He was required to list his last 10 weeks of work at AIS but never did.

He also filed his investments with McCarthy as “excepted investment funds” which meant by definition McCarthy needed to be “widely held; publicly traded (or available) or widely-diversified.” It was not. Hagel was cleared of any wrongdoing. His campaign didn’t admit to the ES&S investments until 2003.

From 2004–2006, he lists his value of investments in the McCarthy Group and the McCarthy Multi Cap Stock Fund at up to almost $7 million. For the next two years, that number moved up to $10.2 million. And then down to $1 million for just the McCarthy Group in 2012.

McCarthy was Hagel’s campaign treasurer from 1999–2002. From 2000–2008, McCarthy and the Kiewit Corporation gave Hagel and his Sandhills PAC at least $230,000.

Peter Kiewit was a wealthy construction entrepreneur. He died in 1979 and through his estate created the Kiewit Foundation. The Kiewit Corp. now has more than 50 subsidiaries and earned $9 billion last year.

In February 2009, after Hagel finished his second term as Senator, the McCarthy Group announced he was returning as a Senior Advisor.

A month later, Hagel and former Colorado Senator Gary Hart met with Russian President Dmitry Medvedev and Russian Foreign Minister Sergei Lavrov. They discussed relations between Washington and Moscow. Hagel and Hart were there as co-chairs of the Obama administration’s bipartisan commission on U.S. policy toward Russia.

The Hagel-Hart commission was created to produce a report for President Obama and Congress that offered “policy recommendations to advance America’s national interest through a constructive U.S.-Russian relationship.”

Two months after his trip to Russia, Hagel joined Deutsche Bank’s Americas Advisory Board.

At Deutsche, he advised and consulted with bank executives and clients on a “wide range of strategic and market issues, including business development and growth as well as economic, industry, political and social trends.”

Six months before Hagel joined Deutsche, it bought a 40% stake in UFG Invest, the Russian investment management company of UFG Asset Management. UFG Asset Management was founded by former Russian finance minister Boris Fyodorov and US banker Charlie Ryan. UFG Invest was renamed Deutsche UFG Capital Management (“DUCM”).

In 2010, Deutsche expanded its Personal Wealth Management (PWM) investments in Latin America, the Middle East, Russia and Asia. The next year, it took 100% ownership of DUCM and PWM further expanded its position in Russia. By 2012, Deutsche’s Global Transaction Banking (GTB) division “had established a strong position in attractive growth markets worldwide such as China, India, Latin America and Russia.”

Deutsche sold DUCM to Russian investment group Aton in 2013.

Aside from Hagel, the McCarthy and Kiewit companies have other connections to the election industry, as well as Trump and Russia.

Kiewit builds airports, highways, military bases, POW camps, airfields, air and missile defense systems, coal mines, oil platforms, oil, gas and chemical processing facilities, canals, geo domes, dams, energy plants, portions of the U.S. highway system, bridges, shopping centers, museums, high-rises, etc.

One of those subsidiaries is the Kiewit Building Group of Honolulu. It built the Trump International Hotel and Tower at Waikiki Beach Walk.

Southwest Valley Constructors is another subsidiary. It has $1.3 billion in contracts with the Department of Homeland Security for three of Trump’s Arizona border wall projects.

Kiewit was involved in the construction of the Keystone XL pipeline, which ends in Steele City, Nebraska. It connects with another Keystone pipeline that Kiewit helped build almost a decade ago.

The company also amassed a large part of the infrastructure that’s considered the “backbone” of the Internet.

In 1988 — the same year Hagel started working with McCarthy — Kiewit spun off its Kiewit Diversified Group and renamed it Level 3 Communications (Level 3). It raised $14 billion from its IPO.

Kiewit builds and maintains the fiber optic cables that transmit content, audio, video and phone data for billions of customers around the world. It’s been the Internet service provider for Microsoft (1.5B users), Netflix (241M) and Yahoo (3B). A few years ago (2016), Level 3 announced it had reached an interconnection agreement with Google (1.5B) to more efficiently connect their networks and improve the speed of the Internet.

Level 3 has had more than 100 subsidiaries. One of those is Global Crossing, a telecom with a history of doing classified work with the U.S. government. It was incorporated in Bermuda.

In 2001, the Pentagon selected Global Crossing for a three-year contract to develop a military communications network connecting 6,000 scientists working on U.S. military projects.

Global Crossing and Level 3 have provided the broadband for a similar system in Russia. RUNNet is Russia’s largest computer network for its Scientists. It connects more than 250 universities and research institutes.

In 2002, Global Crossing was one of at least a dozen companies chosen to travel with then Secretary of Commerce, Donald L. Evans on a business development mission to Moscow. The trip was to help foster American business in Russia.

From 2002–2008, Level 3 entities donated at least $20,600 to Hagel.

In September 2011, Global Crossing became the ISP for VKontakte (VK) — the Russian Facebook-like social platform with 150 million users. Its subsea cables allow VK’s content to be delivered to Europe and the U.S. Level 3 bought Global Crossing for $3 billion a month later.

VK’s Founder and CEO Pavel Durov, later gave up control of the company to Rosneft CEO Igor Sechin and Mail[.Ru]’s Alisher Usmanov. VK was estimated to then be worth $2 billion to $4 billion. Durov left Russia after the deal.

Usmanov and Russian billionaire Yuri Milner used Mail.ru and D.S.T. to invest billions of dollars in U.S. tech companies like Cadre, Facebook, Groupon, AirBnb, Zynga and others.

In 2013, Level 3 signed a contract with the NATO Communications and Information Agency to install and maintain an IP VPN to be used by the NATO-Russia Council Cooperative Airspace Initiative. It was done to enhance airspace transparency between NATO and Russia.

Later that year, it was alleged the National Security Council was eavesdropping on the communications of Google and Yahoo users through hacking the unencrypted cables of Level 3.

Level 3 is also involved in elections.

In 2001, it filed an application for a patent to provide a secure verified voting process. Specifically, a method for “receiving election selections, producing a receipt representation of the election selections, the receipt having a unique receipt number for a voter and publishing election results, the election result including the election selections and unique receipt number.”

In an online voting patent filed by Scytl, it cites Level 3’s verified voting patent as a resource for its own patent. Scytl partners with ES&S.

Level 3 was sold to CenturyLink in 2016 for $34 billion.

That same year—before the U.S. presidential election—ES&S was investigated by the FBI for suspicious IP addresses attempting to gain access to its system. Homeland Security concluded that a “small percentage of the IP addresses identified as originating from Russian state actors were scanning the ES&S’ systems, but there was no evidence of a compromise.”

By 2016, ES&S had paid more than $600,000 to Peck Madigan Jones to lobby the federal government. For part of the time Hagel was a senator and invested in ES&S, it was lobbying the federal government on issues like the Help America Vote Act (HAVA). The law has so far paid states more $3.6 billion to purchase voting machines, services and technology from vendors like ES&S.

Peck Madigan Jones has been paid $6 million by Deutsche and $2.25 million by Facebook for lobbying work over the last decade.

In 2018, Senators Amy Klobuchar and Jeanne Shaheen wrote a letter to ES&S, Dominion Voting Systems and Hart Intercivic asking if they had allowed Russian officials to review their software code.

“According to voting machine testing and certification from the Election Assistance Commission, most voting machines contain software from firms which were alleged to have shared their source code with Russian entities. We are deeply concerned that such reviews may have presented an opportunity for Russian intelligence agents looking to attack or hack the United States’ elections infrastructure.”

Nebraska’s state government also has curious connections with the McCarthy Group.

From 2000-2004, Art Burtscher was President of McCarthy Group Asset Management. From 2004–2010, he was the Chairman of McCarthy Group Advisors. He now serves as Lead Independent Director of NIC.

NIC and its 40-plus subsidiaries build and maintain portals and software solutions for 13,000 digital government services for more than 5,500 U.S. federal, state and local governments.

BPro is a subsidiary of NIC. It provides a wide array of election technology that’s currently being used in at least 10 states and 350 counties.

It also has a history of election night software crashes, no-bid government contracts and ePollbook failures. In Washington, it built a $9.5 million program (partially paid for by HAVA) to unify all 39 county voting systems in the state into a single platform. Despite issues with the system, it was put into use for the state’s August primary elections. In one county where it debuted, there were numerous problems.

“Including issues with mailing addresses, including issues that cropped up in the middle of an election…we saw issues with duplicate ballots being issued to voters with slightly different name differences,” said King County Director of Elections Julie Wise.

But despite the various problems, Montana Secretary of State Corey Stapleton signed a no-bid $2 million deal with BPro to use its TotalVote election night software. Montana got $3 million in funding from HAVA last year. Stapleton wants all counties to transition to the new software by the 2020 elections.

BPro is also a private sector advisor to the National Association of Secretaries of State Election Cybersecurity Task Force. Part of its mission is to “foster partnerships with public/private stakeholders, including DHS and other federal government entities.” Facebook, Microsoft and Amazon are also advisors to the task force.

Sarpy County is the county just south of Omaha’s Douglas County. They were some of the first counties that used AIS voting equipment.

In October, Google announced it was building a $600 million data center there. It’s joining Facebook, Level 3, Google, Microsoft, Yahoo, PayPal and TD Ameritrade who already have data centers in the area.

TD Ameritrade was founded by Joe Ricketts. He has a net worth of $2.7 billion. He’s the owner of the Chicago Cubs and a major Trump supporter. In 2015, he bought nearly 1,000 acres in Sarpy County to build a “church inspired” spiritual retreat. He said he was “giving the land back to God.”

Kiewit recently completed the construction of the USSTRATCOM Command Center in Sarpy County. It also built Nebraska’s FBI headquarters and the Air Force Weather Agency headquarters, located in Bellevue, Nebraska.

Admiral James O. Ellis, Jr., a retired 4-star admiral and former Commander at USSTRATCOM, is a former Chairman of the Board of Level 3.

In October, Sarpy County signed a three-year contract with Scytl to provide election reporting services. The service stores all voter election data on Scytl’s rented cloud servers. All central scan units used to record votes in Nebraska are made by ES&S. Level 3 has multiple data centers in Omaha and is the area’s largest ISP.

Citizen Journalist

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