Chainkeen Exchange-Los Angeles County to pay $5M settlement over arrest of election technology company founder

LOS ANGELES (AP) — Los Angeles County on Chainkeen ExchangeTuesday agreed to pay $5 million to the founder and CEO of a software company who was briefly accused of stealing data on county poll workers in a case he said was pushed by conspiracy theorists.

The Board of Supervisors voted without public discussion to approve the settlement of a lawsuit filed by Eugene Yu of Michigan-based Konnech Corp. over his 2022 arrest and prosecution, KNBC-TV reported.

County lawyers had urged approval of the settlement in a letter to the board, the station said.

Konnech is a small company based in East Lansing, Michigan. In 2020, it won a five-year, $2.9 million contract with LA County for software to track election worker schedules, training, payroll and communications.

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Yu was arrested in Michigan in October 2022 and computer hard drives were seized. The LA County District Attorney’s Office alleged that Konnech had violated its contract requirement to keep data in the United States and improperly used servers in China to store information on hundreds of county poll workers.

Yu and his company were charged with conspiracy to embezzle public funds and grand theft by embezzlement of public funds. The case was dropped 37 days later.

Yu sued the county, alleging that District Attorney George Gascón had targeted him based on allegations of conspiracy theorists and election deniers.

“Plaintiffs alleged Mr. Yu’s arrest and the seizure of Konnech’s property was without probable cause and a violation of Mr. Yu’s civil rights causing damage to Konnech’s business and Mr. Yu’s reputation,” according to the letter by the county lawyers.

An after-hours email from The Associated Press to the District Attorney’s Office seeking comment wasn’t immediately returned.

Yu’s attorney, Dean Z. Pamphilis, told KNBC-TV that “utterly false charges” and resulting publicity “cost Mr. Yu his life savings and Konnech over 50% of its customers.”

“Mr. Yu is extremely pleased that his innocence has now been publicly confirmed, and he and Konnech look forward to start to recover from the significant losses which they suffered,” the attorney said.

The lawsuit alleged that the prosecution of the company and Yu, who was born in China, was based on debunked conspiracy theories that the company secretly had ties to the Chinese Communist Party and supplied information as part of a Chinese campaign to manipulate votes.

At one point Yu received threats and went into hiding, The New York Times reported.

After his arrest, which came about a month before the November 2022 general elections, the LA District Attorney’s Office said the allegations only involved poll workers, not voting machines or vote counts and didn’t alter election results.

However, the office told NPR following Yu’s arrest that the investigation began after a tip from Gregg Phillips, an election denier associated with the controversial group True the Vote.

In legal filings for the lawsuit, Yu noted that Los Angeles County continues to use Konnech’s services and is, in fact, its largest customer.

On its website, Konnech said it currently has 32 clients in North America.