A Shocking Defense

October 31, 2005
Elizabeth MacDonald, Forbes

New court documents contain awkward disclosures for the president of stun gun maker Taser International.

Taser International, The Under-siege stun gun maker whose stock soared sixtyfold in three years only to plunge 80% amid short-seller raids, shareholder class actions and wrongful- death lawsuits, has had another shock to the system.

Newly unsealed court documents in a personal injury case against Taser have President Thomas Smith detailing which current and former cops got stock options in Taser in exchange for essentially endorsing its line of guns, which temporarily paralyze suspects with a blast of electrical currents.

The options controversy first erupted in 2004, when President George W. Bush picked Bernard Kerik, the former New York City police commissioner, to run the Homeland Security Department. It then emerged that Taser had paid Kerik 85,000 options to join its board. Kerik says he promoted the gun to law enforcement and made more than $6 million on the options. Taser had repeatedly refused to disclose which other cops got the stock incentives.

But in September an Arizona state court judge unsealed records in a lawsuit filed by SECInsight, a research firm in Plymouth, Minn., And the Arizona Republicnewspaper. The records show Taser handed out almost 30,000 stock options to 11 people from 2001 to 2003, when Taser shares ranged from a low of 31 cents to a high of $8. The options, valued at $210,000 when they were issued, would have risen in value as Taser shares climbed as high as $33 by December 2004.

Seven of the 11 recipients are current and former police officers: All were in cities that bought stun guns.In Seattle, Wash. and Chandler and Glendale, Ariz. police departments bought Tasers during the options handouts. In Sacramento, Calif., New York City and Austin, Tex. departments had bought the stun guns before the cops got involved. The officers could not be reached for comment. Victoria, B.C. also bought Tasers.

Five of the cops served on a Taser advisory board on training police departments nationwide to use the stun gun, resulting in some sales. One officer in Chandler was accused by his superiors of a conflict of interest; the complaint was dropped. Still, "How can it not be a conflict of interest for Taser to use options as payola to police officers or medical experts, who then plug the company's product?" says John Gavin, president of SEC Insight.

The disclosures are another annoyance for Taser, of Scottsdale, Ariz., which also contends with an accounting investigation by the Securities & Exchange Commission, two class actions and 32 personal-injury torts, 13 of which allege wrongful deaths.

The latest court filings also show Taser gave 775 stock options to Darren Laur, a Victoria law enforcement official, for designing a gun holster. Laur co-wrote two medical reports praising the safety of the stun gun. Taser touts both reports on its Web site without revealing that Laur held options. Laur, who exercised and sold his options in 2003, says he made his superiors aware of his holdings and made the disclosure in a separate study.

Smith defends the options payments, saying Taser "didn't have the cash flow needed to pay these officers to do free training work." He also admitted in court that he didn't know whether Taser has a code of ethics or what it says. For that he need only read the Taser Web site:It says all employees are expected to read, understand and uphold the ethics policy and "avoid situations where a conflict of interest might occur."

Robert Bagnell becomes a case study at CACOLE Conference in Montreal

October 2005
CACOLE Conference, Montreal
Presentation by Victoria Chief of Police Paul Battershill

Taser jolts didn't lead directly to man's death

October 15, 2005
IAN DEMSKY, The Tennessean

Metro announces Patrick Lee's cause of death

October 14, 2005
By Bill Harless, Nashville City Paper

The state and Metro investigation of the Sept. 24 death of Patrick Lee has concluded, officials announced Friday.

The cause of death of Patrick Lee has been ruled as "Excited Delirium" and the manner of death could not be determined, according to a statement released jointly by the state and Metro medical examiners offices.

Lee died of cardiac arrest at the Vanderbilt University Medical Center a day after police shot him multiple times with a Taser the previous night at the Mercy Lounge music club.

Excited delirium is a condition under which "people who are under the influence of certain drugs or suffer from some types of mental illness suffer a cardiorespiratory arrest after a period of agitated and bizarre behavior," the statement said.

"This sudden cardiorespiratory arrest typically occurs after the person is subdued and restrained by either law enforcement or medical personnel, and happens with the use of many different restraint techniques."

LSD and marijuana were found in Lee's blood. "LSD intoxication is a known cause of excited delirium," the statement said.

"There is no evidence that any of the restraint techniques used that night on Mr. Lee by the Metro Police, including the Taser, directly caused Mr. Lee's cardiac arrest and death," said Davidson County medical examiner Bruce Levy in the statement.

"However, the combined effects of multiple applications of the Taser, pepper spray and physical force on someone in excited delirium are unclear and require additional research."

Police chief Ronald Serpas has directed the department to develop a "best practices" guide for officers when they encounter people with excited delirium.

Taser changes marketing language

October 1, 2005
Beth DeFalco, Associated Press

Taser International Inc. has voluntarily changed some of its broad safety claims and limited its use of the word "non-lethal" in an effort to appease Arizona officials concerned about possibly misleading marketing, officials said Wednesday.

The move by the nation's largest maker of stun guns comes as the Securities and Exchange Commission investigates the company and as the Arizona Attorney General's Office conducts its own inquiry into safety claims.

On Tuesday, Taser said the SEC had stepped up an informal inquiry and was conducting an expanded official investigation of claims Taser has made about safety studies; an end-of-year sale analysts have questioned because it appeared to inflate sales to meet annual projections; and the possibility that outsiders acquired internal company information to manipulate the stock price.

In January, Arizona Attorney General Terry Goddard said his office was probing claims Taser has made about safety studies on its products.

Taser President Tom Smith said company officials met with the Attorney General's Office several times since January and have made changes to the way they characterize the weapon's safety to consumers.

According to Taser and the Attorney General's Office, the stun gun maker submitted a list of language changes the company has already made, including an 18-point "product warning."

Among the changes, Taser explains that it uses the term non-lethal as defined by the Department of Defense - which doesn't mean the weapon can't cause death, but that it's not intended to be fatal.

Other changes include substituting the phrase "leave no lasting after effects" to "are more effective and safer than other use-of-force options."

Taser began marketing police stun guns in 1998 as a way to subdue combative people in high-risk situations. Now, more than 8,000 law enforcement agencies and military installations use them worldwide.

But critics say the stun guns have been used too liberally by police and have contributed to scores of deaths. Amnesty International has compiled a list of more than 100 people the group says have died after being shocked in scuffles with lawmen.

Taser maintains that no deaths have been directly caused by the weapon alone.

Company shares fell 47 cents, or 7.4 percent, to close at $5.88 Wednesday on the Nasdaq Stock Market, a new 52-week low.