Software company with history of malfunctions started by state director
Andrews – A great number of ABC stores throughout North Carolina use a point-of-sale system provided by a company that was started by a director within the state’s ABC Commission.
The point-of-sale system has a history of power malfunctions, glitches in internet connections, hardware malfunctions and more, according to court documents filed by the company admitting to the problems. Those problems have resulted in card overcharges at the Andrews ABC store, according to the store’s personnel, who told board members that customers have complained about the issue.
“More money is going to the bank than what was charged. There’s four or five errors every month,” store finance officer Jack Frahmann said during the Andrews ABC Board meeting Thursday. “We get calls every once in a while saying, ‘You charged my account twice.’ I think it’s a combination of the system and the card reader. It’s not one or the other.”
At an Andrews ABC Board meeting in November, manager Jim Ringenberg reported that the store needed a new point-of-sale system. As a result, board members voted for Ringenberg to obtain proposals from other companies that provide such systems throughout the state, along with references from any ABC stores those companies serve.
The vote also required Ringenberg to clarify the annual maintenance and license fees associated with an upgrade by the company that serves the Andrews ABC store today.
At the board meeting Thursday, Ringenberg said he “attempted” to obtain quotes from other providers of point-of-sale systems. He told board members there are only three companies in the state that provide point-of-sale systems to liquor stores. One of the companies only services stores on the east coast, and he claimed another company failed to respond to his request for a quote via email.
Taking Ringenberg at his word, board members unanimously voted to upgrade the faulty point-of-sale system provided by Carolina Data Systems, a company that was started, in part, by Laurie Lee. Today, Lee serves as director of the ABC Board Audits & Pricing Division at the N.C. ABC Commission.
“I never even talked to her about that one,” Ringenberg said when the Cherokee Scout asked whether Lee recommended upgrading the point-of-sale equipment provided by Carolina Data Systems. “I didn’t talk to her about any of them.”
A 2016 blog post on the company’s website says, “Carolina Data Systems was started three decades ago by microcomputer industry pioneers Danny Whitford, Joe Sullivan, Laurie Lee and Scott Swanson. … After stellar careers with the company, Lee was appointed to a staff position with the N.C. ABC Commission and Swanson took an assignment with the U.S. Department of Defense as an IT executive.”
Lee confirmed that she was an “original employee” of Carolina Data Systems. She said she does not receive compensation from the company and does not own stock nor have any other financial interest in the company. The latest annual report filed by Carolina Data Systems Inc. lists Daniel E. Whitford as chairman of the company and Daniel Christopher Whitford as president.
In a 2018 lawsuit filed in N.C. Business Court, representatives for Carolina Data Systems admit the company’s software has occasional “bugs,” or defects, that cause the point-of-sale system to “malfunction.” A 2019 affidavit signed by Matt Carlucci, an independent contractor who performed programming and maintenance work for Carolina Data Systems, says the company’s software is obsolete, but the coding must remain a part of the programming.
“Much of the computer code in CDS’ software is programmed using the ADEPT computer language. ADEPT is an obsolete programming language that was popular in the 1980s but that is no longer used by programmers,” the testimony says.
“My understanding is that much of CDS’ software was originally programmed using ADEPT, and that much of the legacy ADEPT code remains in CDS’ programs because this code is essential to the functionality ... as a practical matter, it would not be efficient to start from scratch and reprogram the software.”
In the lawsuit, which alleges that a competing company stole proprietary trade secrets, Carolina Data Systems admits profiting off of stores that require them to fix repeated malfunctions.
“Part of [Carolina Data Systems’] business model and its service to its ABC board customers is to provide software and hardware support and service,” the lawsuit says. “Most typically this is accomplished by annual maintenance contracts.”
The lawsuit further admits that there are other competitors in North Carolina that could service ABC stores.
“Plaintiff does have legitimate competitors for ABC board business who have adapted or modified more generic third-party software to meet some of the needs of North Carolina’s ABC boards,” the lawsuit says, further adding that the company services numerous stores throughout the state.
“Since its inception in 1990, [Carolina Data Systems] has been highly successful in contracting with ABC boards across the state of North Carolina and has a majority of such boards as its customers.”
The state’s website lists 171 ABC boards and says there are about 435 stores in North Carolina. During an online search, the Scout found at least two other companies based in North Carolina – neither mentioned by Ringenberg – that tout the ability to service liquor stores with a point-of-sale system.
One of those companies specifically lists Cherokee County as being in its service area. However, it’s unclear whether those companies actually have ABC store clients. Lee said via email that “Carolina Data Systems is one of several providers
of point-of-sale services used by the state’s 171 ABC boards. Boards have the authority to select the service provider that best meets their needs.”
“If I was writing a story, I would just write what I had heard and leave it at that,” Ringenberg said during a conversation with the Scout. “I didn’t know that you guys were going to do a thorough investigation of the entire state to see if you could come up with more of them to make me look bad.
“I’m shocked that you would want to write that there are other software companies that allegedly service other stores that I’m not even aware of, and that we didn’t bring them up.”
Ringenberg said he only conducted research on the software companies he knew were being used by other ABC stores. He said “we don’t know for a fact” whether there are other companies capable of servicing liquor stores because “we’re not aware of any other stores using them.”
However, he provided no response when asked whether a conversation with other companies would have determined their capabilities. “If there’s only two software companies mentioned by the other stores, that has to say something,” Ringenberg said.
When asked whether he believes the ABC board would have wanted to know there are additional companies that have the ability to service liquor stores, even if they don’t have any ABC stores as clients, Ringenberg responded, “That would be something they would have to tell you.”
Jeff Huls resigned from the Andrews ABC Board prior to last week’s meeting. Board member Paula Parker declined to comment on the point-of-sale system upgrade when reached by phone over the weekend.
Meanwhile, Debbie Ambler did not respond to a message seeking comment. Chairwoman Bennie Jo McKinnon was out of town when contacted by the Scout on Sunday.
Holly Christy, who made the motion in November for Ringenberg to obtain quotes for a new point-of-sale system, said she expected a list of “other options” and referrals.
“Just because [a company] isn’t servicing any stores here currently doesn’t mean they can’t,” Christy told the Scout.
“When he told us that he couldn’t get another quote and said his reason was because he couldn’t make the time to do a conference call, that disappointed me. But then when I heard that no other company could transfer the data over, I thought [this conversation is a moot point] because we need all of the prior data.”
The aforementioned lawsuit says a competing company successfully acquired a few of Carolina Data Systems’ ABC board customers and accessed the prior existing store data.
“I don’t know that anyone did any independent research on the different programs because we relied on Jim to do that,” Christy said. “I just took him at his word that the other ones would not transfer over all the data.”
After trading in older equipment in use at the store today, the ABC board will pay a little more than $14,000 to upgrade the system. The total combined cost of annual fees associated with the upgraded system is not known because Ringenberg did not obtain the license fee quote as requested by the board.
Carolina Data Systems voluntarily dismissed its lawsuit against the competing company in January.