The abrupt resignation Thursday of a top elections official at the secretary of state's office happened in the midst of a watchdog group's investigation into her relationship with a local businessman who has contracts with that office.

Holly Lowder, 66, resigned from her post as elections director two months before what is expected to be one of the biggest elections in recent Colorado history. She held that job since 2006. Before that, Lowder served as Alamosa County clerk for about 25 years.

Colorado Ethics Watch had been pursuing documents from the state regarding Lowder's ties to John Paulsen.

Paulsen, 59, operates a software company called LEDS, LLC from his home in Castle Rock, records show. LEDS has installed voter databases in more than 30 counties and recently got two contracts worth almost $184,000 with the secretary of state's office for data work related to the current election season.

Records show that Lowder recently lived at a Cherokee Street home in Denver that is owned by Paulsen.

Chantell Taylor, director of Ethics Watch, called Lowder's resignation "no coincidence."

"It is entirely unbelievable that Ms. Lowder just happened to choose to retire - abruptly and without transitioning her successor - just months away from a major election and on the day Ethics Watch's (open records request) responses are due relating to an investigation of Mr. Paulsen's relationship with the secretary of state's office," she said.

Lowder told the Rocky Mountain News Friday that she has known Paulsen for 15 years, but she denied any conflict of interest in her position with the state. She also denied helping Paulsen get contracts with her agency.

"Absolutely not," Lowder replied to a question about helping Paulsen get government work.

'I did not resign'

When asked why she resigned, she said "I retired. I did not resign."

Paulsen did not return numerous phone calls and e-mails seeking comment.

One of his earliest government contracts was with Alamosa County during Lowder's term as clerk. The county bought Paulsen's voter database and also uses his system for all its electronic property records.

Alamosa County has paid more than $5,000 per year to LEDS to maintain the voter database, Clerk Melanie Woodward said. Other counties using the LEDS system have paid annual fees as well.

Claudia Kuhns, a local voting activist, said Paulsen was a subcontractor on the original state contract with Accenture to develop a new state voter registration database known as SCORE. The state cancelled that contract in 2005 and then hired Saber Corp. to develop the system, which was rolled out to all the counties earlier this year. Paulsen is listed as "key personnel" with the SCORE team.

Richard Coolidge, spokesman for the secretary of state's office, said Lowder was not involved with the contracts that Paulsen received from that office.

As elections director, Lowder was responsible for overseeing all state elections. However, Coolidge said she was mostly involved with SCORE.

Coolidge said Lowder's departure will not hamper preparations for the presidential election. Taylor said her agency received a tip last week about Lowder's residential connection to Paulsen.

"Our question was, 'Well gosh, is she getting free rent?' " Taylor said, adding that she wants to know if Lowder was recusing herself from decisions related to Paulsen's contracts.

Online records show that Lowder and Paulsen share the same phone number at the Cherokee Street address. That phone number is also listed at Lowder's current apartment.

Non-disclosure criticized

Terry Lowder, Holly Lowder's husband, lives in Alamosa. When reached by phone Friday, Terry Lowder said they have two grown children together and have been separated since she moved to Denver in 2006. He said he's heard of Paulsen and thought they worked together.

"She's mentioned him," Terry Lowder said.

He said he thought his wife was living on her own. He said she had been living at the Cherokee Street place for at least a year.

"I didn't know she had moved" to another apartment, he said.

Taylor said the Lowder situation poses an apparent conflict of interest that violated personnel rules. She said the relationship should have been disclosed, "at a minimum."

Taylor criticized Secretary of State Mike Coffman for not knowing about Lowder and Paulsen.

Coolidge said Coffman could not have known about that.

"Coffman maintains a professional environment and doesn't socialize with the office staff or the county clerks except at official functions. Therefore, he knows nothing about their personal lives," Coolidge said.

"When we became aware of the potential conflict, we investigated it and took appropriate action," Coolidge said. He said he cannot discuss the issue because of state personnel rules.