HP settles pretexting scandal for $14.5 million
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Hewlett-Packard Co. agreed to pay California $14.5 million to settle state civil claims over its eavesdropping scandal.
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Hewlett-Packard Co. agreed to a $14.5 million settlement in the California civil lawsuit related to the company's spying scandal.
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California is creating a $13.5 million fund to protect privacy. And the state has Hewlett-Packard (HPQ) to thank for it.
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(InfoWorld) - An Internet business that sold people's telephone and credit-card records has agreed to settle charges that it violated U.S. law, the U.S. Federal Trade Commission (FTC) said Thursday. Integrity Security & Investigation Services and its owner, Edmund Edmister, will give up $2,700, the entire amount the company earned from selling phone records and credit card transaction reports, the FTC said. The settlement also bars the company from obtaining and selling confidential phone and credit account records unless authorized by law or court order. The FTC in MayÂ filed federal court complaintsÂ against five Web-based operations allegedly engaged in pretexting, attempting to obtain phone or other personal records from companies by pretending to be the targeted customer. Integrity Security & Investigation Services is the first firm to settle with the FTC; charges are still pending against the four remaining companies. The U.S. Congress has beenÂ investigating pretextingÂ since early this year, but the practice gained national attention last month whenÂ Hewlett-Packard officials revealedÂ pretexting had been used to gain access to the phone records of employees, board members and journalists. Private investigators employed by HP allegedly used pretexting in an investigation of board leaks in 2005 and 2006. The agency dismissed charges against F. Lynne Moseley and Tracey Edmister, Integrity Security & Investigation Services corporate officers. The FTC determined they played no role in operating the business.
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Hewlett-Packard Co. yesterday said a Needham private investigator assured the computer maker its investigative methods were legal, then apparently used ``pretexting," or lying, to obtain phone and fax records of 18 company board members, employees, and journalists.
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SAN JOSE, Calif. _ Hewlett-Packard agreed today to pay $14.5 million to settle civil claims brought by the California attorney general's office, also today, arising from the company's board-spying scandal.
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(InfoWorld) - Verizon Wireless Inc. has sued Hewlett-Packard Co.'s (HP's) private investigators for faking their identities to obtain other people's phone records, a practice known as "pretexting." In a case filed Thursday in U.S. District Court in New Jersey, Verizon asked a judge to award it damage payments and to block the defendants from gaining any more records. Verizon said it did not know the investigators' identities, but defined them as "John and Jane Does" who were retained by HP in 2005 and 2006 to investigate confidential information leaks from HP's board of directors, according to the lawsuit. Those people obtained private information about Verizon Wireless customers by using pretexting calls to gain access to the company's protected computers and data storage facilities. They then sold that information. Both actions violate the national Computer Fraud and Abuse Act, Verizon said. The scandal has already forcedÂ Patricia Dunn to resign as HP board chairman, andÂ sparked investigations by the California attorney general and the U.S. House of Representatives. In court papers, Verizon described how a woman called Verizon customer service on May 17, 2005, asking to see phone records for an HP director. She called back three days later, arranging to block text messages to that phone and logging on to the person's online account. Then, on Feb. 1, 2006, someone called Verizon customer service again, asking for the number of a second phone on that account. Later that day, the person logged into the account again and changed the password, this time from a computer with a different IP (Internet Protocol) address. The next day, someone called Verizon and asked to see call records of the director's spouse. Verizon workers grew suspicious and placed a warning on the account. Someone called again on March 1, offered the spouse's Social Security number and asked for the mobile phone number. Already wary, Verizon workers called the mobile phone and found that the customer's voicemail did not match the caller's voice. When someone tried again to access the records on March 14, Verizon workers refused. Verizon hopes the lawsuit will help restore its customers' confidence in the security of their records, saying that its reputation has been harmed by the spying. "Verizon goes to great lengths to protect confidential customer information," including training its customer service representatives to identify the schemes used by illegal data brokers, the suit said. Despite those precautions, the HP investigators used "fraud, trickery and deceit" by making pretexting calls to Verizon representatives to gain unauthorized online account access, the suit alleges. Verizon said it will update the suit once it learns their identities. Â ADVERTISEMENTMAKE SOA REAL WITH IBM WEBSPHERE PODCASTStreamline processes and maximize efficiency within a proven service oriented architecture. Take back control of your business processes with IBM WebSphere.
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The software giant agreed to pay $225 million to avoid criminal prosecution in an accounting scandal that has brought down several of its top executives.
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Hewlett-Packard Co  settled  claims on Wednesday with four reporters at the heart of a  scandal involving claims that the world's biggest PC maker  engaged in corporate espionage to plug a boardroom leak.
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Hewlett-Packard Co.  on  Thursday admitted that private investigators hired by its board  had acquired the phone records of several journalists in an  attempt to find a suspected boardroom leaker, the Financial  Times reported on Friday.
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Microsoft, Google, and Yahoo have agreed to pay a total of $31.5 million to resolve claims that they promoted illegal gambling, the U.S. Department of Justice announced Wednesday.
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(InfoWorld) - In one telling moment during the recent Congressional hearings onÂ the Hewlett-Packard Co. board scandal, ousted chairman Patricia Dunn offered the "everybody does it" defense. Asked by one legislator about HPâs hiring private investigators who obtained phone records under false pretenses, a practice called pretexting, to identify whoâd leaked confidential information, Dunn replied, "I believe these [pretexting] methods may be quite common at companies around the country." If so, that is chilling to business ethicist Kirk Hanson. "As an ethicist Iâm horrified that HPâs managers relied on the assertion that it was borderline, but legal, and never asked whether it was ethical," says Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University, in Santa Clara, California. If HP adopted what Hanson called "black ops" as standard investigative practices, he wonders how many other companies have done it. HP, some of its employees and companies it hired to investigate boardroom leaks to news media still face potential civil and criminal liability for their actions. Other companies find themselves in a dilemma over how to control information within the law. Companies may have a moral or legal responsibility to respect peopleâs privacy, but they also have a legal and fiduciary responsibility to protect confidential business information. And under the federalÂ Sarbanes-Oxley ActÂ in effect the last four years, they have obligations to investigate certain leaks, Hanson says. Companies have a right to investigate their own employees if theyâre suspected of leaking information. Employees should presume no right to privacy in their use of company computers, e-mail programs or telephones. One commonly used tactic to probe security breaches doesnât even involve electronic snooping. Companies exclusively give suspected leakers seemingly important but relatively benign information. If it turns up in the media, the company has identified the leaker. But Hanson sees a bright line separating how a company can investigate its own employees and how it can investigate outsiders. The HP reaction to leaks to reporters contrasts with the recent practice of Apple Computer Inc. when proprietary information got out. Although Apple is known for its devotion to secrecy, it went to court rather than to private eyes when confidential information leaked in 2004. Apple, of Cupertino, California, sued in state court to force two Web sites to reveal sources for stories they posted about a possible new Apple product. A state appellate court ruled May 26 that the writers on those Web sites enjoy the same First Amendment rights as mainstream journalists and, thus, were protected by Californiaâs shield law from having to reveal their sources. Apple dropped the case. It did not reply to a request for comment on this story. The Sarbanes-Oxley Act requires companies to develop a whistle-blowing reporting system so employees can raise issues about improper behavior within the company, said Hanson. That has prompted companies to develop an investigative capability in the event improper or illegal activity is alleged. "So (under SOX), companies have developed much enhanced investigative capability," he said. Companies also have to keep confidential information safe because disclosure could be a criminal act or a breach of fiduciary responsibility, said Rob Enderle, senior analyst at Enderle Group, a technology market research firm. If word leaks that a board is contemplating an acquisition, for instance, the company or people in it could be prosecuted for insider trading if people used that knowledge to make stock trades. Given the potential liabilities, corporate investigations of leaks are "common," said Enderle. "The stuff with the pretexting goes to the extreme, but looking at company phone records or e-mails, that is very common. Hiring an outside contractor is also common." In fact, leak investigations enjoy broad support among corporate directors. In a September telephone survey of 226 board members at publicly traded companies in the U.S., 73 percent said a company's chairman should be empowered to use any legally available means to identify a board-level leaker, according to Ponemon Institute LLC. About 71 percent of the respondents said it would be okay for a board chairman to review the e-mail messages of other members, in addition to other types of confidential data stored on company computers. Fifty percent said that reviewing telephone records of individuals obtained via pretexting is proper as long as that approach hasn't been outlawed. But HPâs tactics of tailing reporters, attempting to install a tracer on a reporterâs e-mail program, pretexting numbers of people outside the company and even considering planting spies in newsrooms as janitors or clerical workers is "bizarre" to Rick Belluzzo. "The reaction by HP was totally out of proportion with the situation," said Belluzzo, chairman and CEO of Quantum Corp., a network storage equipment maker. His rÃ©sumÃ© includes president of Microsoft Corp. and a 23-year stint at HP, where he rose to the position of executive vice president of its computer division. While he understands the importance of keeping certain information confidential and making employees and directors sign confidentiality agreements, HP overreacted to information leaks that are sometimes going to happen anyway. "Itâs an impossible task to control information flow. Some leaks are inevitable," Belluzzo said.
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By Therese Poletti, San Jose Mercury News, Calif.  SJ-0524-Hewlett-Packard-probe-by-SEC-is-settled   Hewlett-Packard probe by SEC is settled   Therese Poletti  San  Jose Mercury News, Calif.
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Hewlett-Packard Co. (HPQ) targeted three  reporters among the nine journalists whose phone records it sought through a controversial method known as "pretexting," the computer maker confirmed on Sept. 8.
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The agreement settles a California civil suit over its pursuit of private phone records to trace a news leak.
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(InfoWorld) - Hewlett-Packard Co.'s (HP's) board of directors has approved a severance package including $3.7 million in stock options for its general counsel, who resigned Thursday amid a growing scandal into HP's conduct during an investigation into board leaks. Ann BaskinsÂ resigned Thursday just before a U.S. Congress subcommittee hearing on HP's investigation methods, including investigators pretending to be reporters or board members to gain access to their personal telephone records and other data. That practice is often called pretexting. During the hearing, former HP Chairwoman Patricia DunnÂ told lawmakers that Baskins had repeatedly told her the year-long investigation was done legally. HP filed a form with the U.S. Securities and Exchange Commission (SEC) Thursday saying it would provide Baskins with a compensation package, including the option to sell her outstanding stock options, worth nearly $3.7 million, by Nov. 22. Baskins will also have access to the vested portion of her retirement account at HP and to other benefits. If she accepts the package, she will give up any claims against HP and its employees, according to the SEC document. Baskins declined to testify before the subcommittee, citing her right to not testify against herself. Members of the Oversight and Investigations subcommittee of the House Committee on Energy and Commerce hammered HP officials Thursday for investigators who allegedly lied to gain access to others' personal records, for attempting to trace the e-mail of a reporter and for following reporters and board members. Representative Ed Markey, a Massachusetts Democrat, also questioned why HP was giving Baskins a "golden parachute" after Dunn identified her being one of the internal leaders of the leak investigation. "Do you think that's appropriate?" he asked Dunn. Dunn,Â who resigned from the HP board Sept. 21, said she was not a part of the board discussion to approve Baskins' severance package. She would have to hear the discussion before deciding if it was appropriate, she said. Baskins worked for HP for 24 years and served the company well before the recent questions, Dunn said. "She bled HP blue," Dunn said. "She made some mistakes."
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Reporters who sued HP over the spying scandal have settled; money will go to charities of the plaintiffs' choice.