California AG says HP had stonewalled state probe
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Hewlett-Packard Co.   recently "stonewalled" California's probe into the company, but  now has expressed willingness to cooperate, a spokesman for the  state's attorney general said on Thursday.
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Let's not get civil HP will pay $14.5m to keep California prosecutors from filing civil charges against the company and its directors - both current and former.â¦
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California's attorney general  filed a criminal complaint on Wednesday seeking indictments of  former Hewlett-Packard Co. Chairman Patricia Dunn and four  others for their roles in a probe into board leaks.
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(InfoWorld) - California Attorney General Bill Lockyer says criminal charges are "likely" in the scandal surrounding alleged spying involving the board of Hewlett-Packard Co. (HP), reports say. Meanwhile, HP board Chairman Patricia Dunn says she will not resign over the scandal and that she was "appalled" that contractors hired to investigate news leaks used potentially illegal methods, news reports say. The Wall Street Journal reported the HP board will hold a special meeting by phone this weekend to discuss the situation. HP is on the defensive after the disclosures this week thatÂ phone records of HP board membersÂ andÂ journalistsÂ were hacked to see who on the board discussed confidential strategy sessions with reporters earlier this year. The company disclosed in a U.S. Securities and Exchange Commission filing Wednesday that investigators, in order to identify the leaker, had used "pretexting," a method in which false pretenses are used to gain online access to others' phone records. The investigation determined that director George Keyworth was the source for a Cnet.com story in January about HP's strategy. Keyworth was asked to resign from the board in May but refused. Board member Thomas Perkins, a renowned Silicon Valley venture capitalist, did resign in May in protest over concerns with the HP board's handling of investigations into leaks of confidential information. Dunn, in an interview in the Journal Friday, said that while she ordered the investigation of board news leaks, she did not know the investigators hired to conduct the probe used pretexting. "I was appalled. And I'm going to apologize," to those journalists, she told the Journal. Because she was also subject to investigation, she said she could not have known what methods the investigators used. But while she does not plan to resign, Dunn will take into consideration what the board thinks she should do. "I serve entirely at the pleasure of the board,'' Dunn told the Journal. "If they determine it no longer is in the interest of shareholders [for me to remain on the board] I will do so.'' Charges could be filed under a California law prohibiting gaining unauthorized access to computer data or under another law prohibiting identity theft through unauthorized use of personal information, published reports say. The investigation is ongoing but prosecution is likely because a crime has occurred, Lockyer told the San Jose Mercury News. A bill to specifically outlaw pretexting is on Governor Arnold Schwarzenegger's desk awaiting his signature. The governor has until the end of September to sign or veto the bill, spokesman Darrel Ng told IDG News Service. Schwarzenegger hasn't taken a position on the pretexting bill, but only because it is one of hundreds of bills passed during the recently concluded session of the California Legislature, Ng said.
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California's attorney general says he has sufficient evidence for indictments within HP and outside the company in its investigation of whether the company illegally obtained the private phone records of directors and journalists.
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(InfoWorld) - A spokesman from the California attorney general's office Friday said that Attorney General Bill Lockyer at this point does not have any evidence to charge Hewlett-Packard Co. (HP) Chief Executive Officer and President Mark Hurd with a criminal offense in the ongoing investigation intoÂ HP's probe of journalists and board members. However, Thomas Dressler, a Lockyer spokesman, said that Lockyer and his office are still in the middle of an investigation, so it does not mean Hurd is in the clear yet. "The key words are 'at this point,'" he said Friday. "We're not ruling anyone out in terms of criminal culpability. We have much more work to do, many more documents to review, more people to interview." The probe could have serious consequences for HP as evidence continues to surface that investigators not only used pretexting -- or obtaining phone records under false pretenses -- but also physical surveillance and e-mail tracking software that was placed on at least one target's computer without her knowledge to gather information. HP has acknowledged that it undertook an investigation of employees, board members and journalists, in an attempt to find out who on the HP board was leaking information. A report in The Washington Post Thursday cited e-mail that indicated Hurd knew about details of the investigation, and HP's share price began falling after reports that suggested he approved elaborate spying tactics to obtain reporter information. Patricia Dunn, HP's chairman, already has agreed toÂ step aside as chairman in January in the wake of the scandal, and two others also have resigned from the board. Hurd will take over as chairman of the board when Dunn leaves, though she will remain on the board. Hurd is expected to speak publicly for the first time about the scandal in a press conference at 4:05 p.m. Eastern Standard Time. According to HP spokeswoman Emma Wischhusen, Hurd will not field reporter questions, but will make only prepared comments. A representative from a law firm representing HP, Morgan, Lewis & Bockius LLP, also will speak at the press conference. Â
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Hewlett-Packard staff could be indicted over the firm's probe into media leaks, California's attorney general says.
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California's attorney general has   launched an inquiry into methods used by Hewlett-Packard Co.   HPQ.N to investigate boardroom leaks dating back to 2005, the   computer maker said on Wednesday.
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California's attorney general is preparing to file criminal complaints today against ousted Hewlett-Packard Co. chairman Patricia C. Dunn and four others for their roles in the Hewlett-Packard Co. spying operation that surfaced last month, according to sources close to the case.
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Hewlett-Packard Co. chairwoman Patricia Dunn, a former company lawyer, and three outside investigators wereÂ charged Wednesday in CaliforniaÂ on felony charges related to the conduct of an investigationÂ to track down news leaks from the HP board that allegedly broke state law.
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The California attorney general said   on Friday there was no evidence yet linking Hewlett-Packard Co.   HPQ.N Chief Executive Mark Hurd to any criminal wrongdoing,   as scrutiny grew over his role in the PC maker's probe of a   boardroom leak.
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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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(InfoWorld) - A state judge in California on Thursday dismissed charges against the three remaining state criminal defendants in theÂ Hewlett-Packard spying case. Santa Clara County Superior Court Judge Ray Cunningham dropped charges against former HP attorney Kevin Hunsaker and private investigators Ron DeLia and Matthew DePante. The charges were dropped for their part in the use of false pretenses to obtain phone records of individuals they were investigating for leaking HP board deliberations to news media. Cunningham agreed to the dismissal after each of the defendants performed at least 96 hours of community service. In fact, each of them did more than required. According to each of their attorneys, the defendants did the following: DeLia, the owner of Security Outsourcing Solutions, a security firm hired by HP, performed 100 hours of community service at a veterans' organization; DePante, of Action Research Group, an investigative firm hired by DeLia, performed 120 hours at a church organization; and Hunsaker performed 165 hours at a nonprofit legal organization "At worst, the conduct in this case amounted to boardroom politics and a betrayal of trust rather than criminal activity," Cunningham said from the bench in his courtroom in San Jose, Calif. None of the defendants were in the courtroom but were represented by their attorneys. Deputy State Attorney General Ralph Sivilla said the state agreed to the dismissal. "I think everybody at Hewlett-Packard thought they were doing the right thing, the legal thing," Tom Nolan, Hunsaker's attorney, said after the hearing. "They had a serious problem and they relied upon counsel.... But as the [judge] said, they really didn't commit any crimes." The serious problem Nolan referred to, of course, was the leaking of board deliberations to the media. To trace the source of leaks, the private investigators obtained calling records of HP directors, some employees, and several reporters covering HP. At a hearing in March, Cunningham dismissed all charges against former HP chairman Patricia Dunn and said he would dismiss the charges against the other three if they performed community service. The scandal "has achieved much public good," Cunningham said, in that it has brought attention to the problem of "pretexting," or using false pretenses to access private records. It has resulted in the passage of state and federal laws specifically banning the practice. Also, HP agreed to a $14.5 million civil case settlement with the State of California in December 2006 that will support a state program focused on privacy protection. Cunningham noted that The Wall Street Journal editorialized that his dismissal decision in March showed "wisdom and compassion." Given that a Journal reporter was one of the victims of the pretexting, that's a notable endorsement, he said. Bryan Wagner still faces sentencing in federal court in San Jose on one count of conspiracy and one count of aggravated identity theft. HeÂ pleaded guilty to those chargesÂ in January. Wagner was hired by Action Research Group to do the actual pretexting to obtain the phone records, according to court testimony.DeLia's attorney, John Williams, said his client hopes "he gets to go back to work and get on with his life." This story was updated on June 28, 2007
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SACRAMENTO, Calif  - California's attorney general on Wednesday sought felony indictments against former Hewlett-Packard Co. Chairman Patricia Dunn and four others in a leak scandal that involved spying on board members and journalists.
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California Attorney General Bill   Lockyer said he has enough evidence to indict people at   Hewlett-Packard Co. HPQ.N in an investigation into whether   the computer maker had illegally obtained the private phone   records of directors and reporters.
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Hewlett-Packard Co.   Chairman Patricia Dunn on Friday defended her role in an  inquiry into a boardroom leak that has led to a California  state investigation, and said she has no plans to resign unless  asked by the board.
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(InfoWorld) - Ousted Hewlett-Packard chairwoman Patricia Dunn is expected to be indicted Wednesday in California on charges related toÂ the spying scandal that has hit the company, the New York Times reports. To be indicted along with Dunn are Kevin Hunsaker, a former senior lawyer at HP; Ronald L. DeLia, a Boston-area private detective; Joseph DePante, owner of Action Research Group, a Melbourne, Florida, information broker; and Bryan Wagner, a Littleton, Colorado, man who is said to have obtained private phone records while working for DePante, the Times reported. The charges are expected to come from California Attorney General Bill Lockeyer,Â whose office has been investigating reportsÂ that HP hired private detectives and may have used illegal methods to track the source of news leaks from the board of directors. The charges are expected to include using false or fraudulent pretenses to obtain confidential information from a public utility, unauthorized access to computer data, identity theft, and conspiracy to commit each of those crimes, the Times reported. All of the charges are felonies. The private investigators hired by HP allegedly used "pretexting," pretending to be journalists from a number of various publications to obtain their telephone records in an attempt to find out who from the board provided information to the reporters.