HP's Dunn, 4 others charged over probe

Calif. files criminal counts tied to `pretexting' scandal

October 05, 2006|By James S. Granelli, Marc Lifsher and Jim Puzzanghera | James S. Granelli, Marc Lifsher and Jim Puzzanghera,Los Angeles Times

SACRAMENTO, Calif. -- The former chairman of Hewlett-Packard Co. and four others were charged with felonies yesterday for their roles in a clandestine probe to root out the source of boardroom media leaks at the Silicon Valley icon.

California Attorney General Bill Lockyer filed four felony counts against Patricia C. Dunn, who resigned last month from HP's board after supervising a cloak-and-dagger investigation that included obtaining private phone records through subterfuge, tailing HP directors and sending computer spyware to a reporter.

Also charged were Kevin T. Hunsaker, the former HP ethics officer who oversaw the investigation; Ronald R. DeLia, the Massachusetts private investigator who carried it out; Matthew DePante, Florida owner of a data-brokering company that provided confidential phone records; and DePante employee Bryan Wagner of Colorado.

Notably, though, HP chief executive Mark V. Hurd was not accused of wrongdoing - a fact that sent the company's shares to a six-year high as Wall Street hoped the saga was drawing to a close.

Dunn and the others are accused in a complaint filed in Santa Clara County Superior Court of using false pretenses to obtain confidential information from a public utility; unauthorized access to computer data; identity theft, and conspiracy to commit each of those crimes.

If convicted, the five could each face as much as 12 years in state prison and $65,000 in fines.

Dunn and DeLia denied the charges yesterday. Hunsaker's lawyer, Michael N. Pancer, of San Diego, and DePante's lawyer, Richard J. Preira, of Miami Beach, Fla., didn't return phone calls. Wagner could not be reached. An HP spokesman said the company would continue to cooperate with state and federal investigators, but had no further comment yesterday.

Unlike the accounting manipulation of previous scandals at Enron Corp. or WorldCom, the HP case highlighted the precarious notion of personal privacy in the Internet age and raised questions about the heavy-handed tactics of big corporations.

"Privacy issues have been put in a light that simply has not existed before," said James Post, a Boston University business professor and lawyer.

"That's what makes this a landmark case. This is going to be the reference point for decades in the clash of personal privacy and the corporate need to know," Post said.

Lockyer said at a news conference that the state takes privacy crimes seriously and that "those who crossed the legal line must be held accountable."

The scandal has riveted Silicon Valley since it was revealed Sept. 5.

In the intervening weeks, Lockyer, the FBI, Congress and the Securities and Exchange Commission all launched their own investigations into the Palo Alto company, which was once considered so button-down that the "HP Way" was synonymous with honesty and fair dealing.

For investors, the chief worry was that the revelations might taint Hurd, the low-profile chief executive recruited last year to turn around Hewlett-Packard's flagging fortunes after the firing of former CEO Carleton S. "Carly" Fiorina.

Lockyer and his attorneys said yesterday that the investigation "remains active" and other people could be named in related criminal complaints in the future. He said that, to date, his investigation has uncovered "no evidence that Mark Hurd engaged in criminal conduct."

"I think they could put the whole board in jail and Wall Street would not care," said Daniel Morgan, a portfolio manager at Synovus Investment Advisors.

"Until Hurd is implicated in some sort of criminal charges that would prevent him from continuing to lead the company, the stock market has distanced itself from the boardroom soap opera."

Lockyer's complaint alleges that Dunn understood that investigators were using "pretexting" ruses to obtain phone records and even provided the home and cell phone numbers of fellow directors, so their call logs could be viewed.

"These charges are being brought against the wrong person at the wrong time and for the wrong reasons," said Dunn's lawyer, James J. Brosnahan.

"Throughout her entire career, she has stood for corporate process, responsibility and service. As her many supporters fully expect, she will fight these charges with everything she has," Brosnahan said.

James S. Granelli, Marc Lifsher and Jim Puzzanghera write for the Los Angeles Times. Granelli reported from Los Angeles, Lifsher from Sacramento and Puzzanghera from Washington.

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