Dunn, 4 Others Charged in HP Scandal

 
 
By Jeffrey Burt  |  Posted 2006-10-05
 
 
 
The next stop for Patricia Dunn and four others involved in the controversy surrounding Hewlett-Packards hunt for a news leak may be a California courtroom.

A week after appearing before a Congressional subcommittee in Washington, Dunn, the former chairwoman of HPs board of directors, was indicted by the California State Attorney Generals office Oct. 4 on felony charges of fraudulent wire communications, wrongful use of a computer, identity theft and conspiracy.

Facing identical charges are Kevin Hunsaker, a former HP lawyer and ethics officer, and three people hired by HP as part of the investigation: Ron DeLia, managing director of Boston-based Security Outsourcing Solutions, an outside firm brought in by HP to conduct the investigation; Matthew DePante, manager of information broker Action Research Group, in Melbourne, Fla.; and Bryan Wagner, an ARG employee.

Each felony count carries a maximum three-year prison sentence and fines of up to $10,000. California Attorney General Bill Lockyer said in a statement that his office is making arrangements with lawyers for Dunn and Hunsaker to surrender voluntarily, and that its working to bring the other three—all of whom live outside of California—back to the state to stand trial.

"One of our states most venerable corporate institutions lost its way as its board sought to find out who leaked confidential company information to the press," Lockyer said. "In this misguided effort, people inside and outside of HP violated privacy rights and broke state law."

HP, of Palo Alto, Calif., first initiated the investigation into news leaks in early 2005. Dunn revived it again in earlier 2006 after more leaks to the media.

One of the methods used by HPs hired investigators was "pretexting," in which they used the Social Security numbers and other personal information of board members and reporters to trick telephone companies into giving them private telephone records. Investigators also reportedly followed directors, journalists and family members, and at one point considered planting spies in newsrooms.

What are some management lessons to be learned from the HP pretexting scandal? Click here to read more.

In all, investigators used fraudulent information to obtain confidential phone records of 12 people, including board members and their families and journalists and their families, according to Lockyer.

The five are also alleged to have obtained personal identifying information—such as names, phone numbers and Social Security numbers—from 13 people, including board members, journalists and relatives.

The investigation eventually identified board member George Keyworth as the person speaking to the media, but has become the source of scandal since HP first filed documents with the federal Securities and Exchange Commission in early September noting the use of pretexting.

Dunn, Keyworth and another board member, Tom Perkins, all have resigned from the board—Perkins over concerns about the investigation. In addition, several HP employees also have lost their jobs, including General Counsel Ann Baskins.

During the hearings in Washington, Dunn apologized for the investigation but refused to take responsibility, saying she was unaware of the tactics being used by the investigators.

The charges brought by Lockyer disputed that. In a statement, the AGs office said the complaint and supporting evidence "detail how Dunn and Hunsaker knew the outside investigators obtained phone records through false pretenses. After acquiring that knowledge … both Dunn and Hunsaker facilitated the continued use of the illegal means to obtain phone records, making both culpable for the crimes."

In one example, Lockyer said, Dunn in April 2005 gave DeLia the home, office and cell phone numbers of HP board members. Two months later, DeLia briefed Dunn and Baskins, at which time Dunn learned that the phone records were obtained under false pretenses. In January 2006, Dunn—aware of the means used to gain the telephone records—renewed the investigation and subsequently received regular briefings from DeLia.

Hunsaker became aware of the investigators tactics in January 2006, and still gave them the home, office and cell numbers of HP employees, according to the attorney generals office.

Mark Hurd, HPs chairman, president and CEO, said he is ultimately responsible for what happened, though he, too, has said he was unaware of the details of the investigation until recently. Hurd has vowed to ensure that nothing like this happens again.

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