SAN JOSE, Calif. – California's attorney general said Silicon Valley giant Hewlett-Packard Co. (HPQ) had "lost its way" with an ill-fated leak probe as he filed charges against the company's former chairwoman and four others.
Attorney General Bill Lockyer accused two ousted HP insiders — chairwoman Patricia Dunn and chief ethics officer Kevin Hunsaker — and three outside investigators — Ronald DeLia, Matthew DePante and Bryan Wagner — of violating state privacy laws in HP's attempt to root out the source of boardroom leaks.
The five each face four felony counts in the charges filed Wednesday: use of 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. Each charge carries a fine of up to $10,000 and three years in prison.
HP CEO Mark Hurd is not among those named in the charges — filed in Santa Clara County Superior Court — nor was HP's former General Counsel Ann Baskins, who had some oversight of the company's investigation of media leaks.
At a news conference, Lockyer said his investigation of the company, long revered for its ethics and professionalism, was not yet complete and hinted more charges could be ahead.
"One of our state's most venerable institutions lost its way as its board sought to find out who leaked confidential company information to the press," Lockyer said.
Lockyer asked the court to issue arrest warrants for those charged. His office said it has arranged for Dunn and Hunsaker to surrender and hopes the out-of-state defendants will voluntarily waive extradition to California.
Dunn's lawyer, James Brosnahan, said his client has fought for good corporate governance her entire career and will fight the charges "with everything she has."
"These charges are being brought against the wrong person at the wrong time and for the wrong reasons," he said in a statement.
Lawyers for the others charged did not immediately return calls seeking comment, but DeLia asserted his innocence in a statement he read to The Associated Press.
"I am innocent of these charges," DeLia said. "I've been a professional private investigator for more than 30 years. I respect the law and I did not break the law in the HP investigation."
He refused to elaborate on his statement or take questions.
HP said in a statement it is cooperating with Lockyer as well as federal authorities who are also exploring possible criminal charges. The Palo Alto-based company declined further comment.
One defense lawyer who specializes in corporate law said Locker may have a tough time proving the case. Lawyers for Dunn and Hunsaker could show that they were simply relying on legal opinions assuring them HP's tactics were legal, said Jamie Wareham, who is based in Washington, D.C.
"It was a stupid and unethical thing that occurred, but it may not have been a crime," Wareham said.
Wareham also questioned whether Lockyer rushed the charges to generate publicity leading up to the Nov. 7 election, in which he is running for state treasurer.
Lockyer's spokesman, Tom Dresslar, disputed the idea that the timing was politically motivated, saying "the only motivation is to hold accountable individuals who broke California laws designed to protect privacy."
The scandal erupted last month when HP disclosed that detectives it hired to root out a series of boardroom leaks secretly obtained detailed phone logs of directors, employees and journalists. The detectives used a form of subterfuge known as pretexting to masquerade as their targets and trick telephone companies into turning over the records.
According to the criminal complaint, private investigators working for HP compromised the personal data of more than 24 people, including HP directors, employees and journalists. By March, the detectives had compiled records of 1,750 phone calls made on 157 cellular phones and 413 landlines.
In one of the more egregious cases, an impostor posing as CNET Networks Inc. journalist Dawn Kawamoto in January successfully had Kawamoto's cell phone password removed, logged into her online account and changed the password. Several days later, someone viewed Kawamoto's detailed call log for nine minutes.
Pretexting will become a criminal offense in California when a new law signed by Gov. Arnold Schwarzenegger takes effect Jan. 1. Violators will be punished by $2,500 in fines and up to a year in jail, though the law will not retroactively apply to the HP investigation.
Dunn — who initiated the investigation — said she didn't know until after the fact that the detectives went to such extremes to unearth clues about the leaker's identity. She resigned from HP's board last month amid the uproar over the probe.
Dunn, 53, who has survived breast cancer and melanoma, will begin chemotherapy treatments for advanced ovarian cancer on Friday, according to a person close to Dunn who asked to remain anonymous because a formal announcement wasn't planned.
Hunsaker, who directed the investigation, left the company on Sept. 26; DeLia runs a Boston-area detective firm called Security Outsourcing Solutions, a longtime HP contractor commissioned to conduct the leak probe.
DeLia in turn hired DePante's company to gather information, and Wagner was hired to obtain the private phone records. According to the complaint, Wagner acknowledged destroying the computer linking him to the HP probe "because it had incriminating evidence on it and he would not assist in locating it."
HP eventually identified director George Keyworth II as the source of a leak to a CNET reporter. Keyworth resigned after the scandal went public in early September.
Another director, venture capitalist Thomas J. Perkins, resigned from the board in May after learning about the tactics, then pressured the company to publicly disclose the reason for his departure.
Rep. Edward Markey, D-Mass., a senior member of the House Energy and Commerce Committee, said Lockyer's move "indicates that prosecutors are beginning to move forward to address the violations that occurred here."
Still, Markey added, congressional action is needed to tighten the penalties on pretexting. A bill, approved earlier by the committee, has been stalled in the House.
"We need to pursue a new direction in this country that ensures consumers will no longer be vulnerable to intrusions into their families' privacy, either by their employer, by the government or by criminals seeking to turn information into money," he said.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox