Reporters, Family Sue HP in Spy Scheme

FT, AP : "HP's boardroom-spying scandal was back in the spotlight on Wednesday after a group of reporters and their families sued the computer maker over its controversial internal investigation into the identity of a boardroom mole.

Five separate lawsuits claiming "illegal and reprehensible conduct" were filed in San Francisco Superior Court against Palo Alto-based Hewlett-Packard, former Chairwoman Patricia Dunn and Kevin Hunsaker, the company's former ethics chief.

The lawsuits allege invasion of privacy, intentional infliction of emotional distress, and engaging in unfair business practices. They seek unspecified damages and a jury trial. "We're filing the lawsuits to make sure this never happens again," said Kevin Boyle, one of the attorneys for the plaintiffs.

HP said it apologized to each of the people affected by the spying probe and made a "substantial" settlement offer. "Unfortunately, rather than respond to the offer, they have decided to sue," HP said in a statement. "HP is disappointed by their decision and will defend itself."

The lawsuits come nearly a year after HP disclosed in a Sept. 2006 regulatory filing that investigators used a tactic called "pretexting" -- or pretending to be someone else to obtain private information from companies -- to spy on board members, journalists and their families.
The next month, California's attorney general charged Dunn, Hunsaker and three private investigators with four felony counts each -- including fraud, identity theft and conspiracy.

Those charges were later dropped, with a Santa Clara County judge calling their conduct a "betrayal of trust and honor" that nonetheless did not rise to the level of criminal activity.
Separately, HP agreed to pay $14.5 million in a civil settlement with the state, most of which was slated to fund investigations into privacy rights and intellectual property violations.

The U.S. attorney's office in San Francisco brought charges against one of the investigators, Bryan Wagner, who pleaded guilty to two felony counts of identity theft and conspiracy in the case. His sentencing is set for October in San Jose federal court.

Judge Drops Remaining Charges in HP Case

SAN FRANCISCO (AP) -

A Santa Clara County judge dismissed the remaining charges against three defendants in the Hewlett-Packard Co. boardroom spying case Thursday, calling their conduct a "betrayal of trust and honor" that nonetheless did not rise to the level of criminal activity.

Superior Court Judge Ray E. Cunningham followed through on a deal reached in March to drop reduced fraud charges if the defendants -- former HP ethics chief Kevin Hunsaker and private investigators Ronald DeLia and Matthew DePante -- each completed 96 hours of community service. The move ended the state's role in a case that ensnared some of the top officials at the venerable HP, now the world's largest technology company by revenue. A federal investigation is continuing.

Hunsaker and the two private investigators, who had pleaded no contest to misdemeanor charges of fraudulent wire communications, were accused of illegally obtaining the phone logs of directors, journalists and HP employees in an effort to identify board members leaking confidential information to the media. In tossing the misdemeanor charges, Cunningham praised the California attorney general's office for its investigation of HP's ill-fated effort to root out the source of boardroom leaks, but said the defendants' actions were not criminal at the time they occurred.

"At worst, the conduct in this case amounted to boardroom politics and a betrayal of trust and honor, rather than criminal activity," the judge said, according to a transcript of his remarks supplied by the attorney general's office. The judge said the investigation nevertheless "achieved much public good," including helping spur the passage of state and federal legislation specifically outlawing "pretexting," or pretending to be someone else to secretly secure copies of their private telephone logs. In addition, the state reached a $14.5 million civil settlement with HP in December, the bulk of which is slated to fund state and local investigations into privacy rights and intellectual property violations.

Ralph Sivilla, a deputy attorney general, said after the hearing that state prosecutors still think criminal conduct occurred, but that the office was satisfied with this resolution of the criminal case because of the "chilling effect" the HP investigation had on similar sleuthing tactics. Thomas Nolan, one of Kevin Hunsaker's defense lawyers, said the defendants paid a "pretty heavy price" in being prosecuted and that "the people at HP, everyone, felt they were doing the right thing and basically didn't believe they were committing any crime.

"The judge's comments and the ultimate dismissal of the charges backed up that belief, Nolan said after the hearing. Five people, including former HP Chairwoman Patricia Dunn, were originally charged in October with four felony counts in the HP probe: 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. Charges against Dunn, who was accused of orchestrating the spying effort, were dropped in March. State charges against private investigator Bryan Wagner were also dropped, but only after he pleaded guilty to two federal felony counts of identity theft and conspiracy in the case. Wagner's sentencing is set for October in San Jose federal court, and the federal probe is ongoing.

HP CEO, CFO, EVP Exercise Options...

In a form filed with the SEC, Mark V. Hurd reported he exercised 100 000 options for $21.73 apiece and then sold 150,000 shares on the same day for $45.25 to $45.86 a piece.

Catherine A. Lesjak, CFO, reported she exercised 11,755 options for $15.75 apiece and then sold a total of 23,490 shares on Thursday and Friday for $45.34 to $45.70 a piece.

Executive VP Shane V. Robinson (strategy and technology officer) exercised options on 125,000 shares for $15.75 to $22.02 a piece. He sold the shares the same day for $45.26 and $45.38 each.

Open market purchases and sales of insiders must be reported within two business days of the transaction.

HP estimates FY07 revenue will be $100 billion

"While we still have considerable work ahead of us, I am confident we can continue to execute with discipline and deliver strong financial returns."

Mark Hurd

Journalists sue over HP spying scandal

journalists targeted in the HP phone tapping scandal are to sue the company for invasion of privacy. Dawn Kawamoto, Stephen Shankland and Tom Krazit have hired Los Angeles law firm Panish, Shea & Boyle which is currently preparing the suit. The three journalists, who all work for CNET's News.com, make up a third of the nine journalists targeted by private investigators.

Lawyer Kevin Boyle said that the trio are not seeking financial restoration, but are asking for punitive measures to be taken against HP. HP began the investigation to try and locate the source of a boardroom leak last year. However, investigators used illegal methods such as obtaining phone records for the journalists and their relatives by deception, otherwise known as pretexting. CNET Networks said that it was not part of the lawsuit but could launch its own action separately.

HP had hoped to settle the case by making a $250,000 donation on behalf of each journalist to a charity of their choice. Felony charges filed in the case against former HP chief executive Patricia Dunn were dismissed. Out of four other defendants facing felony charges, three were eventually charged with misdemeanours. HP has already settled a civil lawsuit filed by California's attorney general for $14.5m (£7.3m).

Federal government joins lawsuits against HP, Sun, Accenture

The U.S. Department of Justice threw its weight behind a whistleblower lawsuit against HP, Sun and Accenture, alleging that the companies violated federal claims laws by improperly charging government agencies for several years' worth of technology contracts.

In documents filed on April 12 and unsealed Thursday, the DOJ alleges that H-P, Sun and Accenture each "solicited and provided improper payments and other things of value," on technology contracts with several U.S. government departments and agencies from the late 1990s to the present.

H-P, Sun and Accenture are charged with making false claims to the U.S. government for work done involving information technology hardware and services contracts. In a statement, the DOJ said it believes that the tech giants engaged in kickbacks and undisclosed conflict-of-interest relationships with other companies with whom they worked on the government contracts. "The defendants have systematically solicited and/or made payments of money and other things of value, known as 'alliance benefits,' to a number of companies with whom they had global 'alliance relationships' or an agreement to work together," the DOJ said, in a statement.

The suit was originally filed in U.S. District Court in Little Rock, Ark., by plaintiffs Norman Rille and Neal Roberts, and under the whistleblower provisions of the U.S. False Claims Act. That act says that a private party can file an action on behalf of the U.S. and receive a portion of any fees recovered in the case. The act also said the U.S. may recover three times the amount of its losses, plus civil penalties, in the case.

H-P released a statement denying the charges and saying it is confident it engaged in appropriate business practices with the government. "We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong," H-P said.

Hewlett-Packard plans further $8 bln share buyback

HP said its board of directors approved an additional $8 billion to buy back company shares.

During its fiscal first quarter ended Jan. 31, the company already bought back some $2.3 billion worth of its shares and had an additional $3.3 billion of authorized funds remaining for future buybacks.

HP said the buyback would help offset dilution created by shares from employee stock option plans and return cash to stockholders, according to a filing with the U.S. Securities and Exchange Commission...