Case Closed: Judge Ends H.P. Pretexting Saga

A California judge today threw out the remaining charges against three former Hewlett-Packard operatives charged with illegally spying on the company's board members and reporters in a effort to stanch high-level leaks.

While a federal probe has not yet been closed, the ruling by Santa Clara County Superior Court Judge Ray Cunningham effectively ends a sordid drama that besmirched the reputation of the pioneering Silicon Valley firm and led to state and federal laws banning the practice of impersonating people to obtain their phone records.

Former H.P. ethics officer Kevin Hunsaker and private investigators Ron DeLia and Matthew DePante were free and clear after collectively performing hundreds of hours of community service.

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. His sentencing is set for October in San Jose federal court.

Although Judge Cunningham declared that the scandal "achieved much public good," by shining a spotlight on pretexting, he ruled that "the conduct in this case amounted to boardroom politics and a betrayal of trust rather than criminal activity."

Last year, H.P. agreed to pay $14.5 million to the state of California to help support privacy protection.

The scandal, which led to the resignation of several H.P. board members, including Silicon Valley icon Tom Perkins, transfixed the business world last fall with details of private investigators trailing reporters on vacation, rifling through trash bins, and generally behaving like shady gumshoes.

In an emotional conference call with reporters after the scandal broke, H.P. C.E.O. Mark Hurd choked back tears apologizing to reporters, and pledged to restore the luster to the firm's fabled motto -- "the H.P. Way" -- a business ethic that espoused the highest level of integrity.

Adding to the spectacle, former H.P. chairwoman Patricia Dunn resigned from the company and joined several others implicated in the scandal for an election-year grilling before Congress.

Perkins rode the imbroglio out aboard his 300-foot yacht, The Maltese Falcon, a safe distance away from the drama -- in the Mediterranean -- and dispatched his Georgetown super lawyer, Viet D. Dinh, to tell his story to the readers of the Wall Street Journal.

Ironically, the scandal has obscured H.P.'s red-hot performance. Last year the company displaced Dell as the world's leading personal computer manufacturer, and is nipping on its struggling rival's heels domestically. Sales are up 27 percent, and the company's share price has doubled since Hurd took over two years ago.

Although charges against Dunn, who was accused of masterminding the spying effort, were dropped in March - she clearly still harbors a grudge against Perkins, who resignation from HP's board sparked the scandal.

After Perkins suggested <> Dunn was a "control freak," her lawyer James Brosnahan slammed the V.C. legend.

"I am sorry that Patricia Dunn must endure Mr. Perkins' cowardly attacks, but he has made the biggest mistake of his career," Brosnahan said. "He is a bully, and he is bullying the wrong people."

Meanwhile, somewhere off St. Tropez, Perkins tacked and called for another Seabreeze.

by Sam Gustin