HP Settles Pretexting Charges for $14.5 Mln

Hewlett-Packaged has agreed to a $14.5 million settlement over civil charges the company used false pretenses to obtain phone records of board members and journalists.

Resurgent computer maker Hewlett-Packard has announed it has agreed to pay $14.5 million to settle civil charges that the company used pretexting to obtain telephone records of board members and journalists as part of an investigation to stop leaks to the press.

“We are pleased to settle this matter with the Attorney General and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility,” said HP CEO Mark Hurd in a statement.

Under the settlement, HP admits to no liability or wrongdoing, and the California Attorney General agrees not to pursue civil claims against HP or its current or former employees in regard to this case. Some $13.5 million of HP’s money will go towards creating a Privacy and Piracy Fund to be used by California prosecutors to pursue cases involving copyright infringement and privacy violations. Another $650,000 will pay statutory damages, and another $350,000 will reimburse the Attorney General’s costs.

Former HP board chair Patrician Dunn, counsel, Kevin Hunsaker, and three contractors still face felony criminal charges related to the investigation; they have all pleaded not guilty.

The charges in the civil complaint alleged HP used “false and fraudulent pretenses” to obtain confidential information about HP employees, board members and their family members, as well as journalists and their family members, as part of an internal investigation to find how HP information was leaking to the press. HP’s alleged actions are commonly called “pretexting,” and involve knowingly access computerized telephone records and other account information without permission. The complaints also alleged HP violated California’s identity theft laws by obtaining personally identifiable information about individuals, and using that information for an unlawful purpose.

To date, no federal legislation bans pretexting.

HP also plans a comprehensive review of its investigative practices, and will create a Compliance Council which will oversea ethics and compliance programs.