Dunn, Four Others Charged in Hewlett Surveillance Case

By Ellen Nakashima and Yuki Noguchi
Washington Post Staff Writers
Thursday, October 5, 2006

Former Hewlett-Packard Co. chairman Patricia C. Dunn and four others were charged with fraud and conspiracy in California yesterday, one month after HP disclosed that it had conducted a wide-ranging spying operation to identify the source of leaks to the news media.

A criminal complaint was filed in Santa Clara County Superior Court by California Attorney General Bill Lockyer. In addition to Dunn, former HP chief ethics director and senior legal counsel Kevin Hunsaker, who supervised a key phase of the operation, was charged, along with three outsiders who did surveillance work for the Silicon Valley computer icon.

All five were charged with four felonies under California statutes. Each count carries a maximum prison sentence of three years and a maximum fine of $25,000.

The charges were filed on an extraordinary day in which Lockyer, who is seeking election as state treasurer, declared in a statement that "people inside and outside HP violated privacy rights and broke state law" during the company's "misguided" effort to plug media leaks.

The charges came one day after Dunn, 53, learned from her doctor that her advanced ovarian cancer had recurred and she needed to undergo chemotherapy, according to a source close to Dunn. It is her third bout with cancer in recent years; she previously suffered from breast cancer and melanoma.

Dunn's attorney, Jim Brosnahan, issued a statement last night saying the charges "are being brought against the wrong person at the wrong time and for the wrong reasons. They are the culmination of a well-financed and highly orchestrated disinformation campaign."

Charged along with Dunn and Hunsaker, 41, were Boston security contractor Ronald R. DeLia, 56, and private investigators Bryan Wagner, 29, of Littleton, Colo., and Matthew Depante, 27, manager of Action Research Group of Melbourne, Fla. They were accused of participating in long-running HP surveillance operation that involved the use of false pretenses to gain access to personal phone records of HP board members, journalists and their families, a practice known as pretexting.

Each was charged with fraudulent wire communications, wrongful use of computer data, identity theft and conspiracy to commit those three crimes. The complaint alleges that the defendants used "false and fraudulent pretenses" to obtain confidential information from a phone company, including billing records, belonging to 12 people. Dunn, who first stepped down as chairman and then resigned from the board last month, repeatedly has said that she was given assurances that the methods used in the leak probe were legal.

The criminal charges come a few days after Dunn, Hunsaker and the company's chairman and chief executive, Mark V. Hurd, appeared before a congressional investigative subcommittee to answer questions about the surveillance methods HP used.

The tactics, in addition to pretexting, included following or watching board members, journalists and their family members at home and at conferences; and conducting a sting operation on a reporter.

The two-phase spying operation began in 2005 and ended this past spring.

According to court papers filed yesterday, the telephone, fax and cellphone accounts of more than 24 people were accessed in the HP probe. HP's investigators reviewed 33 months' of phone records and about 1,750 calls from 590 telephone numbers.

The charges are the first in the case, which is also being investigated by the FBI.

Dunn told the House Energy and Commerce oversight investigations subcommittee last week that she had been assured that the phone records were obtained legally, a claim that legal observers expect to be the heart of her defense.

At one point during Dunn's testimony last week, the chairman of the House Energy and Commerce Committee, Joe Barton, asked her if it was not correct that the fraudulent practice of obtaining phone records had been used in 2005.

"I believe it did use pretexting," she said.

Her attorney then whispered something to her.

"I've just been corrected," she said. "I don't know."

The complaint says that Dunn knew since at least June 2005 that the phone records were being obtained by deceptive means.

Hunsaker, DeLia and Wagner, one of the two investigators charged, refused to testify before the congressional panel last week, invoking their Fifth Amendment right against self-incrimination. The other investigator, Matthew Depante, was not called to testify, but his father, Joseph Depante, owner of Action Research, also invoked the Fifth Amendment.

No one answered a phone call placed to Matthew Depante's home yesterday, but his attorney, Richard Preira of Miami Beach, said Depante was "not guilty."

"The conduct he is alleged to have engaged in is not a violation of the California penal code or the United States code," Preira said.

A lawyer for Hunsaker did not return calls seeking a comment. DeLia, a reached by telephone last night, said he was not guilty of the charges and declined to comment further.

On the federal level, phone pretexting is likely a violation of the criminal wire fraud statute, former federal prosecutors said.

Congress adjourned last Friday without passing pending legislation to specifically make phone pretexting a crime. Jennifer S. Granick, a cyber law professor at Stanford Law School, said that the evidence released so far suggests that Dunn was aware of the methods used to obtain phone records.

"Generally, you don't have to know that something is against the law in order to be committing an offense," said Granick, who was a criminal defense lawyer in California for nine years. "Ignorance of the law is no defense."

Robert Weisberg, a Stanford University law professor, said the statutes Lockyer is citing are highly technical and do not specifically address or describe phone pretexting: "I think it's kind of dicey whether you can really apply the state laws to [Dunn]."

A California law has since been passed that specifically outlaws phone pretexting, he added, but it is not retroactive.

Friends said Dunn has been battling three forms of cancer since 2001 and has channeled some of her energy into charity and cancer-fighting work. She stepped down as chief executive of Barclays Global Investors in 2002 after the breast cancer and melanoma were diagnosed.

"She has become a real role model to women going through cancer," said Mary Bitterman, who joined the Barclays Global board of directors shortly before Dunn stepped down. Dunn spoke of her involvement with the Charlotte Maxwell Complementary Clinic, a program that provides cancer care to poor patients, she said.

Friends said Dunn has long maintained a concern for rules and ethics, making her indictment ironic to many who worked with her, first at Wells Fargo and then Barclays Global after the firms merged.

"She's so ethical. The fact that this happened is beyond belief," said Rich Koppes, an attorney and former general counsel of the California Public Employees' Retirement System. He said Dunn was always concerned with and interested in good corporate governance. Some legal observers said they thought that Lockyer, who last year pulled out of the race for governor of California, was using the case to enhance his political career.

"I can't say this shouldn't be done," said Jamie Wareham, global chairman of litigation in the District office of Paul, Hastings, Janofsky and Walker LLP, a Los Angeles-based law firm. But, he said, "I think the timing is outrageous."

Staff researchers Richard Drezen and Meg Smith contributed to this report.