Former Hewlett-Packard chairman Patricia Dunn left court a free woman yesterday, after a California judge dismissed criminal charges against her.
The California attorney general's office had said that Dunn and three other defendants - Kevin Hunsaker, Ronald DeLia and Matthew DePante - would plead guilty to misdemeanour counts in the boardroom spying case.
But in a later statement, it admitted error. Dunn did not enter any plea to the charges, the attorney general's office said. The three other defendants pleaded no contest to misdemeanor charges of fraudulent wire communications. The court did not accept their pleas but offered to dismiss the case against them if they completed 96 hours of community service and paid restitution to victims.
Dunn's lawyer, James Brosnahan of Morrison & Foerster, said the judge had done the right thing.
"We have maintained from the beginning that Pattie Dunn was innocent and thus vigorously fought the charges against her. Today, the judge dismissed the case. Ms. Dunn did not plead to anything," Brosnahan said in a statement.
The events ended a major chapter in a scandal that has drawn wide attention to HP but hasn't significantly hurt the company's business.
A federal investigation is ongoing, the US Attorney's Office in San Francisco said. Another defendant, Bryan Wagner, has pleaded guilty to federal charges in the case so can't be prosecuted by the state. Those who had charges dropped against them yesterday could still be charged with federal crimes, the California attorney general's office said.
HP declined to comment on the case.
Nathan Barankin of the attorney general's press office said he issued the incorrect statement after being told by prosecutors the defendants would enter pleas that day. Because the defendants had been negotiating a plea bargain, he mistakenly assumed they all would plead guilty, Barankin said.
"This is purely staff error by me," Barankin said.
Hunsaker was an HP lawyer; DeLia is an investigator with private investigation firm Security Outsourcing Solutions; and DePante was a third-party consultant working with Action Research Group.
The four had been charged with fraudulent wire communications, wrongful use of computer data, identity theft and conspiracy. On the corporate level, HP agreed in December to pay $14.5 million in order to settle potential civil charges in the case.
In January, the California attorney general offered to drop felony charges against the four defendants if they pleaded guilty to one misdemeanour each.
Authorities began investigating HP last year after the company revealed it hired private detective agencies to trace the source of leaks from HP's board to reporters. The private detectives allegedly used a tactic called pretexting - pretending to be the people they were investigating - to gain unauthorised access to telephone records of their targets.
As a result, Dunn stepped down from her job, as did Hunsaker.
Despite the management shake-up caused by Dunn's resignation, HP has weathered the spy saga easily in business terms.
In the third quarter of 2006, HP passed Dell in market share to become the world's largest PC vendor, according to figures from Gartner. HP repeated the feat in the fourth quarter, building sales momentum over its struggling rival Dell.
And in February, HP reported net income for its first quarter of $1.5 billion, beating Wall Street expectations as well as its own profits for the same period last year. Much of the growth in profits came from increased sales in HP's personal systems group, which sells desktop and laptop computers for consumers, and from its imaging and printing division, according to CEO Mark Hurd.
HP customers have also shrugged off the company's legal problems. Board members of Encompass, an HP user group, declined to comment on the judge's decision.
One measure of the long-term effects of the developments in the spy case may come at Encompass' annual HP Tech Forum trade show, beginning 18 June in Las Vegas. But so far, the group plans to restrict its sessions to discussion of "the technologies of HP and related IT topics."
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