The state of California has said it now has enough evidence to indict people both within HP and contractors outside the company for the spying scandal that has seen HP chairman Patricia Dunn resign her post.

California Attorney General Bill Lockyer stated in an interview: "People's identity was taken falsely... People accessed computer records that have personal information. That's a crime in California." The attorney general is also working with Massachusetts officials to pursue the case.

In an effort to discover the source of press leaks about board deliberations, HP has admitted it hired a private investigation firm to pose as suspected board members and journalists in order to convince the phone company to disclose private phone records, a practice known as pretexting.

HP announced on Tuesday that its chairman, who has overseen the investigation, was stepping down and would be replaced by CEO Mark Hurd in January. In a statement, Dunn apologised for the use of inappropriate investigative techniques but said those techniques "went beyond what we understood them to be".

HP hired investigation firm Security Outsourcing Solutions (SOS), according to The New York Times but the name has not been officially recognised. "It's not prudent for prosecutors to mention names before bringing charges," said a spokesman for the attorney general's office.