Intellectual Property Law

Hewlett-Packard Spying Scandal Figures Fined

By Ryan Singel, Kevin Poulsen, Sarah Lai Stirland, Kim Zetter, and David Kravets

A key figure who pleaded guilty to federal charges in connection to the Hewlett-Packard spying scandal was ordered Wednesday to pay hefty fines and to refrain from selling personal phone records obtain fraudulently via pretexting.

A Florida judge ordered Bryan Wagner, right, to pay $428,000 in ill-gotten gains and his co-owner of Eye in the Sky Investigation, Cassandra Selvage, to give up $110,762, according to a default order in a civil suit brought by the Federal Trade Commission. The two did not defend themselves in court, an FTC spokeswoman said.

An FTC official said the civil suit covered the Hewlett-Packard conduct.

"There is some overlap here. Our case is not limited to particular instances or particular scandal, like the HP scandal," said Michael Atleson, an FTC attorney with the Bureau of Consumer Protection. "But I think it would be fair to say that the conduct in the HP cases would be within the scope of our case as well."

Last year, Wagner, of Colorado, pleaded guilty in San Jose federal court to charges of identity theft and conspiracy for his role in the Hewlett-Packard pretexting scandal, and is awaiting sentencing. Eye in the Sky Investigation, according to court documents, was hired by Florida-based Action Research Group, a contractor Hewlett-Packard paid to get to the bottom of boardroom leaks to the media.

To obtain the personal phone records of reporters, Eye in the Sky, according to court records, tricked phone companies under false pretenses to obtain the records ? a concept referred to as pretexting. Under a settlement Wednesday with the FTC, Action Research Group's owners Matthew DePantes and Joseph DePantes were fined $67,000 and permanently barred from obtaining, marketing or selling customer phone records or consumers? personal information derived from pretexting, or using others to pretext to obtain consumers? information.

That is the amount the authorities estimated Florida-based Action Research Group's owners profited from the HP scam. The judgment, however, was suspended in lieu of a $3,000 payment based on the defendants? inability to pay, according to the settlement with the FTC.

The FTC alleged that selling phone records constitutes an invasion of privacy that could endanger the health and safety of consumers.

HP chairwoman Patricia Dunn resigned amid the scandal as did its general counsel, Ann Baskins. The scandal, however, did not shake consumer confidence in the Palo Alto-based computer equipment company, which also paid $14.5 million to settle civil charges in a suit brought by California stemming from the spying scandal.

See Also:

• Private Eyes Indicted in Massive Identity-Theft Scheme Involving ...
• Questions About a McCain Administration? Ask Carly Fiorina
• Whistleblower Law Causes Accenture, HP & Sun's Legal Woes
• HP Sued by Reporters for Surveillance
• HP Spying: Moral of the Story
• Gov Sues Accenture, Sun & HP for Kickbacks and Fraud
• Journalists Lawyer Up Against HP Spying
• HP Settles Spying Charges for $14.5 Million

Full post as published by Threat Level on May 28, 2008 (boomark / email).