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The Hewlett-Packard spying scandal began as an internal investigation into leaks from the company’s board. In 2005 and 2006, investigators hired by HP used deceptive identities and information—including “pretexting” to obtain telephone and fax records—while targeting employees, directors, journalists and some relatives. The operation became public in September 2006, triggering a congressional hearing, executive upheaval, criminal charges and a $14.5 million civil settlement with California.
The most accurate description is a corporate leak-investigation and privacy scandal—not documented industrial espionage against HP’s competitors. The legal aftermath also had several separate tracks: HP’s civil settlement, California’s criminal case against five people, and a federal guilty plea by outside investigator Bryan Wagner.
What “pretexting” meant in the HP case
Pretexting is obtaining confidential information through deception. In this investigation, a person could pose as an account holder or use a false story and identifying details to persuade a telephone company or information broker to release call records.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsHP’s September 2006 SEC filing said investigators obtained telephone and fax information through pretexting, including cases involving Social Security numbers. It also described physical surveillance and an email operation designed to trace a journalist. The filing said HP had records for two employees, seven current or former directors or relatives, and nine journalists or relatives.
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Those methods were distinct. Obtaining phone records through deception was not the same as installing spyware. The email tracer was an attempted tracking mechanism, and HP said investigators never confirmed that it had activated. HP also said possible trash searches had not been fully verified.
Timeline of the HP spying scandal
Early 2005: HP launches “Kona I”
HP Chairman Patricia Dunn contacted Security Outsourcing Solutions, an outside security firm that already had a relationship with HP, after confidential board information appeared in BusinessWeek, The Wall Street Journal and The New York Times.
HP called this first phase “Kona I.” Its goal was to identify the source of the leaks. HP Global Security joined the effort roughly two months after it began. The SEC filing dates the launch to early 2005; some contemporaneous accounts placed it around March or April, so “early 2005” is the safer description.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchJune 15, 2005: “Pretext” appears in a briefing
Dunn and HP General Counsel Ann Baskins attended a telephone meeting with investigator Ron DeLia at which the term “pretext” was mentioned.
The date later became important because HP executives, prosecutors and congressional investigators disagreed about who knew that deceptive techniques were being used, and when. The existence of the meeting is documented; it does not by itself resolve each person’s state of knowledge.
July 22, 2005: Executives receive preliminary results
Investigators briefed HP personnel about Kona I. Mark Hurd, then HP’s president and chief executive, briefly attended part of the meeting.
That establishes that Hurd knew an investigation existed. It does not establish that he was fully briefed on every technique used. Later testimony and HP disclosures distinguished between general awareness of the investigation and knowledge of specific pretexting activity.
Late summer 2005: Kona I ends without identifying the source
The first investigation ended without finding who had supplied the leaked information.
January 23, 2006: A CNET story restarts the investigation
A CNET article reported information from an HP board meeting. HP resumed the inquiry under the name “Kona II.” This second phase focused on identifying the person providing confidential board information to journalists.
January–March 2006: Investigators use records, surveillance and an email sting
According to HP’s SEC filing, Kona II used four principal methods:
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- Obtaining telephone and fax records through pretexting.
- Using Social Security numbers in efforts to obtain phone information.
- Sending an email containing a tracing mechanism.
- Conducting physical surveillance.
The targets included people inside HP and people outside the company. Investigators sought information involving employees, current and former directors, journalists and relatives of some of those people. The journalists were treated as possible links to the leak source, not as people accused of wrongdoing in the core record.
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Investigators created an email account under a fictitious name and sent a journalist a message that appeared to come from a disgruntled senior HP executive. The message contained fabricated information intended to encourage the journalist to forward it to a suspected source.
The investigation team also supplied Social Security numbers to outside investigators or subcontractors for use in obtaining phone records. HP said it had not determined the extent of HP employees’ involvement in transmitting some of those numbers.
February 2006: The attempted reporter “tracer”
The email sting included a supposed tracer intended to reveal information such as the IP address of someone who downloaded the message. HP’s filing said the evidence suggested investigators never confirmed that the tracer had been activated, even though the journalist sent email responses.
HP said Hurd approved the idea and content of sending misinformation to the reporter but did not believe he approved the tracer itself. That is a narrower claim than saying Hurd approved the entire spying operation. The scope and timing of his knowledge were examined in congressional testimony.
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January–February 2006: Physical surveillance takes place
Outside investigators conducted surveillance of an HP board meeting, a board member during a trip to Boulder, Colorado, that board member’s spouse and potentially other relatives, and a journalist and her residence.
HP also said investigators may have searched trash, but the filing did not confirm the targets of that activity. It should therefore be described as possible or unconfirmed, not as an established part of every target’s investigation.
March 2006: A draft report identifies a suspected source
A draft report addressed to Dunn, Hurd and Baskins identified the suspected leak source and described investigative techniques, including pretexting. It also included assurances that the methods were lawful.
HP sent the draft to outside corporate counsel in April for review.
May 18, 2006: The board receives the results and Thomas Perkins resigns
The investigation’s results were presented at an HP board meeting on May 18. Director Thomas Perkins resigned that day, objecting to the methods used.
The date should not be confused with the final report. The SEC filing says investigator Kevin Hunsaker produced that report on May 24.
May–June 2006: George Keyworth is identified as the likely source
HP concluded that board member George Keyworth II was the likely source of information appearing in the January CNET story. Keyworth denied improperly disclosing confidential information.
His resignation later became part of the fallout, but it was not an admission that he had violated HP’s rules or leaked the story.
June 28, 2006: Hurd receives a memo explicitly discussing pretexting
A June 28 memo became part of the documentary record considered by Congress. It helped establish when Hurd became aware of the term “pretexting” and the practices under examination.
Hurd’s recollection differed from other evidence presented to Congress. The careful conclusion is that he knew about the investigation, while the exact timing and scope of his knowledge about particular techniques remained disputed.
September 5–6, 2006: The investigation becomes public
News reports disclosed that HP had hired investigators who obtained phone records involving board members and journalists through pretexting. On September 6, HP publicly described the operation in an SEC filing.
The filing acknowledged records acquisition, surveillance and the email-tracer operation. Its disclosure transformed an internal effort to find a leak into a public controversy over privacy, deception, journalism and corporate oversight.
September 11, 2006: Congress requests HP records
The House Energy and Commerce Committee sought documents concerning the investigation and the use of pretexting. Lawmakers were concerned that private investigators and information brokers could obtain itemized call records through deception and sell them to corporations or other customers.
September 12, 2006: Keyworth resigns and Hurd is set to become chairman
Keyworth resigned from HP’s board while continuing to deny improper disclosure. HP also announced that Hurd would replace Dunn as chairman in January 2007.
September 22–23, 2006: Dunn’s departure and Hurd’s response
The scandal produced a management and governance shake-up. Hurd apologized for the situation and acknowledged that HP had used unacceptable investigative methods.
Contemporaneous reporting connected Hurd to the reporter sting through internal emails, but the precise scope of his approval remained contested. HP’s own filing distinguished approval of the fabricated-information email from approval of the tracer.
September 28, 2006: House hearing examines the operation
The House Energy and Commerce Committee held a hearing titled “Hewlett-Packard’s Pretexting Scandal.” The hearing record examined:
- Dunn’s role in authorizing and overseeing the investigation.
- What Hurd, Baskins and other executives knew.
- The role of outside investigators and data brokers.
- Whether HP employees knew records were obtained through deception.
- Whether HP had spied on competitors.
- The legality and ethics of pretexting.
- Corporate accountability when investigations are outsourced.
Witnesses said they had no knowledge that the operation involved spying on HP’s corporate competitors. The documented focus was suspected leaks of confidential HP information.
September 29, 2006: California enacts a pretexting-related law
California enacted a law specifically addressing telephone pretexting after the HP events. The legal timing matters: later legislation should not automatically be treated as proof that every disputed action was clearly criminal under a statute already in force when the conduct occurred. The applicable law depended on the particular conduct, dates and jurisdiction.
October 4, 2006: California files felony charges
California Attorney General Bill Lockyer charged Dunn, HP senior counsel and ethics chief Kevin Hunsaker, Security Outsourcing Solutions executive Ron DeLia, Action Research Group manager Matthew DePante and ARG employee Bryan Wagner.
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The criminal complaint alleged four felony offenses:
- Fraudulent wire communications.
- Wrongful use of computer data.
- Identity theft.
- Conspiracy.
The alleged victims included HP directors, employees, journalists and family members. The complaint represented prosecutors’ allegations, not a final finding that every allegation had been proved.
December 7, 2006: HP agrees to a $14.5 million civil settlement
HP reached a civil settlement with California totaling $14.5 million:
- $13.5 million for a Privacy and Piracy Fund.
- $650,000 in civil penalties.
- $350,000 for investigative and related costs.
The settlement also required governance reforms. These included expanded independent-director oversight, stronger ethics and compliance reporting, greater responsibility for privacy officers, a compliance council, revised training and a code of conduct for outside investigators.
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This was a civil resolution involving HP. It was not a criminal fine imposed after a conviction, and it did not resolve the separate criminal case against the five individuals.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.2007: criminal cases and the settlement’s legacy
January 12, 2007: Bryan Wagner pleads guilty federally
Bryan Wagner pleaded guilty in federal court to two felony counts involving fraud and deceit in collecting telephone records of reporters, HP officials and relatives. The Department of Justice said the conduct involved fraudulent use of Social Security numbers and other confidential information as part of a conspiracy.
March 14, 2007: Dunn’s charges are dismissed
A California judge dismissed the criminal case against Patricia Dunn. Three other defendants—Hunsaker, DeLia and DePante—entered no-contest pleas to misdemeanor charges under an arrangement allowing dismissal after community service and restitution requirements.
Dunn did not enter a plea. Her case was dismissed. That procedural outcome should not be converted into a broad conclusion that every disputed act in the investigation was either proved or disproved.
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Charges against Hunsaker, DeLia and DePante were dismissed after they completed at least 96 hours of community service, with reports saying each performed more than the required amount.
July 26, 2007: California begins distributing settlement funds
California Attorney General Edmund G. Brown Jr. announced the first distributions from the $13.5 million Privacy and Piracy Fund. Los Angeles, Orange and San Diego prosecutors received money for privacy and identity-theft enforcement.
Who knew what?
| Person or group | Documented or alleged role |
|---|---|
| Patricia Dunn | Initiated or sponsored the leak investigation and received updates. Prosecutors alleged she knew more about deceptive methods than she acknowledged; Dunn disputed knowledge of the specific methods and relied on investigators and legal advice. |
| Mark Hurd | Knew the investigation existed. HP said he approved the fabricated-email concept but did not believe he approved the tracer. The scope and timing of his knowledge about pretexting were disputed. |
| Ann Baskins | HP’s general counsel; attended an early briefing and received investigation information. |
| Kevin Hunsaker | HP senior counsel and ethics chief connected with coordinating Kona II; later charged in California. |
| Ron DeLia | Outside security contractor connected to the investigators; later charged in California. |
| Matthew DePante and Bryan Wagner | Action Research Group personnel involved in obtaining records, according to prosecutors. Wagner later pleaded guilty federally. |
| George Keyworth II | Identified by HP as the suspected source of the CNET leak; resigned and denied improper disclosure. |
| Journalists | Targets of the inquiry because investigators were tracing possible links to the source, not because the core record accused them of wrongdoing. |
Why the scandal mattered
The scandal exposed a governance failure that went beyond the question of who leaked board information. HP outsourced important parts of the investigation, but outsourcing did not remove the company’s responsibility to supervise methods, protect personal information and set clear limits for contractors.
It also showed how a leak investigation can widen its target. What began with board members and employees extended to journalists and relatives, turning a corporate confidentiality problem into a public privacy controversy.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsFinally, the case demonstrated why legal approval is not the same as sound governance. The investigation report reportedly included assurances that the methods were lawful, yet the methods still triggered congressional criticism, executive consequences, civil reforms and criminal proceedings.
For the legal record, the distinctions are essential: the California complaint contained allegations; HP’s $14.5 million settlement was civil; Dunn’s and other defendants’ California cases ended through dismissals or conditional resolutions; and Wagner’s federal case ended with a guilty plea. The scandal’s central lesson was not simply that HP identified a suspected leaker, but that the methods and authorization chain used to do so became more damaging than the leak itself.
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