Hewlett-Packard Pays California To Settle Pretexting SuitHewlett-Packard Pays California To Settle Pretexting Suit

Hewlett-Packard has agreed to pay $14.5 million to settle a civil suit brought by California Attorney General Bill Lockyer over allegations that former HP execs used "pretexting"--obtaining phone records through false pretenses--to stop leaks to the press by members of its board. The suit charged HP with violating California's identity theft statute by obtaining personal information and using it unlawfully.

"Fortunately, Hewlett-Packard is not Enron," Lockyer said in a statement, citing the company's cooperation in reaching a settlement. HP CEO Mark Hurd said he is committed to ensuring that "HP regains its standing as a global leader in corporate ethics and responsibility."

HP will pay $650,000 in civil penalties and $350,000 to cover the attorney general's investigation; $13.5 million will go to creating a California state "Privacy and Piracy Fund," through which Lockyer's office will receive up to $500,000 a year, and local prosecutors will divvy up the same amount, to investigate privacy and intellectual property rights violations.

HP agreed to self-monitor its investigative practices for five years and to enforce privacy rules.

Former HP board chairwoman Patricia Dunn, former counsel Kevin Hunsaker, and three contractors still face felony charges related to the criminal investigation. All have pleaded not guilty.