The headlines are serious and a bit mysterious. Felony charges were dropped against Patricia Dunn, former Chairwoman of Hewlett-Packard Company (NYSE:HPQ), partly because she is battling advanced ovarian cancer. Three others involved in the spying scandal will plead "no contest" to a single misdemeanor charge. These pleas will carry no jail time and serious felony charges have been avoided. A felony conviction carries a stiffer sentence not to mention a label for life. Is it fair?

Everyone is presumed innocent, but the details are quite salacious. The head of a publicly traded U.S. corporation became involved in dark, smoky antics and the felony counts mounted to four charges. Serious and more than just career-threatening. The felony charges included identity theft and unauthorized access to computer data. Sure, no one was killed (that we know of!), but the public trust was once again violated and taken for granted. Senior managers of a major corporation were caught thinking their actions were above the law. The fact that some of them are pleading nolo contendre to lesser charges takes that presumption of innocence away from the equation. They were probably guilty of something far more serious and a misdemeanor rap is an easy, painless way around the bigger issues.

Investor confidence can only be assured when there is total transparency and clear, honest communication. Boards of directors are in place to serve as advocates for the real owners -- the shareholders. Conducting clandestine operations makes for great TV shows, but the corporate, public world has to be squeaky clean and transparent.

The penalty these three will face is the same as if they intentionally knocked down your mailbox. Ms. Dunn should be buying her lawyer one fantastic dinner!!

Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing.

There is some closure to the boardroom scandal at Hewlett-Packard Company (NYSE:HPQ). The company's former chairwoman, Patricia Dunn, as well as Kevin Hunsaker (a former HP executive), Ronald DeLia and Matthew Depante (both are private investigators), were facing four felony charges that related to listening-in on board members. One of the practices was "pretexting," which involves impersonating people to get private information.

Now the four have pled guilty to one misdemeanor each. Thus, there will be no prison time. But there may be fines (up to $10,000) and community service. The whole thing is unfortunate, really. Dunn has had a stellar career in Corporate America. And, it was clear that HP had a dysfunctional boardroom.

While her intentions were good -- to root out the leakers -- it ultimately went out of control.

This is also a wake-up call to board members. While it's good to be vigilant, there are certainly limits.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

According to a story in the San Jose Mercury, the California Attorney General's office is making an offer to former chairwoman of Hewlett-Packard Co. (NYSE: HPQ), Patricia Dunn (and others involved) to drop the felony charges to a misdemeanor.

Of course, last year, Dunn was in the middle of a firestorm because of her efforts to investigate HP's board. Apparently, the company hired various firms that used tactics like pretexting -- a way to get personal records by impersonating someone.

But it's never easy to prove criminal activity in the boardroom. After all, executives and board members rely on highly qualified (and highly paid) advisors.

True, a misdemeanor charge is much better than felony charges, which could mean jail time, but as for Dunn, she has ovarian cancer and may have nothing to lose -- but to fight it out.

Also, the fact that California is willing to be fairly lenient may be an indication that its case is so-so.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

This post is written as part of AOL Money & Finance's Best & Worst 2006. If you think this was the dumbest moment in business, cast your vote here.

What were Hewlett-Packard Company (NYSE:HPQ) executives thinking when they allegedly authorized the unlawful accessing of records and conversations to get to the bottom of leaks that appeared as if they were coming from inside HP's board of directors?

The executives -- and HP chair Patty Dunn among them -- probably thought they were acting in the best interests of the company and HP shareholders in trying to find out who continued to leak stories and confidential information to the outside world. A few small snags arose, though -- the means by which all this spying took place contained loads of illegal activity, although as an executive officer I would have wanted to track down leak sources as well -- even inside my own board.

Regardless of the nepotism on the board and who-knows-what-else political bickering, the first duty is always to the shareholders. Protecting confidential information from outside sources that could impact market price and other factors is right up there. Does the HP spying scandal count as one of the dumbest moments in business of the year? Well, it gets my vote for #1 -- how about you?

This post is written as part of AOL Money & Finance's Best & Worst 2006. Vote for Patricia Dunn's fall from grace or see other nominees in this category.

If you were to look back at this year's biggest management foibles and try to rate the largest, which would you choose? How about former Hewlett-Packard Company (NYSE:HPQ) chair Patricia Dunn? I would count her as the company leader who fell from grace hardest this year. The former chairwoman of one of Silicon Valley's most respected companies was embroiled -- and still is -- in a corporate spying scandal, as the former chair tried to ferret out press leaks from inside her own board of directors. She subsequently quit her post and was grilled on Capitol Hill in front of the U.S. Congress -- and the situation is not resolved yet.

Dunn seemed to be on a roll when she received the Financial Woman's Association of San Francisco's "Financial Woman of the Year" award in 2001, and when she subsequently succeeded Carly Fiorina as CEO of HP. But resigning as chair of the board in September didn't stop her from being charged in October by the state of California on four felony charges, including conspiracy and identity theft. If the scandal and the indictments weren't enough, Dunn, a survivor of both breast and ovarian cancer, discovered that the latter cancer had returned. She continues to undergo treatment.

From one of the top positions in the tech industry to a beleaguered witness, Patty Dunn gets my vote as the hardest-hit, "fallen from grace" corporate executive of 2006.

Welcome to the first annual Blogging Stocks Turkey Awards. With this new feature, we'll take a look at executives at companies we follow who most deserve a basting -- not that they necessarily did anything illegal, but just something dumb, thoughtless, or ridiculously silly.

This year, our nominees for the six biggest turkeys of the business world include:

- Patricia Dunn, Hewlett Packard Company's (NYSE:HPQ) erstwhile board chairwoman, who apparently masterminded a corporate spying program against fellow board members -- or at least is taking the fall for it.

- Andrew Young, the former Wal-Mart Stores, Inc. (NYSE:WMT) spokesman and long-time civil rights leader, who had to step down from the job after making prejudiced comments against ethnic groups that operate mom-and-pop stores in urban neighborhoods.

Hewlett-Packard Company (NYSE:HPQ) CEO Mark Hurd cannot seem to remember anything about the board leak probe that got the company's previous chairman, Patricia Dunn, in hot water. It's not enough that the poor woman has cancer, Hurd also decided to move out of the way while the bullet hit her.

Perhaps it is time to send Hurd to the dog track with a note pinned on him with his name and address. When he is done watching the hounds chase the mechanical rabbit, they can send him home on the bus.

It appears that almost everyone else at the infamous July 22, 2005 meeting remembers what happened. Hurd was napping.

Apparently, Hurd lectured employees about leaking corporate information to the media. But that must have been a coincidence.

Hurd has more to answer for and there is no guarantee that his job is safe if it is clear that his memory loss was just a convenience.

Douglas McIntyre is a partner at 24/7 Wall St.

Carly Fiorina was one of my all-time feminist heroes, so when she was summarily dismissed by the board of Hewlett-Packard Company (NYSE:HPQ), I was a bit miffed. And when the Patricia Dunn scandal began to unfold, I wanted to believe she was innocent. Or at least, well, sane.

When I discovered the mountain of evidence against Dunn, also implicating Fiorina, I felt a little bitter. But always in the back of my mind I have to wonder, how is it that two of the very few powerful women in technology were the biggest casualties of the pretexting scandal?

The Wall Street Journal [subscription required] suggests it may not be random: after all, statistics wouldn't favor two powerfully-placed women being let go in as many years. If it smells like a chauvinist, and walks like a chauvinist... you know the rest.

But it's, of course, not that easy. Alan Murray examines the two women's behavior in the days, and months, following their respective firings and finds them both wanting.

This really comes as no surprise -- former HP CEO Carly Fiorina, who was pushed out of the company's top job a little over a year ago by chairwoman Patty Dunn, was park of the pack who tried to investigate press leaks at Hewlett-Packard Company (NYSE:HPQ) as well. With former chairwoman Dunn (who is now indicted by the State of California for her part in HP's spying scandal) in the hot seat, one has to wonder if Carly is having her due. Well, not really -- her misplaced performance as a CEO was a mistake, although her finesse at sales and marketing (more emphasis on sales) shows a very strong track record in her career.

Carly's book, Tough Choices, is set to be released this coming Tuesday according to this Cnet article, although advance copies have been in the hands of scandal-happy reviewers already. One thing that seems interesting is the timing of the book. It coincides with the ongoing pretexting corporate spying scandal at HP right now, which resulted from leak investigations that initially started with Carly's authorization and under her watchful eye. Hmm.

This almost leaves current CEO Mark Hurd in the clear -- well, not quite. The current CEO has said that he was inattentive to some details about the ongoing corporate investigations, strange for such an operationally-minded CEO, and let some things get his approval without iron-clad due diligence on asking about the origins of the information. But, with the scandal now rocking the company having been started by a CEO predecessor -- insofar as just being approved, if anything -- Hurd will most likely stay perched atop the company where he has made significant changes and changed the once-declining fortunes of HP.

Do you watch Law & Order? I do, and despite the fact that I actually did take several law courses in college and business school, I'll be honest: much of my law I learned from Dick Wolf's many franchises. So when I see the news today about Patricia Dunn I think, ripped from the headlines! and I wonder:

Will her attorney in her eventual trial claim that the cancer made her do it?

Dunn, the now-former, now-infamous chairwoman of Hewlett-Packard Company (NYSE:HPQ) is rumored to be heading towards an indictment today (Update: Dunn chose to surrender at a Silicon Valley courthouse on October 5, and will be arraigned November 17) for her rather pathological behavior, which ran the gamut from lying to spying to generally shocking paranoia. "Separately," she's been recently told by her physician that her ovarian cancer (diagnosed in 2004) is "advanced," and she'll be starting chemotherapy later this week.

Dunn has been battling her health for the past two years, while in the throes of what seems like an evil and invasive disease. If you've known anyone who's dealt with such terrifically defeating illness, you might have seen any number of different responses, from "courage" to fear to downright falling apart. My mother-in-law, who died of cancer two years ago, became blind and deaf to any negative news for the past several months of her life, completely ignoring the bad behavior of those around her. Another distant family member who's dying of liver disease has decided to hoard all his belongings -- and those of his brother and sister -- jealously guarding things that mean nothing to him in an odd denial of his fate.

It's not a stretch to me, then, to decide that these two pieces of news -- an indictment for strange, paranoid, and yes, criminal behavior; an indication that a serious disease is becoming more so -- might not be "separate" after all. I wouldn't at all be surprised if, indeed, the cancer made her do it.

Hewlett-Packard's ongoing corporate spying scandal continues to reach new highs (and lows). Last week brought many former execs "taking the fifth" and former Hewlett-Packard Company (NYSE:HPQ) Chairwoman Patty Dunn and current HP CEO Mark Hurd taking the stand on Capitol Hill in some down-to-earth but brazen performances.

Hurd's approach reflected his personality -- a no-nonsense businessman who is an operational geek to the hilt and who takes full responsibility for HP and all incoming data traffic that lands on his virtual desk. What about Patty Dunn, though -- she's already resigned from HP's board. Not so fast.

Dunn and others are set to be indicted on unknown charges by California Attorney General Bill Lockyer. In information learned by the folks over at BusinessWeek, Lockyer is sending out neat little indictment packages to Dunn, former HP business conduct head Kevin Hunsacker and possibly others as well. Update: Dunn chose to surrender at a Silicon Valley courthouse on October 5, and will be arraigned November 17.

These new charges filed by Lockyer are being filed in obvious connection to the ongoing scandal at HP (been in a remote cabin in Montana for the past month?). HP hired investigators, who ended up lying to several parties in order to obtain the personal phone records of HP directors and staff -- including external journalists -- to assist in the tracking of leak sources to various pieces of the press, even plotting to plant spies at the WSJ.) Story at 11? Nope -- story all over the place.

"Of mankind we may say in general they are fickle, hypocritical, and greedy of gain." -- Niccolo Machiavelli

After Friday's historic conference call, there is little doubt who is in absolute control of HP: the company's CEO, Mark Hurd. In fact, he is more than just a nuts-and-bolts operator. He's a master of power politics. He would make Machiavelli envrious.

As for the conference call, it was brilliant. Hurd realizes that the ultimate power for the CEO comes from Wall Street. If you make investors rich, they will be a powerful ally. How many investors want Hurd to leave?

I can't find any.

In the conference call, Hurd appealed to his power base. He said that the scandal has had "nothing to do with the strategy or operations of the company." Investors seemed to agree, as the stock price held steady.

"He who wishes to be obeyed must know how to command." -- Niccolo Machiavelli

Hurd wasted little time cleaning house. Patricia Dunn, who led the investigation, is out. Kevin Hunsaker, senior counsel and director of ethics, is out. And so is Tony Gentilucci, manager of global investigations for H-P.

Hurd also made the wise move of hiring a top-notch law firm -- Morgan, Lewis & Bockius LLP -- to investigate the scandal. It was certainly a quintessential power move. You see, the law firm reported to Hurd -- not to the board.

"There is no avoiding war; it can only be postponed to the advantage of others." -- Niccolo Machiavelli

Hurd understands it is important to be the one to explain his mistakes. He has much more power in this situation.

On the conference call, he did emphasize that his role was limited. For example, he talked about things like "I attended a brief portion of a meeting...." Or, in another meeting, there was a "verbal summary."

Yet, there were some regrettable actions. In March 2006, a draft report was presented to Hurd. It outlined the aggressive investigative techniques that are at the source of the scandal.

Ironically, in the conference call, he said that such techniques were "disturbing."

Well, he did not read the report. True, he said he should have.

OK, that is certainly a lapse. But, if he did read the report and did nothing, the consequences would have likely been more damaging. Although, he did verbally agree to a plan to use a false email to smoke-out the leakers.

But all of this seems academic (especially when described by Hurd). According to Hurd: "what began as an investigation with the best intentions has ended up turning in a direction we could not have possibly anticipated."

Of course, Hurd will now take on the role to "drive the actions to set it right."

Yes, the Prince is in charge of HP, and Wall Street loves it.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

I've worked for a paranoid boss or two. I won't name names or dish details, but let's just say I've been directed to spend a lot of company money on re-keying every office lock. And again with the changing locks. And again!

But reading about Patricia Dunn and gang, I know that my brushes with paranoia have nothing on Hewlett-Packard Company (NYSE:HPQ). Why don't we lift a few quotes from the New York Times article. Like, "conducted feasibility studies on planting spies in news bureaus of two major publications," (pretty crazy right?) and "Feasibility studies are in progress for undercover operations (clerical) in CNET and WSJ offices in SF bureaus." (that's from an HP memo!)

Really, truly, Patricia Dunn and some of her deputies, including Anthony Gentilucci, manager of global investigations, and (this is comedy gold) Kevin Hunsaker, chief ethics officer, thought about placing their moles in the WSJ secretarial and janitorial staff. It's not known what was the result of the feasibility study (my gut goes with "NOT"), or whether spies were actually engaged and deployed. It remains to be seen whether current CEO Mark Hurd can escape from the mess; Dan Farber says, "Wall Street better hope that Hurd comes out clean from this sordid affair." Shivers.

It's truly the work of a disturbed individual, and it didn't work out well for Ms. Dunn. As we all know, she will be stepping down January 1. She may be the most famous paranoid business leader, but she's surely not the only one. It's a cautionary tale from which Tom Taulli learned, "emails are forever" and Frank Furd learned that the culture of spying is invading our culture as a whole (and "Is *this* what they meant when they spoke of an 'MBA president'?") But what did I learn from this? My lesson is a bit ironic:

Beware the paranoid boss. And whatever you do, don't conduct that feasibility study on criminal acts. (And if you discover criminal misdeeds? Don't reply to the email describing them, "I shouldn't have asked." It just makes you look, umm, unethical.)

In the digital age, it's getting easier to investigate matters. As for Patricia Dunn , the former Chairman of Hewlett-Packard, she led an investigation that used some of these new-fangled techniques to snoop on the company's board. Now, it appears that some of the practices may even be illegal (that is, according to California's Attorney General).

Ironically, it looks like these e-investigation techniques are being used against Dunn. In fact, according to a Wall Street Journal piece, Dunn was fully-engaged in the investigation of the board – since the summer of 2005. And, yes, this comes from lots of internal HP emails (funny enough, it has been Dunn's contention that she has been hands-off with the investigation because of possible conflict-of-interest issues).

It even looks like the former CEO of HP, Carly Fiorina, was part of Dunn's investigation.

Other juicy tidbits: There was discussion to see if text messages of board members could be captured. Also, there was talk about planting informants at a couple news organizations, such as CNET.

True, Dunn had legitimate concerns about her board, which certainly had problems of leaking confidential information.

But, as more and more information about the investigation comes out, it appears that Dunn was too aggressive. In fact, some of HP's own experts had indicated to her that the investigative practices were pushing things too far.

Of course, this is now a moot point.

Basically, in the digital age, one thing is very clear: emails are forever. As the investigation at HP continues, expect more intriguing details to emerge.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

With the Hewlett Packard board pretexting scandal fully underway, HP Chairwoman Pat Dunn will end up resigning in January, but possibly not as a sole scapegoat in one of the most bizarre corporate spying situations of recent memory. Why is Dunn leaving? Most of the media think that it's a direct result of her involvement in setting up spying operations -- 007-style -- of fellow board members along with high-ranking members of the press to which leaks on unreleased HP information were given. That's a pretty large problem and it's illegal on many different levels. But was the direct illegal activity specifically ordered from Dunn? It may as well have been, since activity like this is not buying a loaf of bread at the Supermarket.

But Dunn's concern for media leaks was completely justified, although a little overblown perhaps. Are leaks to the media in this day and age so prevalent that Wall Street's myopic short-term vision can be heightened sharply when "exclusives" come along that the general public does not know about? With what appears to be knee-jerk reactions to public stock anytime something of any significance happens, it makes sense why Dunn was so concerned.

Being at odds with some longtime board members did not help things. What a power struggle the HP board must have been in for quite some time. While newer CEO Mark Hurd has been making great strides with HP operations, the board has been mired in egos and other superfluous nonsense that detracts from, well, HP.

With Dunn being a corporate governance expert it's easy to understand why she was so specific on eliminating possible sources of corruption and being a detail freak about governance at the same time. I'm glad someone does, since corporate governance today is corrupt at so many levels it's unimaginable. Has Sarbanes-Oxley mediated this somewhat? Perhaps. By many accounts, Dunn was pushing for Hurd to become chairman by next spring anyway, so she may have been planning to leave the chairwoman title, and the pretexting/leak scandal just made Dunn push her agenda up and make a public announcement sooner than expected.