Former HP chairman pleads not guilty to felonies

At a brief arraignment hearing here in Santa Clara County Superior Court, Dunn's lawyers entered her plea and she was released on her own recognizance.

Dunn, 53, is at the center of a corporate spying scandal at HP, which the company has acknowledged involved obtaining private phone records belonging to HP board members, employees and at least nine journalists. Among the journalists were three CNET News.com reporters.

California's attorney general has charged Dunn and four other people linked to the spying with four felonies, including identity theft and conspiracy. The charges could bring a prison sentence of up to 12 years.

The criminal case also threatens to drag HP's name back into the headlines for months. Ralph Sivilla, a state deputy attorney general, said outside the courthouse that there is no timetable for when the case might conclude. Dunn and the other defendants are next due in court for a status report hearing on Friday.

HP, one of Silicon Valley's most respected companies, has seen its reputation tarnished by the scandal. The drama has also raised questions about CEO Mark Hurd, who hasn't been charged but who has acknowledged having prior knowledge of at least some of the controversial tactics used by company investigators.

Prosecutors have said that Dunn drove the HP investigation, which began in 2005, in an attempt to locate the source of the leak on HP's board. Documents show that George Keyworth, a former HP director resigned after being accused by Dunn of being the leaker.

HP's gumshoes used pretexting, a controversial and possibly illegal practice that involves duping phone company or bank employees into turning over someone's private information.

While there are hundreds of e-mails, memos and other documents that show Dunn was involved in the spying operation, she denies knowing that HP investigators used pretexting to obtain information.

Prosecutors have been tight-lipped about the evidence against Dunn. But there is speculation that some HP employees involved in the spying operation may be cooperating with authorities. Asked whether HP's former general counsel is cooperating with prosecutors, Sivilla said, "Ms. Baskins is not formally a witness."

Asked about the status of Anthony Gentilucci, HP's former chief of investigations, Sivilla declined to comment. Baskins and Gentilucci, neither of whom has been charged, resigned from HP after the spying operation became public.