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Calif. Drops Felony Charges Against Dunn in HP Scandal

UPDATED: Patricia Dunn, who became the face of Hewlett-Packard's media leak probe that turned into a boardroom spying firestorm, will not face felony charges by the state of California.

In an announcement correcting an earlier release today, the AG's office said all felony charges against the former HP chairwoman in the case are now dropped. The latest development helps close at least one chapter in the long-running scandal that dogged HP throughout 2006.

Citing health issues, California's Attorney General's office dropped all charges against Dunn, who is battling cancer. In October, Dunn pleaded not guilty to four felony counts that: fraudulent wire communications; wrongful use of computer data; identity theft; and conspiracy to commit those crimes.

"I am pleased that this matter has been resolved fairly, and I want to express my deep gratitude to my my husband and family, who never lost faith in me throughout this ordeal," Dunn said in a statement.

She said she always had faith that "truth would win out and justice would be served -- and it has been."

Today's court action followed weeks of negotiations between Dunn and California's Attorney General's office, Jim Brosnahan, Dunn's attorney, told internetnews.com.

Dunn, who wasn't in the Santa Clara Superior Courtroom, refused to plead guilty to even the lesser misdemeanor fraudulent wire communications charges. "She was never going to plead to anything because she was not guilty," said Brosnahan.

Dunn remains loyal to HP. Her attorney didn't rule out a future corporate stint.

Many thought HP wrote the last chapter of the soap opera in December when California accepted a $14.5 million settlement deal and agreed not to pursue civil prosecution of executives or employees of the computer maker in connection with the pretexting.

California's AG also said misdemeanor charges against three other figures in the case, former HP lawyer Kevin Hunsaker, private investigator Ronald DeLia and information broker Matthew Depante, would be dropped after the trio completes 96 hours of community service and pays restitution.

Tom Kucharvy, senior vice president of market research firm Ovum, said he was very surprised with the decision. "That is an unusual message to send at a time when there is so much concern about malfeasance in corporate executive suites and boards."

However, he added, the decision could cause one of two things.

"One there could be a storm of controversy about how lightly HP got off and there were no recriminations or penalties against anyone involved. On the other hand, it's possible that the story has already run its course and this will help to push it under the rug. I would tend to think the former is more likely."

Andy Patrizio contributed to this story.