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Congress subpoenas three for HP testimony

By TIMES WIRES
Published September 26, 2006

Three people involved in Hewlett-Packard Co.'s efforts to unmask a boardroom leak have been ordered to testify at this week's congressional hearing on the corporate spying scandal that's so far claimed the company's chairwoman and two directors.

The subpoenas are the first issued by the panel in its investigation. They were served over the weekend, according to a congressional aide who asked not to be identified because the investigation is continuing.

Until now, the invitations to testify at Thursday's hearing had been voluntary and other witnesses had accepted them.

The subpoenas from the House Energy and Commerce Committee went to Kevin T. Hunsaker, the technology company's chief ethics officer; Anthony R. Gentilucci, who manages HP's global investigations unit in Boston; and Ron DeLia, the operator of a detective firm hired by HP in the elaborate and intrusive investigation to trace the source of a boardroom leak.

HP spokesman Ryan Donovan said Monday that Gentilucci has voluntarily resigned from the company, effective today.

Hunsaker is also reportedly being let go as part of a housecleaning planned by HP's chief executive, Mark Hurd, a person familiar with the matter said last week. The person asked not to be identified because the terms of their departure are still being negotiated.

Donovan had no comment on Hunsaker, other than that he is still an HP employee.

Also in response to the scandal, a coalition of pension funds in New York, Connecticut and North Carolina - which collectively own more than 30 million shares - filed a proposal Monday with HP to allow shareholder-nominated candidates to run for board seats.

FedEx to spend $2.6B on plane purchases, upgrades

FedEx Corp., the world's largest air-cargo shipping company, will spend $2.6-billion to buy and upgrade almost 90 used Boeing 757-200s to replace its aging fleet of smaller Boeing 727s.

The aircraft will begin service between 2008 and 2016, Memphis-based FedEx said in a statement Monday.

The bigger, more fuel-efficient 757s can carry 20 percent more cargo and cost 25 percent less to operate than the current jets, the company said.

"Some of the 727s they have are between 30 to 40 years old, and it's time for them to go," said Helane Becker, an analyst at the Benchmark Co. who has a 'buy' rating on FedEx shares.

'Girls Gone Wild' founder pleads guilty in age case

Joe Francis, the founder and chief executive of the Girls Gone Wild empire, pleaded guilty Monday in Los Angeles to violating federal recordkeeping laws by failing to document the ages of young women in his racy videos.

The plea is the result of an agreement between Francis and his soft-porn company with the Justice Department after an investigation into the company's filming of minors.

Outside the courtroom, Francis' lawyer, Aaron S. Dyer, emphasized that the charges were for recordkeeping and not sexual exploitation. Dyer said the underage girls who had appeared in the videos had lied about their age to the company.

Francis briefly answered reporters' questions afterward, saying he was happy to be out of the courtroom.

Francis' Santa Monica-based Mantra Entertainment pleaded guilty earlier this month in a federal court in Panama City to 10 felonies for the same violations of federal recordkeeping and labeling of the videos. Mantra had agreed to pay $1.6 million in fines.

MRA Holdings Inc., another company owned by Francis, entered into a so-called deferred prosecution agreement under which the government would dismiss all charges if MRA abided by the accord for three years.

MRA must hire an outside company to monitor its records and production facilities to ensure compliance with federal law.

Under the terms of a deal with the Justice Department, Francis agreed to pay personally an additional $500,000 fine to settle charges in Los Angeles that he failed to keep records of the ages and identities of the women who appeared in his films.

Former paper company CEO gets 15 years for fraud

The former chief executive of one of the nation's largest makers of paper products was sentenced Monday to 15 years in prison after being convicted last year of engineering a $300-million fraud in a fruitless bid to save the company from bankruptcy.

In seeking a stiff sentence, prosecutors had compared misdeeds of American Tissue's Mehdi Gabayzadeh with those of better-known white-collar corporate criminals, including former WorldCom Corp. chief Bernard Ebbers.

Gabayzadeh was convicted in April 2005 of all charges in an eight-count indictment, including bank and securities fraud and conspiracy, following a nine-week trial in Long Island, N.Y.

[Last modified September 25, 2006, 23:30:59]