HP had to put off its lawsuit efforts against a broker of HP 3000 equipment when a judge ordered a temporary stay of the HP suit against William Conley and US Computer Corp.

US district Judge Garland Burrell, Jr. signed an order on April 13 that puts a hold on the civil lawsuit HP filed in December against Conley and his company, HP hardware broker and support provider US Computer Corp. Burrell’s order states the lawsuit is being stayed because the US Attorney’s office has notified Conley’s lawyer Glenn Peterson that the federal authorities “anticipate presenting a proposed indictment to the grand jury in the near future,” regarding Conley’s activities. The stay order also referenced a separate California state criminal indictment that’s been filed against Conley for receipt of stolen property — HP memory modules.

The lawsuit charges that US Computer acted in league with three other firms based in California to buy and sell HP memory boards and circuit boards stolen from HP’s Roseville, Calif. facility. An affidavit filed by the Sacramento High Tech Task Force states that HP believes an insider — former contract employee Jeff Gray — aided in the theft of the memory. HP sells the memory for $12,800 per module. The suit also charges that Conley and US Computer used the SS_CONFIG program without authorization to modify user license counts on HP 3000s.

An affidavit filed by the Task Force includes a transcript of an alleged telephone conversation between Conley and the owner of H&H Computers, of Rio Linda, Calif. — a call placed at the Task Force’s request. In the transcript, Conley allegedly says, “I don’t have a problem buying suspect [memory] boards. I just don’t want there to be… you know, that they are stolen.”

H&H is also named in the HP lawsuit, which alleges the company sold US Computer the memory stolen from HP.

Searching behavior

That Task Force affidavit was filed in support of a search warrant executed in August, 1998 to probe the US Computer offices in Redmond, Wash. Conley’s attorney has filed a motion in Washington to force a return of US Computer’s property and documents seized in this search. Redmond police did not execute the search, according to the US Computer motion, but left the searching to California police and an HP private security officer, Tim O’Neill. The motion was accompanied by four statements from US Computer employees who described the alleged search tactics and behavior of the team of California police and O’Neill.

In the statements, the US Computer office manager alleged that the police and HP officers used “foul and offensive language” while searching the office, and then posed in front of the office and around police cars taking “buddy-type photos or trophy photos. They took so many photos the camera batteries died. They took new batteries from me, for which I was not reimbursed,” said Janet Smith in her statement.

Smith was one of four US Computer employees who swore in statements that the High Tech Task Force — a group of California police officers which was accompanied by HP’s O’Neill — found the memory board named in the search warrant within an hour. But the employees say the search lasted more than three hours, and employees reported being interrogated at length about “their salary and other personal matters.”

The search warrant authorized police to look for the memory modules with “fictitious or no serial numbers”; records relating to the transfer or possession of the modules; and records related to US Computer’s business with H&H Computers.

The warrant included permission for HP’s employees to assist in the search, but limited to “identification and status of property located during this search.” All of the US Computer employees swore that HP employees interrogated them during the search. More than one stated that HP and the police tried to stop a delivery of computers from HP Canada that arrived at US Computer during the search.

The employees were tape recorded without their permission during the questioning, according to the statements filed with the motion, and were prevented from moving about the building or doing business during the search. Conley was held in his office, according to his attorney Anne M. Bremner. No arrests were made during the search, and the statements claim that no one was read any rights.

All employees were photographed, asked for name, home address and phone number, and job title. “The only difference from being booked was the absence of fingerprints and handcuffing,” stated US Computer controller James Songerfeld in a court document.

The US Computer motion seeks a return of documents and property seized in the search. The documents include phone lists and personal employee phone lists, financial records, as well as a contract between US Computer and the HP Support Materials Organization and a license transfer document. The contract was allegedly taken by HP’s O’Neill, according to the statement, and was “seized beyond the scope of the warrant.”

The US Computer motion notes that HP competes with US Computer for hardware sales and support business. The property and documents seized 21 months ago are being held in California. A hearing was scheduled for May 12.

Fresh HP allegations

In the days just before the stay order, HP filed an amended suit in its actions against Conley, US Computer and other defendants. In the latest version of the HP lawsuit, HP claims that Conley bribed an HP Canada employee to help Conley rig auctions of HP 3000 and HP 9000 servers. The HP lawsuit charges that Mark Glazer of HP Canada was paid more than $90,000 in cash and vacations to tell Conley the amount of the winning bid in auctions of HP servers, and to allow “Conley and US Computer to win the auction by beating the highest bid by a small amount.” HP’s lawsuit charges that the HP Canada employee took trips to Aruba and Hawaii at Conley’s expense, and the HP Canada employee’s wife accepted $70,000 in cash payments.

The bribery actions described in the newest version of the HP lawsuit allegedly took place more than five years ago. HP’s suit also claims a bribe was paid to Glazer after US Computer changed ownership to become a wholly-owned subsidiary of Computer Sales International in 1998.