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The 10 biggest tech scandals of the decade

Choosing the worst tech disgraces of the past 10 years isn't easy, but CNET News recently took a crack at it. The incidents that made the cut involve sexual harassment, stripper-crazed CEOs, spies, congressional investigations, and even murder.

In the late 1990s, the dot-com bubble generated billions in paper wealth and heralded the coming of the Internet age. Then the bubble burst, and revelations emerged that some tech titans were built on phony accounting. Since then, sliminess has oozed out of some of technology's most stalwart companies. Here are our picks of tech's biggest disgraces.

Note: This list originally appeared as an image gallery on CNET News. It's also available as a PDF download.

10: Savvis -- Expense this

This isn't anywhere near as destructive as most of the events on our list, but it gets a nod anyway for being a mix of pure debauchery and cluelessness.

Robert McCormick, former CEO of IT services company Savvis, resigned in 2005 after he and several associates ran up a $241,000 tab on his company credit card during a single visit to Scores topless bar in New York.

The New York Daily News dubbed him "The Lap Dunce."

Turns out McCormick's fall failed as a cautionary tale. John Arnold, cofounder of Intelius, which offers online background checks, engaged in sex acts with strippers from a Seattle-area club but told a grand jury he didn't. For perjuring himself, Arnold was sentenced last month to spend 45 days in jail and pay a $30,000 fine.

9: AT&T's black ops

In 2006, a former AT&T employee revealed what many people had suspected for a long time: The Bush administration was using the Web to spy on Americans.

AT&T had set up a secret room at its San Francisco facilities where the government -- without obtaining a search warrant -- collected and monitored Internet traffic belonging to individual Americans.

The Electronic Frontier Foundation filed suit against AT&T and in 2008 filed a complaint against U.S. President George Bush. Congress later passed a bill that exempted companies like AT&T from these kinds of lawsuits. EFF says it will continue to fight to stop the National Security Agency's "massive program of illegal dragnet surveillance of domestic communications."

8: Sex-harassment claims sink Hurd

Mark Hurd's glittering five-year tenure as HP CEO imploded in August after Jodie Fisher, a former HP contract worker, claimed Hurd sexually harassed her. HP's board investigated and said it could find no proof Fisher's allegations were true. And then, abruptly, the board switched gears and fired Hurd for falsifying expense reports.

Hurd negotiated a settlement with Fisher, a former soft-core porn actress, before directors could interview her. According to The Wall Street Journal, some on the board believed Hurd's settlement was an attempt to prevent them from "learning the truth."

Hurd did okay, though. He landed at Oracle, and the HP board was criticized for firing a successful CEO. New info emerged last week that suggests Hurd may have leaked HP's plans to buy EDS months before the deal was completed.

7: Web retailers sell out

Hackers once spooked shoppers away from Web retail. Maybe consumers should have feared online merchants more.

Orbitz, Continental Airlines, Ticketmaster, Pizza Hut, Movietickets.com, eHarmony, Hertz, and Live Nation were among 80 companies paid to help dupe their own customers into joining loyalty programs, the government reported in 2009. After making secret pacts with marketers, such as Webloyalty, Affinion, and Vertrue, the e-tailers presented buyers with what appeared to be an offer of free goods or services. Tucked into the fine print, however, were terms that said by providing an email address, a customer agreed to join a loyalty program and allowed one of the marketers to charge their credit card about $20 every month.

A former employee of Webloyalty said such charges were known in the industry as a "stupid tax." If you fell for it, you were stupid.

The Senate Commerce committee held hearings and shamed the retailers into halting the practice. Andrew Cuomo, New York state attorney general, in recent weeks succeeded in getting two of the marketers and a handful of retailers to pay refunds and fines.

6: The murder of Nina Reiser

Hans Reiser founded Namesys, developed a pioneering computer filing system, and was convicted of murdering his wife.

After Nina Reiser went missing in September 2006, police began compiling a case against Reiser. During his murder trial, Reiser's attorneys tried to use a "geek defense." Neighbors saw him hosing down his car's interior and he also removed his car's front passenger seat. Why? Because geeks do odd things, said his lawyers.

Reiser was convicted of first-degree murder, but the charge was reduced when Reiser agreed to reveal the location of his estranged wife's remains. For second-degree murder, he was sentenced to 15 years to life.

5: Smartest guys in the cell

Enron once called itself the most innovative company in America. But executives there were probably most groundbreaking in cheating investors. In 2001, Enron, an energy company that also provided broadband and streaming media services, created offshore companies that were essentially trash containers. Enron hid losses by shifting them to these dummy firms.

Investors, many of them Enron employees, were left holding the bag as the stock plummeted from $90 per share to pennies. Most of the company's top managers went to jail, except Ken Lay, the company's chairman, who died before serving time.

Jeff Skilling, Enron's former CEO, was sentenced to 24 years in prison. The once swaggering exec was interviewed recently by Fortune magazine: "Could you buy me a cup of coffee?" Skilling asked the reporter. "Inmates aren't allowed to touch money."

4: Sony rootkit

A mountain of criticism and lawsuits were heaped on Sony BMG after it was discovered the company loaded copy-protection software, known as a rootkit, onto about 100 CD titles. When the CDs were loaded into a PC, the software covertly launched and created vulnerabilities that could be exploited by computer worms and viruses. Within weeks of the October 2005 rootkit discovery, several Trojans and worms were written to take advantage of the software-created openings.

Sony BMG recalled the CDs and later settled lawsuits filed against it by the states of Texas, New York, and California. To many techies, the rootkit was proof some of the major labels would stop at nothing to fight file sharing.

3: HP "pretext" scandal

For 60 years, Hewlett-Packard helped provide a moral compass for Silicon Valley. The company promised to adhere to "The HP Way," a list of principles that included operating with "uncompromising integrity."

In 2006, HP tarnished its reputation when Chairman Patricia Dunn -- with the approval of then-CEO Mark Hurd -- sent private detectives on a mission to spy on members of the company's board as well as reporters from such publications as The Wall Street Journal and CNET. HP managers were searching for the source of a boardroom leak.

Investigators followed their victims and eavesdropped on their conversations. To gather private phone records belonging to the reporters and board directors, HP investigators called up telephone companies pretending to be the victims, a practice known as pretexting. Dunn eventually resigned, and Hurd got a stern talking-to by lawmakers before replacing Dunn as chairman.

Hurd gets a special shout-out for being the only exec to make our Top 10 twice.

2: Yahoo helps jail Chinese journalists

America is supposed to be the land of the free and home of the brave. But in China five years ago, the journalists were not so free and Yahoo was not so brave. The Sunnyvale, CA-based Web portal was denounced as an enemy of free speech by members of Congress and human rights groups after the Internet portal turned over information that helped China's government jail two journalists.

The journalists were attempting to report that Chinese dissidents could be in danger if they returned to the country to mark the 15th anniversary of Tiananmen Square massacre. Both reporters received a 10-year prison sentence.

1: WorldCom

Poor Bernie Ebbers.

In 2000, WorldCom was the second largest U.S. long distance phone company. It eventually became the country's largest accounting scandal, although in 2008, another Bernie (Madoff) seized the title away. Nonetheless, the $11 billion accounting fraud at WorldCom, coupled with the resulting nosedive in the company's stock price, was destructive enough to investors to make WorldCom tops on our list.

Ebbers once told a church congregation that he hoped his actions hadn't jeopardized his "witness for Jesus Christ." Maybe he should have worried more about the witness for the prosecution.

In 2005, Ebbers was convicted of conspiracy and securities fraud. He won't be eligible for parole until 2028, when he's 85.


33 comments
paulo.sedrez
paulo.sedrez

It is odd not to find "Microsoft Lawyers helps Russian government to bully opposition". This should be alongside number 2 Yahoo! - it certainly beats number 10 Savvy, that could have happened in any business (check it out, it must have happened more then once!). The reassurances from Microsoft top management was only a reaction to the exposure: damage control, nothing more.

Oz_Media
Oz_Media

Apple decided to copy a popular idea, bought out a bankrupt company's failed touch system, added another company's multi-touch chipset, ignored the fact that they were then sued for patent infringement, ignored paying for such infringement, ignored a fee for importing said devices into North America and then made Americans believe it was a cutting edge and unique device that others would then copy. It's a bit hard to believe really, except they did it before when they brought out the iPod. To think people won't buy GW because it's "questionable" but they buy junk from Apple and believe it is leading technology? Lots of logic there! Fool me once, shame on you! Fool me twice, I must be American or something!

mrmhead
mrmhead

. . . Not only will we start seeing the standard Year-End parade of lists, but now also a flood of "First Decade" lists...

Bernie S
Bernie S

Two versions, legacy and revised. Neither of which MS actually uses. And perhaps even neither of them actually implementable as submitted. Then MS turns around and implements ODF in a manner that doesn't play nice with anyone else's. Just so they can claim "check-box" standard compliance in their feature list.

the old rang
the old rang

Global Warming #1 UN PAYING FOR Falsification #2 NASA Weather continuing and admitted involvement #3 Uber libs at Nobel Committee #4-100

jerry-on-the-canal
jerry-on-the-canal

The great Global Warming scam will be shown by history to be the scandal of the decade if not the century.

YetAnotherBob
YetAnotherBob

Unfortunately, with ISO that is not even unusual. Microsoft didn't do anything there tha wasn't done decades ago by others. You may not be aware of the big fracas a couple of years ago between NFPA and the IBC over building codes. There are plenty of others. You have just led a sheltered life.

jdr_03
jdr_03

Well, this is the "teach scandals" list so Nobel (which hasn't had a basis in reality for a while now) probably doesn't need to be involved. The other three might stand though.

m@rcel
m@rcel

Right after the climate hoax there should be the bailout of the banks. The people of the US who are paying the filty rich of Wallstreet.

TryingToBeGood
TryingToBeGood

We will know for sure in 50 to 100 years from now. When our descendants look at these forum archives, one side or the other of GW debate will look foolish. In the meantime, exponentially increasing the billions of tons of fossil carbon we put into our atmosphere and oceans is having a measureable, negative impact. It would be nice if we could all agree that we need to treat the planet better than we are.

Oz_Media
Oz_Media

Sticking your head in the sand doesn't indicate scandal.

john3347
john3347

Y2K was the biggest scam of the late 90s in which many who should have known better preached doom and destruction from power generation stations falling dead to airplanes falling from the sky. Global warming is now the Y2K of this decade. I shudder to think what might be the scam of the next decade when this current one is cycled to global cooling. edit: But this article is about scandals, not scams, isn't it?

RealGem
RealGem

Well, then where did the arctic ice cap go?

RealAusTech
RealAusTech

Good point. The only reason that it isn't there is because it hasn't been made into a scandal yet, but it will happen. It's just a question of when.

Bernie S
Bernie S

current business of the relevant boards and committees is still being hamstrung by the aftereffects.

Jtempys
Jtempys

Definatly Bush and all his political cronies should head this list. They bamboozled a Whole Economic system and are still making out like a cat licking cream from its whiskers.

Oz_Media
Oz_Media

I think you just need to be American to see two sides to this debate and no rational middle ground. If it isn't scientific fact, it's a lefty ruse to spend taxpayers money, as always taking it from the have's and giving it to the have not's. You have to consider also, the USA is all but devoid of science and scientific documentaries, beyond scare tactics and fear mongering by politicians. It's also why religion is still so strong, faith and belief rules over fact and findings. It's just sad how living a life in a bubble like that removes all sense of logic, rationality and reason. It's black or white, left or right, I suppose it makes it easier for the simple one's to grasp and pick a side anyway. To me, GW is irrelevant in that we should be more resourceful and wise in the use of our resources than we currently are, with or without a threat of GW. If this turns out to help slow the natural warming and cooling of the Earth, then so be it, yay we did it. If not, well at least I was responsible for my actions and left a smaller impact on the world and Earth's natural resources than others did. Just because not everyone plays a part, it doesn't make me feel like I shouldn't do mine anyway.

Oz_Media
Oz_Media

But it just may be a lunatic you're looking for Turn out the light, don't try to save me You may be wrong for all I know, but you may be right Your title brought a little Billy Joel to mind. :D

paulo.sedrez
paulo.sedrez

It still puzzles me how people misjudges scientific studies and founds with politics. Y2K was not a scan - came to mind case of an old lady, born in the late XIX century (I don't remember the exact year) who received a notification in the late 1990's to make her inscription to fundamental school the next year! Of course the effects would never be so dreadful as it was announced, but the issue was addressed in time. As of Global Warming, it is hardly a myth, even less a scam: you can expect to lauch MILLIONS OF TONS of waste - including CO2 - in the air and expect it will have no effect. But the industry PR is still trying to debunk it, and the "Pro-Business" republicans took the flag - made it a politics issue. It is not the first time industry tries to spin off their mistakes: tobacco causes cancer and nicotine causes addiction, after all, but Big Tobacco argued for decades that "it has not been proved". The same happened with several chemical and power industries dumping residues on rivers and water suply: "it has not been proved" that those residues provoked cancer or other illnesses... The problem is the debate is extending for decades now, and we are at risk of not having time to solve it. Actions that can recover the equilibrium of the global weather take scores of years to start working, and we should have started at least 20 years ago. We now face threats not only to some remote species, but also to the global agriculture: ask the Russians and the Ukrainians about the dread and their wheat crops, this year. It is a matter of RESPECT - if not to ourselves or to each other - to leave a world to our sons and daughters in a better shape then we received from our forefathers. It is about LEGACY, not immediate gains. It is about the problems our sons and daughters will have to face that we have created or failed to address in time.

Oz_Media
Oz_Media

I know that science and America don't mix, it's far too factual for most who prefer to live in the land where political controversy keeps them alive. However, GW was a well known and studied phenomenon long before Y2K. Y2K was also a fact but most people had enough warning and companies were proactive enough to stop the date change limitations from effecting most businesses, especially key infrastructures that we rely on.

rmazzeo
rmazzeo

you certainly ARE one...a real gem, I mean. The ice caps melt due to the normal warming cycle of this planet we call Earth. There is also a normal cooling cycle, which hopefully won't result in an Ice Age, at least while I'm around...!!! The "global warming" crock is about as scientifically believable as the "Y2K" panic that everyone thought was going to happen...

Oz_Media
Oz_Media

They have actually proven that the ice gap is growing again and that the hole in the ozone layer is actually getting smaller. A result of change? Nobody knows yet, but it is happening. P.S. I don't dispel GW as a myth either, I am very aware of my carbon footprint and I make VERY SMALL adjustments to the way i do things that save tonnes of carbon emissions, from just myself, each year.

YetAnotherBob
YetAnotherBob

Actually, if you check satellite photos, the arctic ice cap is still there. So is the antarctic one. Both ice caps do change in size, sometimes larger, sometimes smaller. Just like they always have in historic times.

DoubleBarrel
DoubleBarrel

This has got to be the biggest, most costly hoax ever perptrated on the world. Junk science seems to have prevailed yet again.

Jtempys
Jtempys

Remember all the companies hiring on tons of extra programmers and consultants to scrub code for all dates with 2 digits that could become confusing, such as peoples birthdates. Oh you were born in '10? are you 100 or 0? Y2K Did happen, we just did alot to fix it before things got bad. Hopefully we do the same for Global Warming.

Oz_Media
Oz_Media

You didn't have the foggiest clue what I was trying to say and yet you still offered a snotty reply, which proved you were absolutely clueless to what you were replying to. So why would you even bother when; A) you were wrong B) you don't have a clue what my stand is on the subjects you are trying to discuss Needed to fill your keystroke quota?

rmazzeo
rmazzeo

...but, to comment on one of your completely silly remarks - America DOES try to control the rest of the world - we attacked Iraq without provocation, & according to what we call "politicians", especially the higher-ups, they want to "spread democracy" everywhere. Not only that, our "government" wants to control & spy on its own people. Put that in your pipe & smoke it, instead of whatever else you've been smoking...

Oz_Media
Oz_Media

now look outside your borders. If you go to a school supply store (they must have schools in your town too, you'll just have to look hard or ask an adult to help), they have colourful balls with a picture of America on them and a WHOLE BUNCH of other pictures. Well those are actually other countries! These countries exist on something we know as planet Earth (yup, it's round alright and America isn't in the middle nor does it control the rest). Now apply your political agenda BS to the rest of the planet and it just doesn't work, so much for that BS then.

Oz_Media
Oz_Media

Now let's forget the US scientists who you all see as having an ultimatum. Look at REAL science, REAL findings and forget AlGore. It's convenient that the largest consumers are the most reluctant to control their own carbon footprint. You'd think people were asking you to eat less or something.

jdr_03
jdr_03

You just nailed the left's stance perfectly. However, let's not forget that the "believers" in global warming think we need to follow their political agenda (which was in place before the "science") to correct the issue. Seems pretty scandalous to me?

Bernie S
Bernie S

... is only a hoax to those who (a) prefer to ignore the disturbing and inconvenient truth, or (b) have been suckered by the petroleum industry and their hired PR flacks -- the same ones who used to make their money by flim-flaming the public on whether cigarettes are a major health problem. (c) also, don't forget the political ideologues masquerading as news providers (eg. Fox News) who combine groups (a) and (b) with an additional admixture of irrelevant, extraneous political motives.

randytwester
randytwester

1. Get yourself a glass of water with ice in it, and an accurate thermometer. 2. Measure the temperature periodically for the next few minutes. 3. Tell yourself that since you observed the glass of water isn't warming up, you've proved it never will. 4. Extrapolate to the entire planet.

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