HBGary executive seeks to distance firm from affiliate involved in private spying scandal

An executive for a small computer security firm tried to distance his company from the activities of a related partnership that has become a focal point in a burgeoning private spying scandal.

Jim Butterworth, vice president of HBGary Inc., said Tuesday that the suburban Sacramento developer of anti-malware and other computer protection software was a victim, not a perpetrator, in the scandal. Its computer system was hacked and thousands of sensitive e-mails and documents were stolen, he said.

Butterworth said the firm was separate from HBGary Federal, a consulting firm that works with classified and unclassified information for government and private-sector clients.

But he acknowledged that the two companies share the same legal headquarters in Sacramento, store data on the same computer servers and share at least some overlapping ownership.


HBGary Chief Executive Greg Hoglund and his wife, Penny Leavy-Hoglund, the company’s president, own about a 15% interest in HBGary Federal, Butterworth said.

In addition, Leavy-Hoglund signed the registration papers for HBGary Federal, a limited liability company, according California secretary of state records.

HBGary Federal was part of a consortium that, according to e-mails released last week by activist hacking organization Anonymous, created a plan to discredit labor and liberal groups that have criticized the U.S. Chamber of Commerce.

The e-mails showed that HBGary Federal, Palantir Technologies Inc. in Palo Alto and Berico Technologies in Arlington, Va., proposed to use misinformation and fake social networking profiles to pressure union-backed nonprofits that opposed the chamber.


The firms sought $2 million in fees for providing political intelligence services.

Palantir and Berico immediately issued statements to the Los Angeles Times and other media saying top executives didn’t know about the plans and didn’t condone the activities.

Chamber officials said they knew nothing about the intelligence service proposal, which had been received by Washington, D.C., law firm Hunton & Williams, which serves as counsel to the chamber.

In the wake of news stories by The Times and other publications, HBGary issued a limited statement to distinguish the company from HBGary Federal, and Butterworth insisted that the two were “separate companies with different employees and management.”


HBGary executives were not aware of the solicitation by its affiliate, Butterworth said.

HBGary Federal, he said, is directed by Chief Executive Aaron Barr from offices in Colorado and Chevy Chase, Md. Barr could not be reached for comment.

“The bad guys in this situation are the self-proclaimed hacker activists that turned criminal,” Butterworth said. “A criminal act has been committed to steal our intelligence and proprietary information.”

Employees also received “numerous threats of violence,” he said, adding that both the data break-ins and the threats against individuals are being probed by local, state and federal law enforcement agencies.


A spokeswoman for the U.S. Department of Justice in Sacramento declined to confirm or deny whether an investigation was underway.