Hypercom Confidential

Colleen Smith claims her boss at Hypercom Corporation raped her. The company says it wanted to make things right. So the human resources director started hitting on her.

It's unclear why Hypercom has continued to tolerate Jairo Gonzalez. The firm paid another female employee $100,000 last year after she leveled her own allegations against Gonzalez of "sexual harassment and physical assaults." And, according to Wallner's testimony, a third woman also made assault allegations against him.

If Wallner is accurate, it's not because Gonzalez -- though a "highly effective" employee, in Wallner's words -- is essential to Hypercom's success.

"With or without Mr. Gonzalez, or with or without Mrs. [Smith], Wallner testified, "the company would be able to function just the same as before."

Hypercom is the world's second-largest producer of credit-card-swiping machines.
Paolo Vescia
Hypercom is the world's second-largest producer of credit-card-swiping machines.
Hypercom human resources director John Murphy
Hypercom human resources director John Murphy

That statement seems disingenuous.

Hypercom summed up Gonzalez's value to the company in a 1997 annual filing with the federal Securities and Exchange Commission: "The loss of . . . Gonzalez could have a material adverse effect on the company's business, operating results and financial condition."

This case is unusual in that the company first approached the alleged victim, not the other way around. Even then, she never spoke to an attorney about her situation for almost a year after signing her agreement.

Hypercom officials say they went to Smith because it was the right thing to do. But Hypercom also had good reason to believe that the rape allegations and other alleged incidents involving Gonzalez and other Hypercom female employees might become public and jeopardize the IPO.

"Either Mrs. Smith was being recompensed for inappropriate conduct, whatever that may mean," Superior Court Judge Pendleton Gaines said during a related proceeding October 12, "[or] another interpretation of the agreement, frankly, is that the company may have been purchasing [her] silence."

(Several stock market experts contacted by New Times say savvy investors always scrutinize a company's senior management when making their decisions, and that confidence in the top guns can boost the price of shares. To the contrary, those experts say, such serious allegations against a key player such as Gonzalez likely would have made some investors rethink their choice.)

Smith's attorney, Larry Debus, told Judge Burke at an August 23 hearing, "The very reason that they are hustling this woman [Smith], the very reason they're attempting to deceive her, the very reason they're trying to keep her quiet and shut her up is so that they can go out for their $100-$200 million IPO, and once that's over, they don't care because they already got their money. . . . She was told daily, sometimes many times a day, that if she told her family, if she told her divorce lawyers, if she told anybody [about the agreement], she was going to lose everything."

Smith says John Murphy, the human resources director, kept telling her that.

Consider that Murphy, charged with investigating rumors of Jairo Gonzalez's aggression, never bothered to interview Gonzalez before concluding the sexual episodes likely had been consensual.

Worse yet, Murphy himself tried to cultivate a romantic relationship with Smith -- during and after he completed his "investigation." He spoke to her several times each day on the phone, and showed up unannounced at her home. He showered her with letters, cards, flowers and gifts. He took Smith and her sons to a hockey game, then to a charity dinner.

"If I sign this letter the way I would like to, you would probably go get a gun and shoot me, so I'll sign it, Affectionately Yours, John," Murphy wrote on November 5, 1997, three weeks after he'd met Smith.

"P.S. Your presence in the building, especially in the pink outfit, has not gone unnoticed by all the young men and (one old guy!!!) You look great!"

Smith says she trusted Murphy at first: "He was my savior. I truly believed that at the time. He was there to help me. . . . He had my entire life in his hands for a period of three weeks, possibly. He knew everything about me. He was the only person I could cry to. He was the only person that understood what I was going through. And for that I thanked him."

Later, however, "when he was starting to rub my neck and buy me flowers and gifts," she worried "that Hypercom had set him up to see if I would . . . go out with him, see him, have a relationship with him."

Murphy testified, "I wanted to show her that she could have an executive friend at work who really cared for her and her two boys, and that we could be friends."

Regardless of Murphy's motives, the fact that he engaged in this behavior at all is baffling.

"I'm having a hard time understanding why a director of human resources would be giving gifts," Judge Burke told Murphy at last month's hearing. ". . . Why is that not harassment, buying a subordinate gifts while doing an investigation?"

Murphy responded that he was just trying to be Smith's friend.


Colleen Smith is a feisty woman who is fast on her feet. She's a born mimic who honed her sense of humor as the youngest of five siblings -- the others are boys -- in her native San Angelo, Texas.

But her life has not been easy. Smith has suffered from recurring bouts of depression, an unhappy marriage and the indignities of working for Jairo Gonzalez.

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