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.

Colleen Smith was afforded no such advice. She says she believed the confidentiality agreement encompassed even her own divorce attorney, James Leather -- who confirmed at the recent hearing that Smith hadn't told him about it.

(Murphy had become so involved in Smith's life that, on November 12, 1997, he went with her to Leather's office. "He was so attentive," Leather testified, "I thought that maybe he was her boyfriend -- or a friend at work. As I recall, they sat very close to each other. He was doing almost all the talking, very interested in all the [divorce] proceedings.")

Smith flew to Texas at Thanksgiving, she says, hoping that this would spell the end of her nightmare.

Jairo Gonzalez (above) was the president of Hypercom Corporation's international division until recently. George Wallner (left) co-founded the Phoenix-based firm.
Jairo Gonzalez (above) was the president of Hypercom Corporation's international division until recently. George Wallner (left) co-founded the Phoenix-based firm.
George Wallner co-founded the Phoenix-based firm.
George Wallner co-founded the Phoenix-based firm.

Though the IPO was finished and the confidentiality agreement signed, Murphy continued his pursuit of Smith. He sent yellow roses to her parents' home in Texas, followed by a centerpiece the next day.

The attention vexed Smith, who let Murphy know about it. He responded in a December 6, 1997, handwritten letter. After apologizing for any embarrassment he might have caused, Murphy wrote:

"I would never touch you in lust or anger and I never have done that to any woman. . . . I'll always be there for you and if you need anything, anytime, just call. Friends do that. No more moral judgments either."

The human resources director closed by saying, "You'll find younger and I'm sure you'll find a more handsome guy, but I'm not sure you'll find a better man. Love, John."

Three weeks after his "never find a better man" letter, Murphy became engaged to marry another Hypercom employee. The pair got married in February 1998.


In 1998, Colleen Smith went to work as an assistant to Hypercom's then-chief financial officer Thomas Linnen. She says Linnen was a gentleman and easy to work for, a welcome change from Jairo Gonzalez.

She occasionally saw Gonzalez in passing, but that was the extent of it. Her divorce was nearly completed, and she was dating an Alaska Airlines pilot named Rick Smith who was treating her nicely.

That summer, however, Smith says she was in the ladies' room at Hypercom and overheard two women talking about her.

"They were talking about my agreement," she says, "and what a fool I was to sign something that wouldn't pay off [the college education component] for 10 years. I was flabbergasted. I hadn't talked about this to anyone. But everyone seemed to know that Jairo had done something to me and the company had made this deal with me. I was starting to feel like I was over my head again."

Within a few days, Smith says, her youngest son told her by phone about a message that a man had left:

"My kid tells me, 'Mom, what does it mean that you didn't have the balls to stand up to them, and that if you had, my wife wouldn't have been hurt?'"

The message came from the husband of Ali Bistick, an ex-Hypercom employee who succeeded Smith as Jairo Gonzalez's assistant.

Within a day, Smith says, she got another message, this one from an attorney representing the Bisticks.

According to Smith, the attorney told her, "'We know that you've had an incident with [Gonzalez], and we know that they settled with you, and he's conducted the same behavior on [Ali]. She is in very bad shape and she needs your help."

Though Bistick didn't testify at Smith's recent hearing -- she was due to give birth the day after it ended -- Larry Debus avowed in legal papers that she would say:

"While in Florida and in Arizona, [Ali] was verbally and physically abused (sexually) by Jairo Gonzalez. That one such physical abuse occurred in Arizona in 1997. That her complaints about the sexual harassment and physical assaults of Jairo Gonzalez resulted in her entering into a settlement with Hypercom and Gonzalez."

Bistick accepted a $100,000 check for her troubles, George Wallner testified at the hearing, though he said he'd disagreed with the decision to settle.

"Ali told me Jairo Gonzalez had done nothing to her," Wallner said, adding she'd told him, "'I'm an Hispanic woman -- I would have scratched his eyes out.'"

Smith says she asked John Murphy what was going on after she got the troubling phone messages.

"'Settle down,'" she recalls him telling her. "'It's nothing to worry about. We are going to settle with Ali, even though we know there's no reason to -- for your privacy, because we have promised you that. Your loyalty, blah, blah, blah.' I said, 'Well, you know what? They're talking about it in the ladies' room.'"

Murphy told Smith to take the rest of the day off.

"I took the afternoon off, all right. I went right to the Yellow Pages and found a lawyer."

In September, that attorney sent Hypercom a demand letter on Smith's behalf. The company responded with a counteroffer: If Smith wouldn't sue, Hypercom would pay her $45,000 plus benefits for a year's "sabbatical." The firm also would put $120,000 into the still-unfunded educational trust program for her sons -- or would cut her one check for $120,000.

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