Mike Lynch Cleared In HP Autonomy Fraud Trial

Dr Mike Lynch, the former chief executive and co founder of Autonomy, has secured a stunning legal victory in the United States.

According to the Associated Press, on Thursday a jury in San Francisco cleared the British tech entrepreneur of fraud charges he had faced over the $11bn (£8.6bn) sale of his software firm to Hewlett-Packard in 2011.

Dr Lynch had faced one count of conspiracy and 14 counts of wire fraud in the trial for allegedly trying to inflate the company’s revenues beginning in 2009 partly in order to lure a buyer.

Earlier this week prosecutors during their closing arguments had portrayed Dr Lynch as directly responsible for the alleged fraud at Autonomy.

Lynch cleared

The trial had lasted 11 weeks, and saw the man who has been compared as the UK’s answer to Bill Gates or Steve Jobs, take to the stand to testify in his own defence.

In his testimony, Dr Lynch maintained his role at the British software firm had been more of a technical nature, rather than business-focused.

Prosecutors had called more than 30 witnesses to the stand, including HP’s former CEO Leo Apotheker, who was fired weeks after the Autonomy deal was announced.

According to the Associated Press, the jury acquitted Lynch on all 15 felony counts facing him, that could have resulted in a 20 year prison sentence if found guilty.

Toward the end of the trial, US District Judge Charles Breyer also threw out a count of securities fraud included in the US Justice Department case against him, ruling it was not supported by evidence.

Another former Autonomy finance executive, Stephen Chamberlain, also faced fraud charges alongside Dr Lynch, and the same jury also acquitted Chamberlain.

Returning to UK

“I am elated with today’s verdict and grateful to the jury for their attention to the facts over the last 10 weeks,” Dr Lynch said in a statement.

“I am looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field,” he reportedly said.

Dr Lynch had been confined to an address in San Francisco under house arrest since he was extradited to the US in May 2023. Lynch was also ordered to pay a $100 million (£79m) bond and was watched by 24-hour armed guards he had to pay for himself.

The jury ruling is a blow for the long campaign by HP and its then CEO Meg Whitman to pursue the senior management of Autonomy after the HP acquisition went south.

There was no public comment from Meg Whitman on the ruling (she is currently the US ambassador to Kenya).

HP Autonomy deal

The trial stems Hewlett-Packard’s disastrous $11 billion (£8.7bn) acquisition of Autonomy in 2011. The acquisition resulted in bitter mud slinging after HP filed an $8.8bn write-down of Autonomy in 2012.

HP alleged at the time that the majority of that charge, more than $5 billion, had resulted from a number of practices used by former members of Autonomy’s management team to inflate the value of the company and mislead investors and potential buyers at the time of the acquisition.

The remainder of that write-off charge was related to other factors such as the trading value of HP stock and marketplace performance.

Legal battles soon followed, and in April 2015 HP sued Lynch, alongside former Autonomy CFO Sushovan Hussain at the High Court in London, seeking $5bn in damages.

Dr Lynch countersued HP for $160m in 2015, saying at the time the company had ruined his reputation and that it was “incompetent in its operation of Autonomy”, leading to the acquisition’s failure.

In the UK the Serious Fraud Office (SFO) in 2015 dropped its investigation into the sale of Autonomy to HP, concluding there was “insufficient evidence for a realistic prospect of conviction”.

Eventually in September 2016 HPE sold its software business, including the Autonomy division, to British IT firm Micro Focus for $8.8 billion.

US extradition

HPE (the resulting software operation after HP’s split in 2015) however continued its attempt to recoup its losses in its lawsuit against Lynch, and Autonomy’s former chief financial officer, Sushovan Hussain, who in 2019 was sentenced to five years in prison in the US.

HP’s UK court case against Lynch resulted in a British judge ruling in January 2022 that HP “substantially succeeded” in its lawsuit.

However the judge ruled any damages would be “considerably less” than the $4 billion sought by HP.

After that verdict, then Home Secretary Priti Patel approved the extradition of Mike Lynch.

In October 2023 Lynch had launched a legal challenge to dismiss the US allegations against him.