Categories: LegalRegulation

Prosecutors Say Lynch Behind Autonomy Fraud

Prosecutors portrayed former Autonomy chief executive Mike Lynch as directly responsible for alleged fraud at the company, while his own lawyers portrayed Lynch as “focused on the future” in closing arguments on Monday related to HP’s $11 billion (£8.6bn) acquisition of the firm in October 2011.

HP soon wrote down the value of the acquisition by $8.8bn and has pursued former Autonomy executives in a series of lengthy and expensive lawsuits.

Assistant US Attorney Robert Leach said jurors should have no reasonable doubt that fraud took place at Autonomy and that Lynch was behind it, arguing that Lynch’s £500m profit from the deal showed he was “in charge”.

“Dr. Lynch had 500 million reasons to defraud HP. It tells you volumes about who was in charge and who benefited from this,” Leach told the San Francisco court.

‘CEO doesn’t do those things’

Lynch and former Autonomy finance executive Stephen Chamberlain are facing charges of fraud and conspiracy for allegedly trying to inflate the company’s revenues beginning in 2009 partly in order to lure a buyer.

The former chief unusually testified on his own behalf last week, telling the jury he was not personally involved in many aspects of the company’s financial operations.

“The CEO doesn’t do those things, you don’t do the accounting, you don’t do the customer support… You have a department that does [those things] and you set a culture for what you want them to do,” he said, adding that he did not understand certain spreadsheets Autonomy executives prepared about its financial performance.

Lynch’s lawyer Brian Heberlig told jurors the testimony should sway them in favour of a not-guilty verdict.

“It was more than reasonable doubt. It was truth,” he said, displaying a large photo of Lynch overlaid with descriptions of him as “smart” and “focused on the future”, Reuters reported.

Fraud charges

The defence team won a victory last week when US District Judge Charles Breyer threw out one count of securities fraud, saying it was not supported by evidence.

Lynch faces one count of conspiracy and 14 counts of wire fraud in the trial, where jury deliberations are expected to begin this week.

His legal team has argued HP rushed through due diligence on the acqusition and as a result overpaid, while Lynch argued he left financial matters to former chief financial officer Shushovan Hussain.

Hussain was separately convicted in 2018 in the same court of conspiracy, wire fraud and securities fraud and was released in January after serving a five-year sentence.

HP won a civil suit against Lynch and Hussain in the UK in 2022 in which the company is seeking $4bn.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Recent Posts

Spyware Maker NSO Group Found Liable In US Court

Landmark ruling finds NSO Group liable on hacking charges in US federal court, after Pegasus…

1 day ago

Microsoft Diversifying 365 Copilot Away From OpenAI

Microsoft reportedly adding internal and third-party AI models to enterprise 365 Copilot offering as it…

1 day ago

Albania Bans TikTok For One Year After Stabbing

Albania to ban access to TikTok for one year after schoolboy stabbed to death, as…

1 day ago

Foldable Shipments Slow In China Amidst Global Growth Pains

Shipments of foldable smartphones show dramatic slowdown in world's biggest smartphone market amidst broader growth…

1 day ago

Google Proposes Remedies After Antitrust Defeat

Google proposes modest remedies to restore search competition, while decrying government overreach and planning appeal

1 day ago

Sega Considers Starting Own Game Subscription Service

Sega 'evaluating' starting its own game subscription service, as on-demand business model makes headway in…

1 day ago