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Mike Lynch: Autonomy co-founder cleared of fraud in US trial
Article information
- Author, Natalie Sherman
- Role, Business Reporter, BBC News
- June 6, 2024
Updated 36 minutes ago
British technology mogul Mike Lynch has been cleared of fraud charges he faced in the US during the $11 billion (£8.6 billion) sale of his software company to Hewlett-Packard in 2011.
A jury in San Francisco found him not guilty on all counts, in a stunning victory for Lynch, who had been accused of inflating the value of his company Autonomy before its sale.
Lynch, who faced more than 20 years in prison if convicted, denied the allegations and took the stand to defend himself.
In his testimony, he stated that he focused on technology rather than accounting, distancing himself from other executives, including the company’s former chief financial officer, who has already been successfully prosecuted for fraud.
“I am elated by today’s verdict and grateful to the jury for their attention to the facts over the past 10 weeks,” Lynch said in a statement.
“I’m looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field.”
Mr Lynch, a Cambridge University graduate, co-founded Autonomy in 1996 from a specialist software research group called Cambridge Neurodynamics.
He led it as it became one of the UK’s biggest companies, earning comparisons to Microsoft’s Bill Gates and Apple’s Steve Jobs.
The company, known for software that can extract useful information from “unstructured” sources such as phone calls, emails or videos, was ultimately sold to Hewlett-Packard (HP) in 2011 in a deal that was billed as the largest acquisition of a company ever made. British technology business at the time.
Lynch made £500 million from the sale. Just a year later, HP reduced the value of Autonomy by $8.8 billion.
Years of legal battles followed.
The company’s chief financial officer, Sushovan Hussain, was found guilty of fraud in 2018 and was later sentenced to five years in prison.
US prosecutors brought charges against Mr. Lynch in 2018, accusing him of inflating the company’s value by using retroactive agreements to deceive about the company’s sales; concealing the hardware reselling company’s loss-making business and intimidating or paying people who raised concerns.
Lynch, who lives in Suffolk, was eventually extradited after a UK judge ruled in favor of HP in a similar civil fraud case in 2022. HP is seeking $4 billion in that case.
Lynch, a former UK government adviser who sat on the boards of the BBC and the British Library, faced house arrest in the US as he prepared for the trial that began in San Francisco in March.
Prosecutors called dozens of witnesses to testify, including former HP chief Leo Apotheker, who was fired shortly after the purchase was announced.
But the arguments failed. Lynch’s team argued that HP failed to properly value the deal and mismanaged the acquisition, while he testified that he was not involved in the transactions described.
Judge Charles Breyer had previously dismissed a securities fraud charge during the trial due to lack of evidence.
Abraham Simmons, a spokesman for the U.S. Attorney’s Office, said: “We recognize and respect the verdict.
“We would like to thank the jury for their attention to the evidence the government presented in this case.”
In addition to Lynch, another former Autonomy financial executive, Stephen Chamberlain, was also tried. He was found not guilty.
Lynch’s attorneys, Christopher Morvillo and Brian Heberlig, said in a statement they were thrilled with the outcome, saying it reflected a “rejection of the government’s profound excess in this case.”
“This verdict closes the book on a tireless 13-year effort to pin HP’s well-documented ineptitude on Dr. Lynch,” they said. “Fortunately, the truth has finally prevailed.”