On Thursday, in a court in San Francisco, British entrepreneur Mike Lynch was cleared of fraud charges by a jury, thanks to which he avoided the prospect of a long prison sentence. The once famed co-founder of software company Autonomy was acquitted of all charges criminal chargesending a 12-year legal saga accusing him of wire fraud and conspiracy.
During an 11-week trial, the U.S. Department of Justice accused Lynch of overseeing a intricate, multi-year fraud that inflated the value of Autonomy before its purchase by Hewlett-Packard in 2011.
The Justice Department alleged that Lynch dated and fabricated the sale and lied in public documents about his company’s finances. The effect, according to prosecutors, was to defraud HP Purchasing autonomy at an exorbitant price – $11.7 billion – Lynch personally walked away from the deal, taking $640 million in cash.
During the trial, Lynch argued that Autonomy’s accounting practices were within the purview of others at the company, not himself. He also argued that any company put under a microscope as Autonomy was would show the kind of deficiencies that the Justice Department characterized as evidence of fraud: “If you take a microscope to a spotless kitchen, you’ll find bacteria,” Lynch told the court.
Stephen Chamberlain, former vice president of finance at Autonomy, who was tried along with Lynch, was also acquitted.
Lynch, once called “Britain’s Bill Gates,” was like that extradited to the USA in 2023, he will face criminal charges for his involvement in the sale of Autonomy to HP. At the time, the $11 billion deal was the largest-ever acquisition of a British technology company – reflecting HP’s desire to find a foothold in the high-margin software market. But within a year HP did it reduced the value of the purchase by $8.8 billionclaiming it had uncovered “serious accounting irregularities” and “blatant misrepresentations.”
In 2019, the Justice Department indicted Lynch on 17 counts and later moved to charge 16 of them. Lynch, like Chamberlain, was found innocent on all counts.
The criminal trial follows HP’s victory in the long-running civil fraud case against Lynch in 2022. The High Court trial, the largest of its kind in UK history, resulted in a judgment finding that Autonomy executives had fraudulently increased reported revenues companies, earnings and value.
Autonomy’s former CFO, Sushovan Hussain, was charged in the US in 2016 with defrauding HP and its investors in connection with the company’s takeover – similar to the Lynch case. Hussain was sentenced to five years in prison.
Before his own criminal trial in the US, Lynch’s chances were not looking good. In mid-March, at the opening of the trial, the prosecution and defense he painted contrasting pictures from Lynch. The lead prosecutor in the case branded Lynch an abusive and tyrannical person – the driving force behind a “massive fraud.” However, Lynch’s lawyer, Reid Weingarten of the Steptoe law firm, who often he turned to Lynch like “Mike”, he characterized him as a tough but respected leader. He described the case as a “routine business dispute” that was blown out of proportion.