Mike Lynch, the Irish-born businessman who was once one of the UK’s leading tech entrepreneurs, was acquitted of criminal charges by a jury in San Francisco on Thursday, capping a 12-year legal saga stemming from one of Silicon Valley’s biggest fraud cases.
The former Autonomy chief executive was accused of falsely inflating revenues at the UK software company ahead of its $11 billion (€10.1 billion) sale to Hewlett-Packard in 2011. The verdict is a moment of vindication for Lynch after a long battle that saw him extradited to the US and subjected to house arrest under 24-hour surveillance ahead of the trial.
Mr Lynch (58) has long claimed he was used as a scapegoat by HP for its own botched acquisition and later mismanagement of Autonomy.
He unsuccessfully argued that any criminal charges should be heard in the UK. After a two-and-a-half-month trial, the jury, which began deliberating on Tuesday afternoon, found him not guilty on all counts, along with Stephen Chamberlain, Autonomy’s former vice-president of finance, who was also on trial.
Following the verdict, Mr Lynch said he was “elated”, and was “looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field”.
But even as he walks free after an acquittal that defied all the odds, Mr Lynch, who made at least $500 million from Autonomy’s sale, has to clear his name in a separate London civil case against Hewlett Packard Enterprise Co.
HPE is seeking as much as a $4 billion from Mr Lynch after a judge found that he and Autonomy fraudulently boosted the value of the company. The judge came to that conclusion following a nine month, £40 million (€47 million) trial in 2022 that was among the longest and most expensive in modern British history.
Mr Lynch said previously that he plans to appeal the civil court findings, with his lawyers insisting that the litigation isn’t resolved at all. But first, he needs to wait for a ruling on the size of the damages that he must pay.
HPE said in February the total losses that Mr Lynch and his former chief financial officer must pay back totals $4 billion, while the judge had previously cautioned that the final amount was likely to be “substantially less” than HP claimed.
The sale of Autonomy was a high point for the UK tech scene at a time when the “Silicon Fen” region around Cambridge, where it was based, was rising to prominence. Autonomy’s software, used to sort through information that is not held in structured databases, was seen as a critical piece of technology for large companies and governments, making it central to HP’s efforts to rebuild its floundering computer hardware business around software.
However, the US company wrote down its investment by $8.8 billion just a year later, blaming $5 billion of the hit on what it claimed was the fraudulent raising of Autonomy’s revenues in the years before the deal.
Autonomy’s former chief financial officer, Sushovan Hussain, was found guilty of fraud over similar charges and released in January after serving a five-year sentence in the US. – Copyright The Financial Times Limited 2024 / Bloomberg
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