Mike Lynch, the rich tech founder as soon as hailed as Britain’s reply to Steve Jobs, oversaw a “multiyear, multilayered fraud” that lured Hewlett-Packard into paying $11 billion for his software program firm Autonomy, prosecutors advised a US jury in California on Monday initially of his felony trial.
Lynch “spun a superb story” in regards to the firm’s funds, prosecutor Adam Reeves stated in federal court docket in San Francisco.
“HP ate it up – they thought this sort of software program firm is strictly what they wanted,” Reeves stated.
Autonomy co-founder Mike Lynch is accused of scheming to inflate the corporate’s income. REUTERS
Autonomy co-founder Lynch and former finance government Stephen Chamberlain are accused of scheming to inflate the corporate’s income beginning in 2009 and ending with HP’s disastrous acquisition of the corporate in 2011.
After the deal, HP wrote down the worth of the British firm by $8.8 billion a yr, saying it had uncovered severe accounting improprieties.
Prosecutors accuse Lynch and Chamberlain of padding Autonomy’s funds via backdated agreements and “roundtrip” offers that fronted money to prospects via faux contracts. A part of the aim was to entice patrons like HP, prosecutors stated.
On the trial scheduled to run into late Could, jurors might hear from dozens of witnesses, together with Leo Apotheker, the previous HP chief government who was fired weeks after the Autonomy deal was introduced.
Lynch’s attorneys have stated in court docket that he’s contemplating testifying in his personal protection on the trial, the place he faces 16 counts of fraud and conspiracy. Chamberlain faces 15 counts.
Each males are presumed harmless. The 12-person jury should attain a unanimous verdict to search out both of them responsible.
Autonomy’s implosion launched greater than a decade of authorized battles for Lynch.
Former HP CEO Leo Apotheker was fired weeks after the Autonomy deal was introduced. REUTERS
HP considerably received a civil lawsuit in opposition to him and Sushovan Hussain, Autonomy’s former chief monetary officer, in London in 2022, and it’s searching for $4 billion in damages.
Hussain was individually convicted on US expenses in 2018. Months later, prosecutors introduced expenses in opposition to Lynch and Chamberlain.
Lynch fought his extradition, however was finally delivered to the US to face the costs after Britain’s Excessive Courtroom refused him permission to enchantment final yr.
US District Decide Charles Breyer, who’s overseeing the trial, granted Lynch bail secured by a $100 million bond, however restricted him to a house in San Francisco underneath 24 hour guard.
Lynch’s lawyer has stated in court docket that his web price is round $450 million.
After the deal, HP wrote down the worth of the British firm by $8.8 billion a yr, saying it had uncovered severe accounting improprieties. Bloomberg
Hussain was convicted on 16 counts at a jury trial earlier than Breyer in 2018. He was launched from jail in January after serving a five-year sentence.
Within the civil lawsuit, a British decide dominated in January 2022 that Lynch had masterminded an elaborate fraud to inflate the worth of Autonomy, which means the Silicon Valley firm considerably succeeded in its civil case.
Lynch had stated HP didn’t know what it was doing with Autonomy, and was out of its depth in understanding his expertise.