Mike Lynch, founder and CEO of Autonomy, has been acquitted of criminal fraud and conspiracy charges arising from the 2011 sale of the British software company to Hewlett-Packard.
On Thursday, a federal court jury in San Francisco cleared Lynch of all 15 charges – 14 counts of wire fraud and one count of conspiracy. Co-defendant Stephen Chamberlain, formerly VP of finance at Autonomy, was also acquitted. A charge of securities fraud was tossed during the trial by the judge.
In 2018, the US Justice Department alleged that Lynch and Chamberlain unlawfully ballooned Autonomy’s value prior to its acquisition.
The Feds claimed the pair “artificially inflated Autonomy’s revenues by backdating written agreements to record revenue in prior periods” and made false statements to auditors and regulators, all leading to HP allegedly vastly overpaying for Autonomy.
Meanwhile, the now-former chief exec argued during his trial that he was just the tech and marketing guy, a smart and savvy entrepreneur rather than a master manipulator of finances, and that if there were any problems with Autonomy’s numbers, the IT titan should have spotted and pulled those up during the takeover bid.
I am elated with today’s verdict and grateful to the jury for their attention to the facts over the last ten weeks
Lynch, who was extradited from the UK to the US last year after length legal resistance, has for years maintained his innocence, claiming that he was being made a scapegoat for the failed acquisition. Chamberlain also denied any wrongdoing.
In a statement to The Register, Dr Lynch said, “I am elated with today’s verdict and grateful to the jury for their attention to the facts over the last ten weeks. My deepest thanks go to my legal team for their tireless work on my behalf. I am looking forward to returning to the UK and getting back to what I love most: My family and innovating in my field.”
HP paid $11 billion for Autonomy, an enterprise search firm, but within a year wrote down the deal by $8.8 billion. Meg Whitman, CEO of HP at the time, said a senior executive on Lynch’s team had made claims about accounting irregularities and that the American IT giant had referred the matter to the US Securities and Exchange Commission and the UK Serious Fraud Office.
Years of legal wrangling followed. HP shareholders sued in 2012. In 2015, HP sued Lynch and Sushovan Hussain, former Autonomy CFO, in the High Court of England and Wales. Lynch responded by filing a $150 million countersuit for defamation.
In 2022, HPE – which inherited the civil litigation after HP split into HPE and HP Inc – prevailed in that British civil case and is presently seeking $4 billion in damages.
The UK’s Serious Fraud Office opened an inquiry in 2013, and dropped it in 2015 to allow US authorities take over the case.
The Feds in 2017 indicted Hussain on fraud charges and secured a conviction in 2018. He was sentenced to five years in prison the following year and was released in January, 2024 having served his time.
The evidence presented at trial demonstrated conclusively that Mike Lynch is innocent
Christopher Morvillo and Brian Heberlig, attorneys for Lynch, celebrated the jury’s verdict in a statement.
“We are thrilled with the jury’s verdict, which reflects a resounding rejection of the government’s profound overreach in this case,” said Morvillo and Heberlig.
“The evidence presented at trial demonstrated conclusively that Mike Lynch is innocent. This verdict closes the book on a relentless 13-year effort to pin HP’s well-documented ineptitude on Dr Lynch. Thankfully, the truth has finally prevailed. We thank Dr Lynch for his trust throughout this ordeal and hope that he can now return home to England to resume his life and continue innovating.”
“We’re grateful to the jury for carefully paying attention to the evidence and allowing Mr. Chamberlain to return home to his family,” added Gary Lincenberg, an attorney with Bird, Marella, Rhow, Lincenberg, Drooks & Nessim, LLP, who represented Chamberlain, in an email to The Register.
The US Justice Department did not immediately respond to a request for comment. ®