As a tech tycoon dubbed ‘Britain’s Bill Gates‘, Mike Lynch often said that the secret to his success was that he refused to be ruled by convention.
The Cambridge-educated computer expert made clear that he didn’t get to become one of the richest people in the UK by slavishly following the advice of business textbooks.
And after breaking the first rule of white-collar fraud trials by taking the stand in his own defence, his unconventional approach appears to have paid off once again.
In a spectacular reverse for US federal prosecutors, who rarely lose a case, Lynch has been acquitted of criminal charges by a jury in San Francisco.
The decision on Thursday to clear Lynch, 58, of 15 charges — 14 of wire fraud and one of conspiracy — ends a 13-year legal saga over allegations that he cooked the books at his software company Autonomy before US computer giant Hewlett-Packard (HP) bought it for a sensational £8.6billion in 2011.
Tech tycoon Mike Lynch has been cleared of 15 charges – 14 of wire fraud and one of conspiracy
Even though Autonomy’s finance chief, Sushovan Hussain, was found guilty on similar charges and served five years in prison, its bluff chief executive rejected advice to seek a plea bargain and fought a long battle to resist extradition to the US.
He had faced as many as 25 years in prison if convicted by America’s fiercely punitive justice system.
Lynch had denied all the charges, insisting he was being made a scapegoat for HP’s managerial incompetence in not doing its due diligence properly before buying the company.
Former Autonomy finance executive Stephen Chamberlain, who was tried alongside Lynch on the same charges, was also acquitted on all counts.
Prosecutors had portrayed Lynch as a ruthless and intimidating fraudster who ran Autonomy like a Mafia boss. Citing accounting irregularities, they said he’d been the ‘driving force’ of Silicon Valley’s biggest ever fraud by inflating the company’s revenues in the two years leading up to the HP deal by spinning a ‘fabulous tale of corporate success’.
Within a year of the sale, HP wrote down Autonomy’s value by an astonishing £6.9billion, saying it had uncovered serious accounting improprieties.
Lynch admitted his company was ‘not perfect’ but insisted that he had concentrated on new ideas and products rather than sales and accounting.
Pronouncing himself ‘elated’ by the verdict, he added: ‘I am looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field.’
Jurors could be forgiven for thinking that Lynch is most looking forward to getting back to his rare-breed pigs, given how much he had to say about them.
This ends a 13-year legal saga over allegations that he cooked the books at his software company Autonomy before US computer giant Hewlett-Packard (HP) bought it for a sensational £8.6billion in 2011
The reason defence lawyers usually advise their clients in such cases not to testify is because it exposes them to potentially disastrous cross-examination.
However, during four days in the witness box towards the end of his 12-week trial, Lynch talked at length about his passion for conserving rare breeds of pigs and cows as he sought to soften his image with jurors.
But when he started to explain how the ‘medieval breeds of pigs are really robust’, Judge Charles Breyer cut him off and said the court had heard ‘enough farm stories’. His acquittal spares him a stint in the US prison system that would have been anything but cushy.
While American white-collar criminals are usually sent to ‘minimum-security’ facilities where confinement conditions are lenient and violence rare, foreigners have to go to tougher ‘low-security’ prisons.
Lynch would most likely have been sent to the grim Allenwood Federal Correctional Institution in Pennsylvania.
Former inmate Giles Darby, one of the so-called ‘NatWest Three’ — a trio of British bankers jailed for fraud in 2008 following the Enron scandal — wrote a book describing the drudgery of daily lock-downs in cramped and barely-furnished cells, the threat of routine violence and horrific gang beatings.
He was also ’emotionally tortured’ by not being able to see his five young daughters. ‘I felt as if I’d arrived in Hell,’ he said.
Instead, Lynch will be returning to an infinitely more comfortable life in the UK where he and his wife, Angela Bacares, have two daughters and several homes, including a £20million house in Chelsea and the Suffolk farm.
Even before his trial started, Lynch had spent a year in San Francisco living under court-ordered house arrest in a rental property. He was under 24-hour video surveillance and wore a GPS tracking bracelet around his ankle.
At least financially, he is still not out of the woods. HP won a civil case against him in the High Court in 2022. Although damages have yet to be decided, the company is demanding more than £3billion.
Lynch has been estimated to be worth £1billion but his lawyers have said the real figure is closer to £350million.
His legal team said after the verdict that the US government had shown ‘profound over-reach’ in its ‘relentless 13-year effort to pin HP’s well-documented ineptitude’ on Lynch. A spokesman for the US Attorney’s office in San Francisco said they ‘acknowledge and respect the verdict’.
His acquittal adds a new chapter to the spectacular rise and fall — and rise again — of a man who was feted by the British establishment after becoming a rare major UK success in the tech world.
Born in Ilford, east London, and raised in Chelmsford by working-class Irish parents, Lynch started his first company in the late 1980s out of a Cambridge student flat. He co-founded Autonomy in 1996 and it soon became a leading light of Silicon Fen, the nickname for the cluster of tech companies around Cambridge.
Lynch earned a reputation as an outspoken eccentric. A hardcore James Bond fan, he drove an Aston Martin DB5 and named his office meeting rooms after 007 villains such as Goldfinger and Dr No. He even kept piranhas in a fish tank in the atrium of the Autonomy headquarters.
In 2006 he was made an OBE and appointed to the Board of the BBC. He also became a trustee of the Royal Botanic Gardens, Kew, a Fellow of the Royal Society and a Deputy Lieutenant of Suffolk. In 2011, he was appointed to the science and technology council of the then prime minister, David Cameron.
Critics of the UK’s uneven extradition deal with the US have said Lynch should never have been sent there when Washington refuses to hand over an American woman, Anne Sacoolas, who admitted to driving on the wrong side of the road when she ran over and killed 19-year-old Harry Dunn outside RAF Croughton, Northamptonshire, in 2019.
Thursday’s verdict will no doubt revive the debate over whether people like Lynch should ever be handed over to the US justice system.