Former Autonomy chief executive Mike Lynch issued a statement Thursday following his acquittal of criminal charges, ending a 13-year legal battle with Hewlett-Packard that became one of Silicon Valley’s biggest fraud cases. He was accused of falsely inflating revenues at the UK startup ahead of Autonomy’s $11 billion sale to HP in 2011.
Commenting on the acquittal, Lynch (pictured above, left, when he appeared at TechCrunch Disrupt) said in his statement: “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.”
After a 12-week trial, the entrepreneur was cleared of 15 counts of fraud and conspiracy that were brought against him in relation to the 2011 acquisition.
The victory for Lynch is notable in light of the fact that in the US, in fiscal year 2022, only 0.4% of federal criminal cases led to trial and acquittal, according to the Pew Research Center, and only 12% of all wire fraud prosecutions resulted in acquittal.
Christopher Morvillo and Brian Heberlig, legal counsel for Lynch, added 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. 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.”
Lynch, 58, was previously extradited to the US, and put under house arrest and 24-hour surveillance ahead of the trial. He long maintained he was scapegoated by HP, claiming it botched the acquisition of Autonomy, and later mismanaged the company’s software assets.
Lynch made £500 million from the sale of Autonomy to HP. But only a year later, HP wrote down its investment by $8.8 billion, saying $5 billion of that write-down owed to practices employed by Autonomy’s earlier management team that inflated Autonomy’s value and misled potential buyers into believing the company was far more valuable.
Prosecutors accused Lynch and Stephen Chamberlain, Autonomy’s former vice president of finance, of illegally inflating revenues ahead of the acquisition and hiding high-margin software revenue inside unprofitable hardware sales.
In the trial, Lynch successfully argued that he had not been involved in accounting and contract matters, instead focusing on technical and marketing issues.
Although unsuccessfully arguing that the case should be heard in the UK, leading to his extradition, the US jury exonerated Lynch on all counts, along with Chamberlain, who was also on trial.
The US attorney’s office in San Francisco said: “We acknowledge and respect the verdict. We would like to thank the jury for its attentiveness to the evidence the government presented in this case.”
Autonomy’s sale to HP was seen as a vindication of the UK’s booming tech scene, and the platform’s ability to sift through unstructured databases was, at the time, viewed as a way for HP to rebuild its flat-lining hardware business.
Lynch co-founded Autonomy in 1996 out of a specialist software research group called Cambridge Neurodynamics.
Awarded an OBE for services to enterprise in 2006, Lynch became a UK government adviser who sat on the boards of the BBC and the British Library, founded the Invoke Capital VC, and invested in breakout cyber security company Darktrace.