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Mike Lynch, as soon as one of many UK’s main tech entrepreneurs, was acquitted of prison fees by a jury in San Francisco on Thursday, capping a 12-year authorized saga stemming from considered one of Silicon Valley’s biggest-ever fraud instances.
The previous Autonomy chief govt was accused of falsely inflating revenues on the UK software program firm forward of its $11bn sale to Hewlett-Packard in 2011. The decision is a second of vindication for Lynch after a protracted battle that noticed him extradited to the US and subjected to accommodate arrest below 24-hour surveillance forward of the trial.
Lynch, 58, has lengthy claimed he was used as a scapegoat by HP for its personal botched acquisition and later mismanagement of Autonomy. He unsuccessfully argued that any prison fees must be heard within the UK. After a two-and-a-half-month trial, the jury, which started deliberating on Tuesday afternoon, discovered him not responsible on all counts, together with Stephen Chamberlain, Autonomy’s former vice-president of finance, who was additionally on trial.
Prosecutors accused Lynch and Chamberlain of illegally inflating revenues within the two years earlier than the acquisition by backdating a few of Autonomy’s contracts, utilizing “spherical journey” offers to compensate prospects for making purchases from Autonomy, and hiding the truth that a few of its high-margin software program income was actually coming from unprofitable {hardware} gross sales.
They confronted 14 counts of wire fraud and one rely of conspiracy. One other cost, of securities fraud, was thrown out by the decide close to the top of the trial.
The sale of Autonomy was a excessive level for the UK tech scene at a time when the “Silicon Fen” area round Cambridge, the place it was primarily based, was rising to prominence. Autonomy’s software program, used to type by data that’s not held in structured databases, was seen as a crucial piece of know-how for big corporations and governments, making it central to HP’s efforts to rebuild its floundering laptop {hardware} enterprise round software program.
Nevertheless, the US firm wrote down its funding by $8.8bn only a yr later, blaming $5bn of the hit on what it claimed was the fraudulent ramping-up of Autonomy’s revenues within the years earlier than the deal. A successor firm, HPE, largely prevailed in a civil declare in opposition to Lynch within the UK in 2022 and is in search of $4bn in damages.
Autonomy’s former chief monetary officer, Sushovan Hussain, was discovered responsible of fraud over comparable fees and launched in January after serving a five-year sentence within the US. Prosecutors argued that letting Hussain be seen because the central determine within the fraud had left Lynch, the chief govt, free to personally train management “with out making a paper path” again to himself. They sought to depict him as a domineering and controlling boss who aggressively attacked critics.
Testifying throughout the trial, Lynch claimed he had left detailed accounting and contract issues to others on the firm and his personal consideration was targeted on technical and advertising points, leaving him unaware of any fraud.
Lynch, who accomplished a doctorate at Cambridge, rose to turn out to be one of many nice and the nice of the UK’s tech trade, serving on a science group that suggested the UK prime minister and on committees on the Royal Society. He was awarded an OBE for companies to enterprise in 2006 and in 2012 based enterprise capital agency Invoke Capital, whose investments embody the cyber safety firm Darktrace.
