Prosecutors Say Lynch Behind Autonomy Fraud
Federal prosecutors argue former Autonomy chief Mike Lynch responsible for fraud, as case over disastrous HP acquisition nears end
Prosecutors portrayed former Autonomy chief executive Mike Lynch as directly responsible for alleged fraud at the company, while his own lawyers portrayed Lynch as “focused on the future” in closing arguments on Monday related to HP’s $11 billion (£8.6bn) acquisition of the firm in October 2011.
HP soon wrote down the value of the acquisition by $8.8bn and has pursued former Autonomy executives in a series of lengthy and expensive lawsuits.
Assistant US Attorney Robert Leach said jurors should have no reasonable doubt that fraud took place at Autonomy and that Lynch was behind it, arguing that Lynch’s £500m profit from the deal showed he was “in charge”.
“Dr. Lynch had 500 million reasons to defraud HP. It tells you volumes about who was in charge and who benefited from this,” Leach told the San Francisco court.
‘CEO doesn’t do those things’
Lynch and former Autonomy finance executive Stephen Chamberlain are facing charges of fraud and conspiracy for allegedly trying to inflate the company’s revenues beginning in 2009 partly in order to lure a buyer.
The former chief unusually testified on his own behalf last week, telling the jury he was not personally involved in many aspects of the company’s financial operations.
“The CEO doesn’t do those things, you don’t do the accounting, you don’t do the customer support… You have a department that does [those things] and you set a culture for what you want them to do,” he said, adding that he did not understand certain spreadsheets Autonomy executives prepared about its financial performance.
Lynch’s lawyer Brian Heberlig told jurors the testimony should sway them in favour of a not-guilty verdict.
“It was more than reasonable doubt. It was truth,” he said, displaying a large photo of Lynch overlaid with descriptions of him as “smart” and “focused on the future”, Reuters reported.
Fraud charges
The defence team won a victory last week when US District Judge Charles Breyer threw out one count of securities fraud, saying it was not supported by evidence.
Lynch faces one count of conspiracy and 14 counts of wire fraud in the trial, where jury deliberations are expected to begin this week.
His legal team has argued HP rushed through due diligence on the acqusition and as a result overpaid, while Lynch argued he left financial matters to former chief financial officer Shushovan Hussain.
Hussain was separately convicted in 2018 in the same court of conspiracy, wire fraud and securities fraud and was released in January after serving a five-year sentence.
HP won a civil suit against Lynch and Hussain in the UK in 2022 in which the company is seeking $4bn.
