Mike Lynch goes to Californian court over fraud allegations

Mike Lynch, the wealthy tech founder once hailed as Britain’s answer to Steve Jobs, will face a US jury in California on Monday at a trial over the accusation he defrauded Hewlett-Packard in the $11bn sale of his software company Autonomy.

Federal prosecutors in San Francisco accuse Autonomy co-founder Lynch and former finance executive Stephen Chamberlain of inflating the company’s revenue starting in 2009 — a scheme prosecutors say resulted in HP’s disastrous acquisition of the company in 2011.

Autonomy’s unravelling ranks among the worst corporate deals, leading to the firing of HP’s CEO and an $8.8bn writedown.

The implosion launched more than a decade of legal battles for Lynch.

HP substantially won a civil lawsuit against him and Sushovan Hussain, Autonomy’s former CFO, in London in 2022, and it is seeking $4bn in damages.

Hussain was separately convicted on US charges in 2018. Months later, prosecutors brought charges against Lynch and Chamberlain.

Lynch fought his extradition, but was ultimately brought to the US to face the charges after Britain’s High Court refused him permission to appeal in 2023.

US district judge Charles Breyer, who is overseeing the trial, granted Lynch bail secured by a $100m bond, but restricted him to a home in San Francisco under 24-hour guard.

Lynch’s attorney has said in court that his net worth is about $450m.

Prosecutors accuse Lynch and Chamberlain of padding Autonomy’s finances through backdated agreements and “round-trip” deals that fronted cash to customers through fake contracts. Part of the purpose was to entice buyers such as HP, prosecutors said.

At the trial scheduled to run into late May, jurors may hear from dozens of witnesses, including Leo Apotheker, the former HP CEO who was fired weeks after the Autonomy deal was announced.

Lynch’s attorneys have said in court that he is considering testifying in his own defence at the trial, where he faces 16 counts of fraud and conspiracy. Chamberlain faces 15 counts.

Both men are presumed innocent. The 12-person jury must reach a unanimous verdict to find either of them guilty.

Hussain was convicted on 16 counts at a jury trial before Breyer in 2018. He was released from prison in January after serving a five-year sentence.

In the civil lawsuit, a British judge ruled in January 2022 that Lynch had masterminded an elaborate fraud to inflate the value of Autonomy, meaning the Silicon Valley company substantially succeeded in its civil case.

Lynch had said HP did not know what it was doing with Autonomy, and was out of its depth in understanding his technology.

Reuters