By Abhirup Roy and Jody Godoy
(Reuters) – Autonomy founder Mike Lynch was acquitted of fraud by a San Francisco jury on Thursday, a major victory for the entrepreneur dogged by legal troubles since the disastrous sale of his company to Hewlett-Packard (HP) for $11 billion in 2011.
Lynch representatives and U.S. prosecutors said Lynch was acquitted of all 15 charges: one count of conspiracy and 14 counts of bank fraud, each related to specific transactions or communications.
Former Autonomy chief financial officer Stephen Chamberlain, who faced the same charges alongside Lynch, was also acquitted on all counts, Lynch’s representative said.
The trial, in which prosecutors said Lynch and Chamberlain plotted to inflate Autonomy’s revenues, was the latest chapter in a legal saga arising from the failed deal.
The sale of Autonomy was one of the largest British technology deals at the time, but it quickly went wrong: HP wrote down the value of Autonomy by $8.8 billion within a year.
During the three-month trial, jurors heard from more than 30 government witnesses, including Leo Apotheker, the former HP CEO who was fired weeks after the Autonomy deal was announced.
Lynch also took the stand in his own defense during the trial, denying wrongdoing and telling jurors that HP botched the integration of the two companies. Prosecutors said Lynch and Chamberlain padded Autonomy’s finances in a variety of ways, including outdated agreements and “return” deals that provided cash to customers through bogus contracts. Lynch’s legal team argued at trial that HP was so eager to acquire Autonomy before potential competitors that it quickly conducted due diligence before the sale. On the stand, the Cambridge University-educated entrepreneur said he had focused on technical issues and had entrusted finance and accounting decisions in question to Sushovan Hussain, Autonomy’s then chief financial officer. Hussain was convicted separately in a 2018 trial in the same court on charges related to the HP deal. He was released from US prison in January after serving a five-year sentence. Lynch was one of Britain’s leading technology entrepreneurs, drawing comparisons to Apple co-founder Steve Jobs and Microsoft co-founder Bill Gates.
Lynch turned groundbreaking research in Cambridge into the foundation of Autonomy, which grew into Britain’s largest software company and joined the blue-chip FTSE 100 index.
He was praised by academics and scientists and asked to advise the British government on technology and innovation. The Autonomy acquisition was intended to boost HP’s software business. Instead, it led to a series of bitter and expensive legal battles. HP largely won a civil case against Lynch and Hussain in London in 2022, although no ruling has yet been made on damages. The company is demanding $4 billion.
(Reporting by Jody Godoy in New York and Abhirup Roy in San Francisco; Editing by Rod Nickel)
