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Mike Lynch, once one of the UK’s leading tech entrepreneurs, was acquitted of criminal charges by a jury in San Francisco on Thursday, ending a 12-year legal saga stemming from one of Silicon’s biggest fraud cases Valley.
The former Autonomy chief executive was accused of falsely inflating revenue at the UK software company before its $11 billion sale to Hewlett-Packard in 2011. The ruling is a moment of vindication for Lynch after a long battle which saw him extradited to the US and placed under 24-hour house arrest before the trial began.
Lynch, 58, has long claimed he was used as a scapegoat by HP for its botched acquisition and subsequent mismanagement of Autonomy. He argued unsuccessfully that any criminal charges should be heard in the UK. After a two-and-a-half-month trial, the jury, which began deliberating Tuesday afternoon, found him not guilty of all charges, along with Stephen Chamberlain, Autonomy’s former vice president of finance, who was also on trial.
Prosecutors accused Lynch and Chamberlain of illegally inflating revenue in the two years before the buyout, kicking back some of Autonomy’s contracts, using “round-trip” deals to compensate customers for purchases from Autonomy and hiding the fact that some of its high-margin programs were actually revenue from unprofitable equipment sales.
They faced 14 counts of wire fraud and one count of conspiracy. Another charge, for securities fraud, was thrown out by the judge near the end of the trial.
A spokesman for the US attorney’s office in San Francisco said in a statement: “We accept and respect the decision. We would like to thank the jury for their attention to the evidence that the government presented in this case.”
The sale of Autonomy was a high point for the UK tech scene at a time when the ‘Silicon Fen’ region around Cambridge, where it was based, was gaining prominence. Autonomy’s software, used to sort information not stored in structured databases, was seen as a critical piece of technology for large companies and governments, making it central to HP’s efforts to rebuild its business. its difficult computer hardware about software.
However, the US company reduced its investment by $8.8 billion just a year later, blaming the $5 billion hit on what it claimed was Autonomy’s fraudulent revenue growth in the years before the deal. A successor company, HPE, largely prevailed in a civil suit against Lynch in the UK in 2022 and is seeking $4 billion in damages.
Autonomy’s former chief financial officer, Sushovan Hussain, pleaded guilty to fraud on similar charges and was released in January after serving a five-year sentence in the US. Prosecutors argued that allowing Hussain to be seen as the central figure in the fraud had left Lynch, the chief executive, free to personally exercise control “without creating a paper trail” behind him. They sought to portray him as a domineering and controlling boss who aggressively attacked critics.
Testifying during the trial, Lynch claimed that he had left detailed accounting and contract matters to others in the company and his attention was focused on technical and marketing matters, leaving him unaware of any fraud.
Lynch, who completed a PhD at Cambridge, became one of the biggest and best of the UK technology industry, serving on a scientific panel advising the UK prime minister and on committees at the Royal Society. He was awarded an OBE for services to enterprise in 2006 and in 2012 founded venture capital firm Invoke Capital, whose investments include cyber security company Darktrace.