One-time British tech titan Mike Lynch acquitted of fraud in $11 billion U.S. deal with Hewlett Packard

San Francisco – Mike Lynch, once hailed as Britain’s technology king, was cleared of charges that he orchestrated a fraud and conspiracy that led to an $11 billion deal that turned into a costly albatross for pioneer Hewlett Packard, in Silicon Valley.

The not guilty verdicts reached Thursday by a federal court jury in San Francisco followed an 11-week criminal trial that delved into the story of HP’s 2011 acquisition of Autonomy, an enterprise software company that Lynch founded. and then oversaw as CEO in Great Britain. HP initially hailed the purchase as a major coup that would propel the Palo Alto, Calif., company down a promising new path, but quickly regretted it under then-CEO Meg Whitman.

The jury acquitted Lynch of all 15 criminal charges he faced. Near the end of the trial, U.S. District Judge Charles Breyer dismissed a securities fraud charge included in the U.S. Department of Justice’s case against him in a charge dating back to 2018. It took years to extradite Lynch from the U.K. and then more legal disputes before the trial finally began in mid-March.

Lynch, 58, was released on $100 million bail.

Being accused of a massive fraud represented a dramatic turnaround in fortunes for a businessman once described as Britain’s Bill Gates – a title he seemed to live up to when he negotiated the sale of Autonomy, which netted him more than $800 million. in unexpected profits.

The acquittal vindicates Lynch, who spent years vehemently denying he did anything wrong while painting HP as a technological disaster.

It’s yet another setback for HP, which spent years blaming Lynch for cheating the company out of a deal that deepened its problems and tarnished a legacy that dates back to the company’s creation in 1939 in a Silicon Valley garage.

BLoomberg reported that Lynch “hugged his lawyer and wiped his eyes after the verdict was read, while some people in the courtroom audibly cried.”

In a statement, Lynch said he was elated with the verdict and thanked the jury for looking into the facts of the complex case.

“I’m looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field,” said Lynch.

Another former Autonomy finance executive, Stephen Chamberlain, faced fraud charges alongside Lynch during the complex trial. The same jury also acquitted Chamberlain.

Among other things, they were accused of inflating Autonomy’s revenues.

A Justice Department spokesman, Abraham Simmons, told Reuters news agency: “We recognize and respect the verdict.”

After prosecutors called more than 30 witnesses to the stand to help make their case, Lynch testified in his own defense over several days last month and occasionally spoke directly to jurors while explaining several variations of British phrasing.

Like his own lawyers, Lynch maintained that he did nothing wrong and argued that Whitman unfairly made him and Autonomy a scapegoat for HP’s mismanagement and deteriorating financial situation.

Whitman, who became CEO of HP after an unsuccessful campaign to become governor of California in 2010, ended up recognizing $8.8 billion in losses in the Autonomy deal and ended up firing Lynch in 2012 while accusing him of cooking the books. It also laid off thousands of workers as HP’s fortunes declined and ended up splitting the company in two to separate its personal computer and printer operations from products and services sold to other companies.

Although Whitman was not called to testify, the trial investigated HP’s downfall under his direction. Another former HP CEO, Leo Apotheker, who negotiated the Autonomy deal, was called to the stand by federal prosecutors to outline Lynch’s alleged misconduct.

Apotheker initially saw Autonomy as a key piece of his plan to lessen HP’s reliance on selling PCs and printers during the advent of the smartphone. Evidence presented at trial indicated that HP internally valued Autonomy at as much as $46 billion, largely because of its software that helped other companies quickly find valuable information hidden in emails and other digital documents.

While federal prosecutors portrayed Lynch as a sneaky, iron-fisted boss during his 16-year reign as CEO of Autonomy, his lawyers cast him as the prototypical tech nerd who liked to eat cold pizza late at night while discussing ideas that could turn into gold.