Former Autonomy CEO Mike Lynch issued a statement Thursday following his acquittal of criminal charges, ending a 13-year legal battle with Hewlett-Packard that became one of Silicon Valley's biggest fraud cases. He was accused of falsely inflating revenues at the British startup ahead of Autonomy's $11 billion sale to HP in 2011.
Commenting on the acquittal, Lynch (pictured above, left, when appearing on JS Disrupt) said in his statement: “I am delighted with today's verdict and am grateful to the jury for their attention to the facts of the past ten weeks . My deepest thanks go to my legal team for their tireless work on my behalf. I look forward to returning to the UK and returning to what I love most: my family and innovating in my field.”
After a 12-week trial, the entrepreneur was acquitted of 15 fraud and conspiracy charges brought against him in connection with the 2011 takeover.
The victory for Lynch is notable in light of the fact that in the US in fiscal year 2022, only 0.4% of federal criminal cases resulted in trial and acquittal, according to the Pew Research Center, and only 12% of all prosecutions in the US field of electronic fraud. resulted in acquittal.
Christopher Morvillo and Brian Heberlig, general counsel for Lynch, added in a statement: “We are pleased with the jury's verdict, which reflects a resounding rejection of the government's profound overreach in this case. The evidence presented at the trial conclusively proved that Mike Lynch is innocent. This verdict closes the book on a brutal, thirteen-year effort to pin HP's well-documented incompetence on Dr. Lynch. Fortunately, the truth has finally prevailed. We thank Dr. Lynch for his trust during this ordeal and hope that he can now return to England to resume his life and continue to innovate.”
Lynch, 58, was previously extradited to the US and was placed under house arrest and 24-hour supervision ahead of the trial. He has long maintained that he was made a scapegoat by HP, claiming it bungled the Autonomy acquisition and later mismanaged the company's software assets.
Lynch made £500 million from the sale of Autonomy to HP. But just a year later, HP wrote down its investment by $8.8 billion, saying that $5 billion of that writedown was due to practices by Autonomy's previous management team that inflated Autonomy's value and misled potential buyers into believing that the company was much more valuable.
Prosecutors accused Lynch and Stephen Chamberlain, Autonomy's former vice president of finance, of illegally inflating revenues ahead of the acquisition and hiding high-margin software revenue in unprofitable hardware sales.
At trial, Lynch successfully argued that he did not deal with accounting and contract matters, but instead focused on technical and marketing issues.
Although the American jury unsuccessfully argued that the case should be heard in Britain, leading to his extradition, the American jury acquitted Lynch on all counts, along with Chamberlain, who was also on trial.
The U.S. attorney's office in San Francisco said: “We acknowledge and respect the verdict. We would like to thank the jury for its attention to the evidence presented by the government in this case.”
Autonomy's sale to HP was seen as vindication for Britain's booming tech scene, and the platform's ability to query unstructured databases was seen at the time as a way for HP to regain its flat-lining hardware business to build.
Lynch co-founded Autonomy in 1996 from a specialist software research group called Cambridge Neurodynamics.
Lynch was awarded an OBE for services to business in 2006 and became an adviser to the British government. He sat on the boards of the BBC and the British Library, founded Invoke Capital VC and invested in pioneering cyber security company Darktrace.
