British entrepreneur and founder of the IT company Autonomy Mike Lynch called on the US authorities to stop abusing the extradition mechanism in cases of alleged financial crimes, recalling that Washington "is not a global marshal of the corporate world," reports Bloomberg.
The businessman said this at Westminster Magistrates ' Court in London at the opening of the trial of his extradition to the United States.
Judge Michael Snow will decide whether Lynch can be extradited to the United States, where he is suspected of multibillion-dollar fraud in the sale of Autonomy to the US corporation Hewlett-Packard in 2011. According to the agency, the transaction amount was about $ 11 billion.
The extradition process has attracted considerable attention, including from members of the legal community, some of whom point out the imbalance in favor of the United States in the extradition treaty between the two countries, the agency notes.
Edward Grange, a partner at the Corker Binning law firm, told the Financial Times that if Lynch is successful in the extradition process, it will show that the British courts are " robust enough to withstand the continued over-reach of US jurisdiction."
Recall that in 2012, HP representatives said that the previous management of Autonomy, during the approval of the transaction, provided inflated information about the company's financial performance in order to mislead potential buyers and investors. According to the American corporation, because of this fraud, a year after the purchase, it had to write off part of Autonomy's assets for $ 8.8 billion.
In 2015, the UK's Major Fraud Office (SFO) announced that it had completed its own investigation into the transaction and passed the results on to US law enforcement agencies.
The British entrepreneur denies any wrongdoing on his part.
At the same time, along with Lynch, charges of fraud were brought against the former finance director of Autonomy and a British citizen Sushovan Hussain. In 2019, a U.S. court found him guilty on 16 counts and sentenced him to 60 months in prison and a $ 4 million fine.
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In the United States, the trial of Mike Lynch, the founder and former CEO of Autonomy, a software developer that made a lot of noise in the past, has ended. The businessman was acquitted of all charges. The businessman, who was previously extradited from the UK at the request of the US authorities, was accused of fraud and conspiracy in preparing a deal to sell the then very promising Autonomy to American HP. It is generally believed that this transaction pushed the tech giant to split.
"British Bill Gates" acquitted
The founder of the software company Autonomy Mike Lynch (Mike Lynch) was acquitted by a court in San Francisco (California, USA) as part of a fraud case in a transaction with Hewlett-Packard (HP). This was reported by the Reuters news agency.
The 58-year-old entrepreneur, who in the past was called "the British Bill Gates", thereby wanting to emphasize his contribution to the development of information technology, was found not guilty on all 15 counts. Lynch was charged: participation in collusion (one episode), fraud using electronic means of communication (14 episodes).
Stephen Chamberlain, former vice president of finance for Autonomy, who worked in conjunction with Lynch, whose case was considered in parallel, was also fully acquitted, representatives of the British entrepreneur told the agency.
"I'm thrilled with today's decision," Lynch said, " and I'm looking forward to returning to the UK and doing what I love most – working with my family and innovating in my field."
According to US law enforcement agencies, Lynch tricked HP into overpaying for Autonomy as part of a deal to acquire it that was closed back in 2011. A promising software developer cost HP $11 billion, and the overpayment was about 67%. The deal, at the time one of the largest for the UK technology market, subsequently triggered the separation of HP into two separate companies – HP Inc and HPE.
Abraham Simmons, a spokesman for the U.S. Attorney's office, said that the prosecution recognizes the verdict of the court and treats its decision with respect.
Arguments of the parties
During the trial, which lasted for three months, the jury listened to the testimony of more than 30 witnesses from the prosecution. Among them is Leo Apotheker, the former chief executive officer of HP (CEO), who lost his position just a few weeks after the announcement of the controversial deal with Autonomy.
Lynch, speaking in court, once again declared his complete innocence and blamed the company's management for the failed integration of Autonomy into HP.
According to the prosecution, Lynch and Chamberlain "inflated" operating indicators, including using contracts dated retroactively, as well as by reselling unused assets with repurchase at the same price.
According to Lynch's lawyers, HP management was in such a hurry to close the acquisition of Autonomy, ahead of potential competitors, that it ignored its thorough comprehensive analysis. The British entrepreneur also said that during the preparation of the deal, he personally focused on its technical aspects, and entrusted the solution of financial issues to Sushovan Hussain ,then CFO of Autonomy.
Losing in a British court and being extradited
In 2022, HPE, one of the "splinters" of the formerly unified Hewlett-Packard, won a civil suit against Hussein and Lynch in the UK. However, the objective extent of the damage caused by their actions has not yet been established. The American company insists on compensation in the amount of $4 billion.
However, the troubles of the top three managers did not end there. In May 2023, Lynch was extradited to the United States at the request of the North American law enforcement agencies. As previously reported by CNews, during the investigation, a court in San Francisco released the entrepreneur on bail of $100 million.
The CFO was the one to blame
Sushovan Hussain was convicted back in 2018 as part of a separate trial in a case related to a deal between HP and Autonomy.
A court in San Francisco found a British citizen guilty of criminal conspiracy, 14 counts of fraud using electronic means and securities fraud. The former financial director, according to the verdict, manipulated accounting statements in order to inflate Autonomy's revenue – by 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter and 12.4% in the second quarter of 2011. As a result, on paper, the company's revenues were $193 million higher than real ones.
In January 2024, Hussein was released from the correctional facility, where he served a five-year sentence imposed by the court.
How the purchase of Autonomy led to the split of HP
Autonomy was founded by Mike Lynch in 1996 and developed software for working with structured and unstructured data, including the so-called Big Data. The company's solutions are designed for data management, analysis, information retrieval, redundancy, etc. They were developed using the results of researchers from the University of Cambridge (Great Britain), Lynch's alma mater.
Lynch's work was highly appreciated by the scientific community, and the UK authorities expected to attract him to work as an adviser on technology and innovation.
In 2010, the company's turnover was $870 million, and net profit reached $216 million. The flagship product of Autonomy was considered to be the IDOL (Intelligent Data Operating Layer) middleware package, designed for processing unstructured data. The company's headquarters were located in Cambridge. The staff of Autonomy at that time numbered 1,9 thousand people.
HP expected that the purchase of Autonomy would spur the development of the company's software business, but in reality the deal turned into a series of legal battles that in every sense cost their participants dearly.
About a year after the deal closed, HP CEO Meg Whitman began complaining about the difficulty of scaling Autonomy and weak sales of the company's software.
In May 2012, Lynch and other Autonomy employees were told to exit, and in November, the company wrote off about $8.8 billion of Autonomy's assets. HP claimed that Autonomy's financial performance was inflated before the sale. Lynch also attributed the discrepancies to the transition from British accounting standards to American ones.
It is believed that the outcome of the deal with Autonomy played a decisive role in the split of HP into HP Inc.and HPE. Based on the division of HP into two separate business units. The new public company HP Inc inherited the business of manufacturing PCs and printing devices. HPE, in turn, focused on the development and production of enterprise IT systems.
The businessman said this at Westminster Magistrates ' Court in London at the opening of the trial of his extradition to the United States.
Judge Michael Snow will decide whether Lynch can be extradited to the United States, where he is suspected of multibillion-dollar fraud in the sale of Autonomy to the US corporation Hewlett-Packard in 2011. According to the agency, the transaction amount was about $ 11 billion.
The extradition process has attracted considerable attention, including from members of the legal community, some of whom point out the imbalance in favor of the United States in the extradition treaty between the two countries, the agency notes.
Edward Grange, a partner at the Corker Binning law firm, told the Financial Times that if Lynch is successful in the extradition process, it will show that the British courts are " robust enough to withstand the continued over-reach of US jurisdiction."
Recall that in 2012, HP representatives said that the previous management of Autonomy, during the approval of the transaction, provided inflated information about the company's financial performance in order to mislead potential buyers and investors. According to the American corporation, because of this fraud, a year after the purchase, it had to write off part of Autonomy's assets for $ 8.8 billion.
In 2015, the UK's Major Fraud Office (SFO) announced that it had completed its own investigation into the transaction and passed the results on to US law enforcement agencies.
The British entrepreneur denies any wrongdoing on his part.
At the same time, along with Lynch, charges of fraud were brought against the former finance director of Autonomy and a British citizen Sushovan Hussain. In 2019, a U.S. court found him guilty on 16 counts and sentenced him to 60 months in prison and a $ 4 million fine.
==========
In the United States, the trial of Mike Lynch, the founder and former CEO of Autonomy, a software developer that made a lot of noise in the past, has ended. The businessman was acquitted of all charges. The businessman, who was previously extradited from the UK at the request of the US authorities, was accused of fraud and conspiracy in preparing a deal to sell the then very promising Autonomy to American HP. It is generally believed that this transaction pushed the tech giant to split.
"British Bill Gates" acquitted
The founder of the software company Autonomy Mike Lynch (Mike Lynch) was acquitted by a court in San Francisco (California, USA) as part of a fraud case in a transaction with Hewlett-Packard (HP). This was reported by the Reuters news agency.
The 58-year-old entrepreneur, who in the past was called "the British Bill Gates", thereby wanting to emphasize his contribution to the development of information technology, was found not guilty on all 15 counts. Lynch was charged: participation in collusion (one episode), fraud using electronic means of communication (14 episodes).
Stephen Chamberlain, former vice president of finance for Autonomy, who worked in conjunction with Lynch, whose case was considered in parallel, was also fully acquitted, representatives of the British entrepreneur told the agency.
"I'm thrilled with today's decision," Lynch said, " and I'm looking forward to returning to the UK and doing what I love most – working with my family and innovating in my field."
According to US law enforcement agencies, Lynch tricked HP into overpaying for Autonomy as part of a deal to acquire it that was closed back in 2011. A promising software developer cost HP $11 billion, and the overpayment was about 67%. The deal, at the time one of the largest for the UK technology market, subsequently triggered the separation of HP into two separate companies – HP Inc and HPE.
Abraham Simmons, a spokesman for the U.S. Attorney's office, said that the prosecution recognizes the verdict of the court and treats its decision with respect.
Arguments of the parties
During the trial, which lasted for three months, the jury listened to the testimony of more than 30 witnesses from the prosecution. Among them is Leo Apotheker, the former chief executive officer of HP (CEO), who lost his position just a few weeks after the announcement of the controversial deal with Autonomy.
Lynch, speaking in court, once again declared his complete innocence and blamed the company's management for the failed integration of Autonomy into HP.
According to the prosecution, Lynch and Chamberlain "inflated" operating indicators, including using contracts dated retroactively, as well as by reselling unused assets with repurchase at the same price.
According to Lynch's lawyers, HP management was in such a hurry to close the acquisition of Autonomy, ahead of potential competitors, that it ignored its thorough comprehensive analysis. The British entrepreneur also said that during the preparation of the deal, he personally focused on its technical aspects, and entrusted the solution of financial issues to Sushovan Hussain ,then CFO of Autonomy.
Losing in a British court and being extradited
In 2022, HPE, one of the "splinters" of the formerly unified Hewlett-Packard, won a civil suit against Hussein and Lynch in the UK. However, the objective extent of the damage caused by their actions has not yet been established. The American company insists on compensation in the amount of $4 billion.
However, the troubles of the top three managers did not end there. In May 2023, Lynch was extradited to the United States at the request of the North American law enforcement agencies. As previously reported by CNews, during the investigation, a court in San Francisco released the entrepreneur on bail of $100 million.
The CFO was the one to blame
Sushovan Hussain was convicted back in 2018 as part of a separate trial in a case related to a deal between HP and Autonomy.
A court in San Francisco found a British citizen guilty of criminal conspiracy, 14 counts of fraud using electronic means and securities fraud. The former financial director, according to the verdict, manipulated accounting statements in order to inflate Autonomy's revenue – by 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter and 12.4% in the second quarter of 2011. As a result, on paper, the company's revenues were $193 million higher than real ones.
In January 2024, Hussein was released from the correctional facility, where he served a five-year sentence imposed by the court.
How the purchase of Autonomy led to the split of HP
Autonomy was founded by Mike Lynch in 1996 and developed software for working with structured and unstructured data, including the so-called Big Data. The company's solutions are designed for data management, analysis, information retrieval, redundancy, etc. They were developed using the results of researchers from the University of Cambridge (Great Britain), Lynch's alma mater.
Lynch's work was highly appreciated by the scientific community, and the UK authorities expected to attract him to work as an adviser on technology and innovation.
In 2010, the company's turnover was $870 million, and net profit reached $216 million. The flagship product of Autonomy was considered to be the IDOL (Intelligent Data Operating Layer) middleware package, designed for processing unstructured data. The company's headquarters were located in Cambridge. The staff of Autonomy at that time numbered 1,9 thousand people.
HP expected that the purchase of Autonomy would spur the development of the company's software business, but in reality the deal turned into a series of legal battles that in every sense cost their participants dearly.
About a year after the deal closed, HP CEO Meg Whitman began complaining about the difficulty of scaling Autonomy and weak sales of the company's software.
In May 2012, Lynch and other Autonomy employees were told to exit, and in November, the company wrote off about $8.8 billion of Autonomy's assets. HP claimed that Autonomy's financial performance was inflated before the sale. Lynch also attributed the discrepancies to the transition from British accounting standards to American ones.
It is believed that the outcome of the deal with Autonomy played a decisive role in the split of HP into HP Inc.and HPE. Based on the division of HP into two separate business units. The new public company HP Inc inherited the business of manufacturing PCs and printing devices. HPE, in turn, focused on the development and production of enterprise IT systems.
