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British tech founder Mike Lynch committed fraud, US prosecutor says
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British tech founder Mike Lynch committed fraud, US prosecutor says
Jun 3, 2024 11:25 AM

SAN FRANCISCO, June 3 (Reuters) -

A U.S. prosecutor told jurors on Monday there was no

reasonable doubt that British tech pioneer Mike Lynch directed

fraud at software company Autonomy before he sold it for $11

billion to Hewlett-Packard ( HPE ), as Lynch's criminal trial neared its

end.

The 2011 deal was one of the biggest British tech deals at

the time, but quickly went sour. HP wrote down Autonomy's value

by $8.8 billion within a year of the acquisition.

Assistant U.S. Attorney Robert Leach told jurors on Monday

they should have no reasonable doubt there was fraud at

Autonomy, and that Lynch directed it.

Lynch and former Autonomy finance executive Stephen

Chamberlain face charges of fraud and conspiracy for allegedly

scheming to inflate the company's revenue starting in 2009,

partly to entice a buyer.

Lynch's defense team scored a win last week when U.S.

District Judge Charles Breyer threw out one count of securities

fraud as not supported by the evidence. Lynch still faces one

count of conspiracy and 14 counts of wire fraud.

The Cambridge University-educated entrepreneur took the

stand in his own defense at the trial, denying wrongdoing and

telling jurors that HP botched the two companies' integration.

Prosecutors say the pair padded Autonomy's finances in

several ways, including back-dated agreements and "round-trip"

deals that fronted cash to customers through fake contracts.

At the trial, which began in mid-March, jurors have 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's legal team has argued that HP was so eager to

acquire Autonomy ahead of potential competitors that it rushed

through due diligence before the sale.

On the stand, Lynch said he had been focused on tech issues,

and entrusted money matters and the accounting decisions at

issue to Sushovan Hussain, Autonomy's then-chief financial

officer.

Hussain was separately convicted in 2018 at a trial in the

same court on charges of conspiracy, wire fraud and securities

fraud related to the deal with HP. He was released from U.S.

prison in January after serving a five-year sentence.

Lynch was one of the UK's leading tech entrepreneurs,

drawing comparisons to Apple ( AAPL ) cofounder Steve Jobs and

Microsoft ( MSFT ) cofounder Bill Gates.

The Autonomy acquisition was meant to fuel HP's software

business. Instead, it spawned a series of bitter and expensive

legal battles.

HP largely won a civil lawsuit against Lynch and Hussain in

London in 2022, though damages have not yet been decided. The

company is seeking $4 billion.

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