Mike Lynch, formerly a prominent tech entrepreneur in the UK, is poised to stand trial in San Francisco on Monday, marking a significant juncture in a legal saga that spans over a decade and involves what US prosecutors have labeled as “the largest fraud in the history” of Silicon Valley.
Lynch, who orchestrated the sale of his software company Autonomy to Hewlett-Packard for $11.7 billion in 2011, stands accused of falsifying Autonomy’s accounts in the two years leading up to the acquisition. After a five-year legal battle, Lynch was extradited from the UK last year to face charges in the United States.
Accompanied by Stephen Chamberlain, Autonomy’s former vice president of finance, Lynch faces 16 counts of wire and securities fraud, each carrying sentences of up to 20 years. These charges mirror those that resulted in a five-year prison term for former Autonomy chief financial officer Sushovan Hussain.
However, Lynch encountered setbacks during pre-trial proceedings as some of the defense evidence he intended to present was disallowed by Judge Charles Breyer, who will preside over the anticipated three-month jury trial.
The acquisition of Autonomy’s data analysis software was pivotal for Hewlett-Packard as it sought to rejuvenate itself around software offerings.
Yet, a year post-acquisition, Meg Whitman, then HP’s CEO, accused Autonomy’s former management of accounting irregularities, resulting in a $5 billion write-off. Whitman subsequently abandoned efforts to reshape HP, leading to the company’s breakup.
Lynch aimed to redirect blame towards Whitman, asserting that he was being scapegoated for her alleged mismanagement of Autonomy. Notable figures in Silicon Valley, including former eBay CEO and current US ambassador to Kenya Meg Whitman, and Frank Quattrone, a prominent investment banker, could potentially testify in the trial.
Despite Lynch’s efforts, Judge Breyer limited the admissibility of evidence related to the post-acquisition period, hindering Lynch’s attempt to shift the focus onto HP’s actions.
The prosecution alleges that Lynch and Chamberlain inflated Autonomy’s revenues through various deceptive practices, including backdating sales and misrepresenting low-margin hardware sales as software deals.
Key witnesses closely associated with Autonomy, such as Christopher Egan and Joel Scott, are expected to testify, providing insights into Lynch’s purported involvement in fraudulent activities.
As Lynch prepares to defend himself, his legal team faces significant challenges in presenting their case amidst restrictions on evidence and witness testimonies. The trial is anticipated to shed further light on one of Silicon Valley’s most notable legal battles in recent years.
