Former Autonomy CEO Mike Lynch issued a statement Thursday after being acquitted 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 the British startup’s revenue before selling Autonomy to HP for $11 billion in 2011.
Commenting on the acquittal, Lynch (pictured above, left, as he appeared at the TechCrunch Disrupt conference) said in a statement: “I am delighted with today’s verdict and grateful to the jury for the attention they have paid to the facts over the past ten weeks. My deepest thanks go to my legal team for working tirelessly on my behalf. I can’t wait to return to the UK and get back to what I love most: my family and innovation in my field.”
After a 12-week trial, the entrepreneur was cleared of 15 counts of fraud and conspiracy brought against him in connection with the 2011 takeover.
Lynch’s victory is notable in light of the incontrovertible fact that, based on the Pew Research Center, in the U.S. in fiscal 12 months 2022, only 0.4% of federal criminal cases resulted in trial and acquittal, and only 12% of all wire fraud prosecutions resulted in acquittal.
Christopher Morvillo and Brian Heberlig, general counsel for Lynch, added in a statement: “We are delighted with the jury’s verdict, which reflects a strong rejection of the government’s deep dive into this case. The evidence presented at trial conclusively established that Mike Lynch was innocent. This verdict closes the book on a relentless 13-year effort to pin HP’s well-documented ineptitude on Dr. Lynch. Fortunately, the truth finally won. We thank Dr. Lynch for his confidence in this ordeal and hope that he will now be able to return home to England to resume his life and continue his innovations.”
Lynch (58) was previously extradited to the United States and placed under house arrest and 24-hour supervision before his trial. He long maintained that HP made him a scapegoat, saying it botched its acquisition of Autonomy and later mismanaged the company’s software resources.
Lynch made £500m from selling Autonomy to HP. But just a 12 months later, HP reduced the value of its investment by $8.8 billion, claiming that $5 billion of the write-down was as a result of practices by Autonomy’s prior management team that inflated Autonomy’s value and misled potential buyers into believing that the company is much more worthwhile.
Prosecutors accused Lynch and Stephen Chamberlain, Autonomy’s former vice chairman of finance, of illegally inflating pre-acquisition revenues and hiding high-margin software revenues in unprofitable hardware sales.
During the trial, Lynch successfully argued that he was not concerned with accounting and contractual matters, as a substitute focusing on technical and marketing matters.
Although it was argued unsuccessfully that the case must be tried in the UK, resulting in his extradition, an American jury acquitted Lynch of all charges, along with Chamberlain, who was also tried.
The U.S. Attorney’s Office in San Francisco said: “We acknowledge and respect the verdict. We would love to thank the jury for taking note of the evidence presented by the government in this case.”
The sale of Autonomy to HP was seen as validation of the booming UK tech scene, and the platform’s ability to mine unstructured databases was then seen as a way for HP to rebuild its shaky hardware business.
Lynch co-founded Autonomy in 1996 from a research group specializing in software called Cambridge Neurodynamics.
Awarded an OBE for services to enterprise in 2006, Lynch became an adviser to the UK government, sat on the boards of the BBC and the British Library, founded Invoke Capital VC and invested in the groundbreaking cybersecurity company Darktrace.