Mike Lynch has denied fraud in a US court. Lynch is accused of orchestrating accounting irregularities at the startup he co-founded, Autonomy, shortly before its acquisition by Hewlett-Packard (HP) for $11bn. Lynch testified that he was not involved in any of the transactions the prosecution alleges took place at the company, which HP claims to have resulted in it losing $4bn in a separate civil suit.
“I think Autonomy was an extremely successful company,” Mike Lynch told prosecutors under oath, referring to the startup before its purchase by HP in 2012. “From a financial point of view, it was highly profitable.”
Mike Lynch falsely juiced Autonomy revenue, claim US prosecutors
Lynch was originally charged with 14 counts of conspiracy and fraud by US federal prosecutors in 2018, claiming that the UK tech founder had purposely inflated Autonomy’s revenues to boost its chances of being bought out by a larger firm. Prosecutors argue that Autonomy also falsely claimed to be a pure software company, instead engaging in “hidden, loss-making resales of hardware.”
Following a successful civil suit against Lynch by HP in 2022, the founder’s criminal trial began in March. Since then, prosecutors have called over 30 witnesses. Lynch told jurors in his opening remarks that the process had been “surreal,” referring back to his previous claim that he was largely involved in tech issues at Autonomy and left daily management of its financial side to others in the company. This includes Sushovan Hussain, Autonomy’s former CFO, who was sentenced to five years for fraud in 2019. “I’ve sat and watched a parade of witnesses that I’ve never met,” said Lynch, “and a series of transactions I had no involvement in, and not much else.”
Decline and fall of Autonomy
Born in London to Irish immigrants, Mike Lynch quickly forged a reputation as the UK’s entrepreneurial equivalent to Steve Jobs. The firm he co-founded in 1996, Autonomy, provided software capable of breaking down large corporate datasets. Two years later the startup was floated on the NASDAQ, before embarking on a series of multi-million dollar acquisitions of smaller rivals.
Shortly after its purchase by HP, however, Autonomy quickly unravelled. Lynch was fired by the firm’s new masters in 2012 for performance issues, with most of the original board having also abruptly left the once-promising startup. That same year, HP wrote Autonomy’s value down by $8.8bn, alleging accounting improprieties prior to the startup’s acquisition, and fired its own chief executive Léo Apotheke for overseeing the deal. Audit giant Deloitte was subsequently fined £15m by regulators for failing to spot these irregularities.
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