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Every morning, at his home in San Francisco’s upscale Pacific Heights neighborhood, the man once referred to as Britain’s Bill Gates gets to work.
That man, Mike Lynch, checks in with his investment firm, Invoke Capital, about his recent performance. He talks to researchers in Cambridge, England, whom he personally funds, about ways artificial intelligence could be used to help people with hearing difficulties. He receives updates on the heritage of Red Poll cattle and other animals on his farm in Suffolk, eastern England.
Finally, Lynch, 58, turns to his most important task: defending himself against 16 criminal charges of conspiracy and fraud. If he is convicted, he will face up to 20 years behind bars.
The trial begins Monday in San Francisco, where federal prosecutors (who extradited Lynch from Britain in May and placed him under house arrest) accused the former tech mogul of defrauding Hewlett-Packard of billions when sold his software company, Autonomy, to HP for $11 billion in 2011.
In 2012, HP announced a Amortization of 8.8 billion dollars and attributed it to “serious accounting irregularities” at Autonomy. Stunned investors called it one of the worst acquisitions in history. Since then, Lynch has fought a series of complex and overlapping legal battles in the United States and Britain.
In 2022, a London judge in a civil case found Mr Lynch and Sushovan Hussain, Autonomy’s former finance chief, responsible for defrauding HP. The judge said the case was “one of the longest and most complex in English legal history”, with a trial lasting more than three months, the production of tens of thousands of documents and, in the end, a ruling that lasted longer. of three months. 1,000 pages.
Lynch disputes HP’s claims and plans to appeal the ruling. His lawyers called it “a case study in buyer’s remorse” and pointed the finger at HP executives for mismanagement of Autonomy. Hearings were held last month to decide on damages: HP asked for about $4 billion and Lynch argued that he owed nothing.
Lynch’s legal troubles also serve as a reminder of the decline of Hewlett-Packard, once a titan of the American technology industry. The former Silicon Valley giant has since split up and long been overshadowed by younger leviathans like Alphabet, Apple and Microsoft.
For his upcoming criminal trial, Lynch’s odds don’t look good. Judge Charles Breyer of the Northern District of California dismissed some of the evidence Lynch’s lawyers tried to present that they said showed HP mismanaged Autonomy after acquiring the company. Justice Breyer also oversaw Mr. Hussain’s trial, which was convicted in 2018 of charges similar to those Lynch now faces. Hussain was recently released from a federal prison in Pennsylvania.
Last year, Lynch lost an attempt to avoid extradition despite lobbying the British government, which had approved his transfer to the United States on the same day as the sentencing against him in the civil case brought by HP.
Last month, it sued the Serious Fraud Office, Britain’s securities regulator, over its handling of data requests by the U.S. government. The lawsuit, a last attempt to delay the criminal trial in the United States, it was solved earlier this month.
Lynch still has considerable resources to defend himself in the San Francisco courts. “Mike Lynch has faith that he will be vindicated when he finally has the opportunity to tell his story before a jury,” Reid Weingarten, one of several prominent white-collar defense attorneys representing Mr. Lynch in the case, said in a statement. USA. . “We look forward to this opportunity to tell Mike Lynch’s story and allow him to put this unfortunate chapter behind him.”
Since his extradition, Lynch has lived under 24-hour surveillance and court-ordered private security, a drastic fall for a man once considered one of Britain’s biggest tech success stories.
Born into a working-class family on the outskirts of London, he attended private school on a scholarship and graduated from Cambridge before founding Autonomy in 1996. The company helped clients analyze unstructured data to uncover hidden insights about their business.
By 2011, Autonomy had become one of Britain’s most prominent technology companies, with its headquarters in Cambridge sometimes called “Silicon Fen”.
“It certainly raised the profile of Cambridge technology,” said Tony Quested, editor of Business Weekly, a technology trade publication based in Cambridge. “There wasn’t much at the time.”
Lynch became a celebrity in British technology circles. She was a member of the Royal Society, one of the country’s leading scientific associations; advisor to David Cameron, the prime minister at the time; and was part of the BBC board of directors.
HP, then led by Léo Apotheker, former head of German software giant SAP, had the idea of buying Autonomy to transform itself from a legacy hardware supplier into a higher-margin software company. horsepower agreed to buy autonomy in mid-2011 for approximately 60 percent more than its market value.
Things went sour quickly.
Apotheker stepped down as CEO a month after the deal was announced, as investors and analysts rebelled against both the high price tag of the Autonomy acquisition and a plan to spin off HP’s personal computer division (which was born of another major acquisition, from Compaq.)
He was replaced by Meg Whitman, the former eBay boss who was on HP’s board of directors. Within HP, Autonomy’s star quickly faded amid rapidly declining sales. Lynch, who clashed with Whitman, was fired in May 2012.
Later that year, HP said it had been misled by Autonomy, misled by irregularities that included backdating contracts and using hardware sales to boost revenue, particularly at the end of a quarter. The multimillion-dollar write-off marked the beginning of Lynch’s legal problems, which will culminate this month in another long and complex trial.
Over the years, Lynch has denied the characterization that the company was plagued by fraud. He has blamed Whitman, now the US ambassador to Kenya, and other top executives who clashed with him over the disintegration of autonomy. His lawyers have argued in court papers that HP executives, for example, were aware of the hardware sales and had not raised them as an issue.
They have pointed to internal emails showing changing estimates of Autonomy’s value, which at one point put it at more than $11 billion. They also noted that accountants at EY, the global accounting and consulting firm formerly known as Ernst & Young, who worked for HP, had not believed that Autonomy’s acquisition price was inflated due to accounting irregularities.
US federal prosecutors argued in court papers that Lynch, long known as a tough boss, enjoyed being tough and maintaining control. (In a filing, government lawyers described an internal sales video at Autonomy in which he portrayed himself as a mafia boss, and noted that he had named conference rooms after villains from James Bond films). Witness statements have included Ms. Whitman and Catherine Lesjak, HP’s former chief financial officer.
Prosecutors have sought to present tens of thousands of pieces of evidence and a witness list of 44 people, and estimate the trial could last until the end of May.
Lynch’s freedom and legacy are at stake.
He has tried to foster a reputation as a public intellectual by giving interviews on the subject of technology, but has kept a low profile since his extradition. His last published article was in April, when he encouraged British policymakers to Embrace AI startups.
Autonomy is now part of the Canadian software company OpenText. Lynch’s investment firm, Invoke, has made crucial early investments in companies such as cybersecurity provider Darktrace.
But partnerships with Lynch can be complicated. In December, Darktrace shareholders rejected a board candidate proposed by Invoke. And in the company financial presentationsDarktrace has described “autonomy issues” as a risk “from both a legal and reputational perspective.”