How did he clear his name? Inside the process with tech titan Mike Lynch

According to prosecutors, Lynch walked away with $516 million in ill-gotten gains, and for that he argued the businessman should be convicted of 15 counts of fraud — one count of conspiracy to commit fraud and 14 individual charges in the service. that scheme.

A guilty verdict would send him to prison for most of the rest of his natural life. “Dr. Lynch had over 500 million reasons to lie to HP,” the prosecutor told jurors. “In our line of work, the old adage is: follow the money. And that’s easy in this case. The vast majority of that goes to Dr. Lynch. He had 500 million reasons to do it.”

Three days later, a jury found Lynch not guilty on all counts. After being extradited and living under house arrest for more than a year, fitted with an ankle monitor and 24-hour surveillance by a security force he was forced to pay for, Lynch was a free man.

He wiped the tears from his eyes. His wife, Angela Bacares, who was sitting in her usual place in the right corner of the front pew in the gallery, rushed to hug her husband. His ten-year campaign to prove his innocence was over. He could go home.

To say Lynch beat the odds is an understatement. Less than half of one percent of defendants in federal criminal cases are acquitted. Sushovan Hussain, Autonomy’s former CFO, was convicted in a separate case for his role in the alleged plot.

Hussain spent five years in federal prison before being released in January. He has since returned to his home in Britain. In 2022, a High Court judge found that Lynch had defrauded HPE, as it is now known, by inflating the value of Autonomy. The US tech giant had asked for more than $4 billion in damages, although the judge in the case indicated that any amount Lynch would have to pay would be much lower.

How did Lynch, a former Chipping Norton adviser to Lord Cameron when he was prime minister, an OBE recipient for services to business and a titan of the tech scene once seen as Britain’s answer to Bill Gates, win the argument?

It’s hard to predict how jury trials will turn out when 12 strangers come together with the mandate to make a unanimous decision that will change the course of a defendant’s life. The complicated (and boring) nature of the alleged crime and the way the government chose to prosecute it also helped. So is Lynch’s defense, which hasn’t wavered in over a decade. He has always denied all the allegations.

In his narrative, he was the scapegoat for HP’s incompetence. HP was a dying giant known for selling printers. It was desperate to transform itself into a software powerhouse. In Autonomy, which specialized in data processing for companies, she found her ideal target.

HP offered $11.7 billion for the company in August 2011, a 60 percent premium, double the market average—too rich to pass up. “That would be like trying to stop a herd of elephants,” Lynch told the court. But the board fired Lé Apotheker, HP’s CEO and architect of the deal, before the takeover closed. He was replaced by Meg Whitman, and the former eBay boss botched the integration, according to Lynch. Within a year, she publicly accused Autonomy’s boss of masterminding a fraud that led to HP paying $5 billion more than it should have, setting off his 12-year legal odyssey.

Part of the problem for the Justice Department lawyers was that their story—Lynch was a fraud—had to be told in a very complicated way. They produced thousands of documents: jargon-filled emails, financial reports and spreadsheets where individual cells were subject to lengthy interrogation. Their goal was to show how Lynch used “every accounting trick in the book” to artificially inflate Autonomy’s numbers.

And yet, throughout the trial, the government often appeared to be exaggerating and overlaying the financial fraud story on a sea of ​​spreadsheets. Jurors often seemed glassy-eyed. One was dismissed because he repeatedly fell asleep. Critically, the burden rests solely on the government to prove that Lynch orchestrated the “biggest fraud” in tech history. They were trying to land a knockout punch.

Lynch’s lawyers had a lower bar. It was enough to sow reasonable doubt. Lynch’s team painted him as a visionary CEO who either didn’t get involved or didn’t care about the dirty work of closing deals and making sure the numbers were right.

“You cannot infer that Mike Lynch is guilty of these crimes simply because he was the CEO of Autonomy,” argued Brian Heberlig, Lynch’s attorney. “You can’t condemn because you think the CEO should have known about everything that was going on there. That’s not the law.”

If anything untoward happened, they added, it was inconsequential, not on Lynch’s radar, or both. The finer details, Lynch said, fell to Hussain. “They say the trees can see the wood.” Mr. Hussain liked to look at the bark on the trees,” Lynch said. “He was a very detailed person.

With Hussein in mind, however, they had to tread carefully. Justice Charles Breyer, the brother of former US Supreme Court Justice Stephen Breyer, barred either side from telling jurors that Hussain had been convicted.

Lynch’s high-risk decision to testify in his own defense — a move few defendants make — also paid off. He spoke about his upbringing in East London, his early love of computers and starting Autonomy. He rhapsodized about his farm and the robustness of medieval pig breeds, which the judge quickly stopped. “I think it’s a good idea to be a little more focused,” admonished Lynch’s team.

Lynch was the last witness to be called. After weeks of being painted as a pantomime villain, the gambit humanized him. Heberlig also criticized the government for not taking more of its opportunity to question him directly about many of the most damning facts on which it built its case.

“The magic moment of this trial happened last Tuesday at 3:00 p.m.,” he said in his closing speech. “That’s when [we] handed Mike over to the prosecutor for cross-examination. This is the moment prosecutors live for. Cross-examination is the ultimate crucible. It is a form of combat. That was when the prosecutor went straight for the jugular with the best evidence he had to prove that Mike Lynch was guilty. What happened? You witnessed it. He looked through the chronology of the documents without question. He added: “It takes an exponential leap that is not justified by the evidence to conclude that Mike committed fraud.”

The jury clearly agreed.

As the tech world digested the outcome of the trial, Hussain welcomed the verdict. He told The Sunday Times: “I am extremely delighted that Mike and Steve have been acquitted of all charges and that they have been fully vindicated by the American justice system. The world now finally knows the truth that there was no conspiracy in Autonomy.

“It’s unfortunate that the lies and untruths told over the past 12 years have gotten the better of me, but at least today the mockery hasn’t gotten any worse.”

Lynch’s acquittal leaves many questions unanswered. What effect, if any, will it have on the Supreme Court’s decision on the $4 billion that HP sought. Lynch is rich – he and Bacares share a fortune of £500m according to The Sunday Times Rich List – but he’s not that rich.

In a statement last week, Lynch said he was looking forward to “returning to the UK and getting back to what I love most: my family and innovating in my industry”.

One wonders what his next venture will be. In his testimony, Lynch compared Autonomy to a record label. “We liked to try things out. We did experiments where for every nine failures we get a success,” he explained. “It’s a bit like being a record producer, you only have one hit. It’s okay to fail a lot.”

Thirteen years ago, he made a bet on what seemed like a sure thing and it derailed his life. You can’t blame him for retreating to his farm rather than re-starting his business. But that doesn’t seem likely.

Additional reporting: Laith Al-Khalaf