Former Autonomy CEO Indicted on Wire Fraud Charges Related to Sale to HP
Autonomy's former CEO and vice president of finance have been indicted on wire fraud charges and allegations they conspired to inflate the company's performance before its 2011 sale to HP.
November 29, 2018 at 10:59 PM
3 minute read
The Phillip Burton federal building in San Francisco. Credit: Jason Doiy/ The Recorder
A federal grand jury has indicted the former chief executive officer of Autonomy Corp. on wire charges related to the software company's $11 billion sale to Hewlett-Packard in 2011.
The indictment, handed down Thursday, charges Autonomy's former CEO Michael Richard Lynch with conspiracy to commit wire fraud and multiple counts of wire fraud.
Lynch allegedly engaged in a scheme to defraud Palo Alto-based HP and other sellers of its securities by fraudulently inflating Autonomy's financial returns. HP announced an $8.8 billion write-down of Autonomy in 2012, claiming misinterpretations pre-merger.
In an email statement, Mike Lynch's attorneys, Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson, called the indictment a “travesty of justice” and the case “unsupportable.”
“It targets a British citizen with rehashed allegations about a British company regarding events that occurred in Britain a decade ago. It has no place in a U.S. court,” they said. “The claims amount to a business dispute over the application of U.K. accounting standards, which is the subject of a civil case with HP in the courts of England, where it belongs.”
Assistant U.S. Attorneys Robert S. Leach, Adam A. Reeves, and William Frentzen will prosecute the case.
The U.K.-based company's former vice president of finance Stephen Keith Chamberlain also was indicted on the same charges Thursday. Autonomy's former chief financial officer, Sushovan Hussain, was found guilty of inflating the company's returns in April 2018.
No federal court appearance has been scheduled for either defendant. Lynch and Chamberlain each face a maximum of 20 years in prison and a fine of $250,000 plus restitution per charge.
A spokesman for Hewlett Packard Enterprise, the software portion of the since-split HP, said in an email Thursday that the company was “gratified that justice prevailed and that Mr. Hussain was held accountable for his criminal actions when he was convicted in April of this year.”
“HPE is now pleased to learn that Dr. Lynch and Mr. Chamberlain have also been criminally charged in this matter by a federal Grand Jury. HPE believes that the facts uncovered during the course of this matter will further demonstrate the harm that was caused by Dr. Lynch, Mr. Chamberlain, Mr. Hussain and others to HP and looks forward to seeing justice served once again.”
Read the indictment below:
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