Lawyers for British tech founder Mike Lynch demand acquittal in US fraud trial

By Jody Godoy and Abhirup Roy

SAN FRANCISCO (Reuters) – Lawyers for Mike Lynch portrayed the British technology pioneer as a savvy entrepreneur on Monday, while prosecutors in a San Francisco court called him a money-hungry fraudster. Jurors will soon examine allegations that Lynch defrauded Hewlett-Packard in its $11 billion acquisition of his software company.

The 2011 deal was one of the UK's biggest tech deals at the time, but it quickly went awry. HP wrote down Autonomy's value by $8.8 billion within a year of the acquisition.

Assistant U.S. Attorney Robert Leach told jurors in his closing argument that there could be no reasonable doubt that fraud had occurred at Autonomy and that Lynch had ordered it.

The federal prosecutor urged jurors to follow the money line, saying Lynch made £500 million ($640 million) from the HP deal.

“Dr. Lynch had 500 million reasons to defraud HP. That says a lot about who was in charge and who benefited,” Leach said.

Lynch and Stephen Chamberlain, a former financial manager at Autonomy, are charged with fraud and conspiracy. They are accused of trying to inflate the company's sales starting in 2009 – in part to attract a buyer.

The Cambridge University-educated entrepreneur testified in his own defense at the trial, denying any wrongdoing and telling the jury that HP had botched the integration of the two companies.

Lynch's attorney Brian Heberlig told jurors on Monday that the testimony was devastating to the prosecution's case.

“It was more than reasonable doubt. It was the truth,” he said as jurors viewed a large photo of Lynch superimposed with descriptions of the tech founder, including “smart” and “focused on the future.”

Lynch's defense team scored a victory last week when U.S. District Judge Charles Breyer dismissed one count of securities fraud because it was not supported by the evidence. Lynch still faces one count of conspiracy and 14 counts of wire fraud.

Prosecutors accuse the two of inflating Autonomy's finances in a variety of ways, including through backdated agreements and “round-trip” deals in which customers were advanced cash through fictitious contracts.

At the trial, which began in mid-March, jurors heard from more than 30 government witnesses, including Leo Apotheker, the former CEO of HP who was fired a few weeks after the Autonomy deal was announced.

Lynch's legal team argues that HP was so eager to acquire Autonomy before potential competitors that it conducted a rushed due diligence review before the sale.

On the witness stand, Lynch said he focused on technical issues and entrusted the financial matters and accounting decisions in question to Sushovan Hussain, then-CFO of Autonomy.

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Hussain was convicted in a separate trial in the same court in 2018 of conspiracy, wire fraud and securities fraud related to the HP deal. He was released from U.S. prison in January after serving a five-year sentence.

Lynch was one of Britain's leading technology entrepreneurs and was compared to Apple co-founder Steve Jobs and Microsoft co-founder Bill Gates.

The acquisition of Autonomy was supposed to boost HP's software business, but instead it triggered a series of bitter and costly legal battles.

HP largely won a civil lawsuit against Lynch and Hussain in London in 2022, but damages have not yet been decided. The company is demanding $4 billion.

Closing arguments in the case are expected to conclude Tuesday before the jury begins deliberations.

(This story has been resubmitted to remove the word “lawyers” from the headline.)

(Reporting by Jody Godoy in New York and Abhirup Roy in San Francisco; Editing by Rod Nickel, Leslie Adler and David Gregorio)