The man once called Britain's Bill Gates goes to work every morning from his townhouse in San Francisco's fashionable Pacific Heights neighborhood.
That man, Mike Lynch, is checking in with his investment firm, Invoke Capital, on recent performance. He is speaking with privately funded researchers in Cambridge, UK, about how artificial intelligence can be used to help people with hearing loss. He receives updates on traditional Redpole cows and other livestock at his farm in Suffolk, east England.
Ultimately, Mr. Lynch, 58, turns his attention to his most important task: defending himself against 16 criminal charges of conspiracy and fraud. If convicted, he faces up to 20 years in prison.
The trial began Monday in San Francisco, where federal prosecutors, who extradited Lynch from Britain in May and placed him under house arrest, will accuse the former high-tech mogul of defrauding Hewlett-Packard of billions of dollars when it sold the software company HP. accused the mogul. Home Rule, $11 billion in 2011.
In 2012, HP announced an $8.8 billion writedown that it blamed on “material accounting irregularities” at Autonomy. Stunned investors called it one of the worst acquisitions in history. Mr Lynch has since fought a series of complex and overlapping legal battles in the US and UK.
In 2022, a judge in London found Lynch and Autonomy's former financial chief Sushobhan Hussain responsible for defrauding HP in a civil lawsuit. The judge said the case was “one of the longest and most complex in the history of British law”, with the trial lasting more than three months, tens of thousands of documents produced and the final verdict significantly different. He said it has been extended. 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 accused HP executives of mismanagement of Autonomy. A hearing was held last month to determine damages, with HP seeking about $4 billion, but Lynch insisted he owed nothing.
Mr. Lynch's legal woes are also a reminder of the decline of Hewlett-Packard, once a giant of the U.S. technology industry. The once Silicon Valley giant has since split and has long been overshadowed by younger leviathans like Alphabet, Apple and Microsoft.
Lynch's odds do not look good for his future criminal trial. Judge Charles Breyer of the Northern District of California rejected some of the evidence Lynch's lawyers tried to present that showed HP mismanaged Autonomy after acquiring the company. Judge Breyer also oversaw the trial of Mr. Hussain, who was convicted in 2018 of similar charges to Mr. Lynch. Mr. Hussein was recently released from a federal prison in Pennsylvania.
Despite lobbying the British government, which approved Lynch's extradition to the United States on the same day that the judgment against him was handed down in a civil suit brought by HP last year, Lynch was unable to avoid extradition. The bid was lost.
Last month, he sued Britain's securities regulator, the Serious Fraud Office, over its handling of data requests by the US government. The lawsuit was a last-ditch effort to delay a U.S. criminal trial and was settled earlier this month.
Mr. Lynch continues to use significant resources to defend himself in San Francisco courts. Reid Weingarten, one of several prominent white-collar defense attorneys representing Lynch in the United States, said in a statement: “Mike Lynch is deeply grateful for the opportunity to finally tell his story in front of a jury.'' “I believe that my innocence will be proven.'' . “We look forward to this opportunity to tell Mike Lynch's story and help him put this unfortunate chapter behind him.”
Mr Lynch has lived under 24-hour surveillance and court-ordered private security since his extradition, a significant fall from grace for a man once considered one of Britain's biggest technology successes. .
Born into a working-class family on the outskirts of London, he founded Autonomy in 1996 after graduating from Cambridge on a scholarship to private school. The company helped clients analyze unstructured information to uncover hidden insights about their businesses.
By 2011, Autonomy had become one of Britain's most prominent technology companies, and its home base in Cambridge was sometimes referred to as 'Silicon Fen'.
“He certainly raised the profile of technology in Cambridge,” said Tony Quested, editor of Business Weekly, a Cambridge-based technology industry publication. “There weren't that many back then.”
Mr Lynch has become a celebrity in British technology circles. He was a member of the Royal Society, one of the country's highest scientific societies. Advisor to then Prime Minister David Cameron. He then became a director of the BBC.
At the time, HP, led by Leo Apotheker, former chief executive of German software giant SAP, came up with the idea of acquiring Autonomy to transform it from an aging hardware provider into a highly profitable software company. Ta. HP agreed to acquire Autonomy in mid-2011 for approximately 60% above market value.
The situation deteriorated rapidly.
Apothekar was replaced as chief executive officer a month after the deal was announced, as investors and analysts balked at both the high price tag of the Autonomy deal and a planned spinoff of HP's personal computer division (which grew out of another major acquisition). CEO (CEO). Compaq)
He was replaced by Meg Whitman, a former head of eBay and a member of HP's board of directors. Within HP, Autonomy's star quickly faded as sales rapidly declined. Mr. Lynch clashed with Mr. Whitman and was fired in May 2012.
Later that year, HP announced that it had been misled by Autonomy through fraudulent activities, including backdated contracts and the use of hardware sales to boost revenue, particularly at the end of the quarter. The multibillion-dollar writedown marks the beginning of Mr. Lynch's legal woes, which will culminate in another long and complicated trial this month.
Mr. Lynch has long denied accusations that the company was rife with fraud. He blames Whitman, now the US ambassador to Kenya, and other executives with whom he has clashed, for the collapse of autonomy. His lawyers argue in court filings, for example, that HP executives knew about the hardware sales and did not raise the issue.
They pointed to internal emails showing Autonomy's value calculations had changed and at one point exceeded $11 billion. They also noted that accountants from EY, the global accounting and consulting firm formerly known as Ernst & Young, worked for HP, and that they believed Autonomy's purchase price was inflated by accounting fraud. He pointed out that he had not done so.
Federal prosecutors said in court documents that Mr. Lynch had long been known as a demanding boss who took pleasure in maintaining control through his tough demeanor. (In one filing, a government lawyer explained that in Autonomy's internal sales video, he portrayed himself as: He is a mafia don and said he named his conference room after a James Bond movie villain. ) Witness testimony also includes Whitman and HP's former chief financial officer Katherine Lesjac.
Prosecutors are seeking tens of thousands of pieces of evidence and a list of 44 witnesses, and estimate the trial could last until the end of May.
Mr. Lynch's freedom and his legacy are at stake.
He has sought to improve his reputation as a public intellectual by giving interviews on technology topics, but has kept a low profile since the handover. His last published article was in April, in which he encouraged UK policymakers to embrace AI startups.
Autonomy is now part of Canadian software company OpenText. Mr. Lynch's investment firm, Invoke, has made significant early investments in companies such as cybersecurity provider Darktrace.
But associating with Mr. Lynch comes with risks. In December, Darktrace shareholders rejected Invoke's proposed director candidates. And Darktrace describes “autonomy-related matters” as a risk “from both a reputational and legal perspective” in its financial filings.
