Mike Lynch ‘was driving force behind massive fraud’
BRITAIN’S answer to Bill Gates was the ‘driving force’ behind Silicon Valley’s biggest ever fraud, a court heard last night
Prosecutors accused Mike Lynch of committing a ‘massive fraud’ when he fooled computer giant HewlettPackard into buying his software company Autonomy for £8.6bn in 2011.
Lawyers claimed Lynch ‘spun a fabulous tale’ about Autonomy’s finances but in reality it was a ‘multi-year, multilayered fraud’.
He has denied
16 counts of conspiracy and fraud at the court in San Francisco.
But if found guilty after the two-month trial, Lynch faces 20 years in prison.
The case has already proved to be a fall from grace for Lynch, 58, who was awarded an OBE for services to enterprise in 2006. He has served on the board of the BBC and in 2011 was appointed to the science and technology council of then prime minister David Cameron.
But since his arrest and extradition to the US ten months ago, Lynch has been living in an apartment in San Francisco where he has been forced to wear an ankle tag to monitor his movements as part of a £78m bail bond. The case is about the sale of Autonomy which turned Lynch into one of Britain’s most celebrated tycoons with comparisons to Gates, the Microsoft founder. Lynch, who was raised in Chelmsford, Essex, made more than £500m from the deal,. But it soured almost immediately and sparked a decade of civil and criminal litigation, culminating in the trial that began last night.
Prosecutor Adam Reeves told the court that Lynch lured in HP with a series of claims about Autonomy’s finances.
Reeves said: ‘HP ate it up – they thought this kind of software company is exactly what they needed.’
A year after the deal was announced, HP was forced into a £6.9bn write-down it blamed on ‘serious accounting improprieties’. Reeves said Autonomy used accounting tricks like backdating contracts to make its revenue appear bigger than it was.
Another trick was to pay more than necessary for services Autonomy did not need so vendors would purchase its products.
Autonomy’s former vice president of finance, Stephen Chamberlain, is on trial and has also pleaded not guilty.
Lynch’s lawyer Reid Weingarten, who has previously represented financier and convicted sex offender Jeffrey Epstein, has said he was innocent.
HP was to blame because it was out of its depth and didn’t understand Autonomy’s software, Weingarten and his team have claimed.