Former Autonomy CEO Michael Lynch is on trial on accounting fraud charges he duped HP into buying the company for $11 billion in 2011.

As discussed in Corporate Counsel (Autonomy CEO Denies Misleading HP, Says Its Own Blunders Made $11B Buyout a Flop, written by Maria Dinzeo and available here), Lynch’s fraud trial began in March, so it has been going on longer than that other fraud trial that has been making the news lately. 😉

Prosecutors say the British tech tycoon orchestrated what they call the biggest fraud in Silicon Valley history through a range of tactics, including padding Autonomy revenues and issuing false and misleading annual reports.

The 58-year-old Lynch told the jury that he launched the sale process that led to the deal with HP because the threat loomed that a hostile bidder would emerge for his Cambridge, England-based company. Lynch testified Tuesday that he actually would have preferred to keep it independent. In other words, he would have preferred that Autonomy keep its autonomy. See what I did there? 😉

The trial has thrown the spotlight back onto what’s widely viewed as one of the most disastrous mergers in tech history. Within one year of closing, HP had written off $8.8 billion of Autonomy’s value.

Per the article, Lynch’s claims in testimony included that he delegated much of the minutiae of running the company to his underlings (including Chief Financial Officer Sushovan Hussain, whom a jury found guilty of wire fraud in 2018), that there were a variety of things he just wasn’t “good at,” like sales negotiations or accounting, and that he had no idea that Stouffer Egan, the CEO of Autonomy’s U.S. division, had improperly backdated contracts with several resellers to allow Autonomy to prematurely recognize revenue.

Lynch also said HP completely botched the deal announcement, calling it “a complete mess.” Somehow, the news was leaked and HP’s stock cratered,” Lynch said. “It was a very peculiar day. The HP board basically panicked and decided to fire Leo ultimately.” “What happened after Leo was fired was total chaos and paralysis for weeks,” Lynch said. “There was no transition plan, no handing over of the Autonomy plan. It was back to square one.”

I wrote about this case all the way back in 2012 in my former blog (covering the $8.8 billion write-off, which explains the graphic above) and said: “Expect a long legal battle”. Gee, you think? 😮

So, what do you think? Do you think that Autonomy CEO will be found guilty? Please share any comments you might have or if you’d like to know more about a particular topic.

Image Copyright © New Line Cinema

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.