‘britain’s-invoice-gates’-lastly-extradited-to-california-to-face-costs-in-‘one-of-many-largest-frauds-ever-prosecuted-by-the-usa-division-of-justice’

The British expertise tycoon Mike Lynch, as soon as dubbed “Britain’s Invoice Gates”, has been extradited to the US to face 17 legal costs after a years-long struggle. Lynch is the founding father of the software program firm Autonomy, which was offered to Hewlett-Packard for $11bn in 2011. Lynch left Autonomy in 2012, and in the identical 12 months HP wrote down the worth of the corporate by $8.8bn: The entrepreneur is accused of over-inflating the worth of Autonomy within the interval main as much as the sale, primarily cooking the books, and additional accused of attempting to impede the next investigation into the matter. 

The UK’s House Workplace confirmed to the BBC that Lynch was extradited to the US on Thursday, 11 Could, which got here after an April judgement that rejected his newest attraction (Lynch argued he needs to be tried within the UK). That judgement makes for some eye-popping studying, and begins by quoting the American prosecutors describing the case as “one of many largest frauds ever prosecuted by the USA Division of Justice.” The worth of the alleged fraud runs into the billions of {dollars} and per the courtroom doc refusing Lynch’s attraction:

“The Applicant is accused of participating in a conspiracy to supply dishonest monetary and different details about Autonomy’s efficiency to the markets from 2009, after which to HP from about 2011 in the course of the buy negotiations, thereby dishonestly sustaining or inflating Autonomy’s share value, and therefore, in the end, the worth which HP paid for it. The Applicant owned a considerable variety of Autonomy’s shares, and so the alleged fraud benefitted him personally.”

Additional costs embrace trying to impede justice in subsequent investigations, and of cash laundering in relation to the cash Lynch acquired. The doc additional notes that Lynch “held about 7% of Autonomy’s inventory and he personally acquired about $800 million from its sale.”

In keeping with US courtroom paperwork, authorities regard Lunch as being at “severe danger of flight” as a result of size of time he is spent combating extradition and his private wealth. “There may be nothing maintaining him right here, past the costs he faces on this courtroom,” mentioned District Choose Charles Breyer. Thus Lynch has needed to put up bail of $100 million and is now dwelling below home arrest in San Francisco, guarded by non-public safety and below video surveillance which he has to pay for. Lynch’s internet price is estimated at between £988m ($1.235 bn) and £1.1 bn ($1.375 bn).

On the time of the sale, Autonomy was the UK’s greatest software program firm (or the accounts mentioned so, anyway) and the HP deal was the largest-ever takeover of a British tech agency. HP’s buy was meant to assist it diversify away from {hardware}, with Autonomy specialising in software program that would extract info from issues like telephone calls, electronic mail and video. 

For the reason that writedown in worth, HP, Lynch and Autonomy’s former chief monetary officer Sushovan Hussain have been in litigation. Hussain was jailed for 5 years and fined $4 million by a US courtroom in 2019 on 16 counts of fraud, securities fraud and different costs.

In 2022, HP received a civil fraud case towards Lynch and Hussain. The decide in that case mentioned the core of the matter was HP’s declare “they had been essentially misled and are victims of fraud”, whereas Lynch and Hussain argued they had been scapegoats for “purchaser’s regret coupled with administration failings”. The decide discovered HP “considerably succeeded” in backing up its claims, although the ruling stays topic to attraction and the quantity of damages has not but been determined (HP had requested for $5 billion).

A US courtroom submitting mentioned: “After prolonged extradition proceedings in the UK, Defendant Michael Richard Lynch has lastly landed on our shores to face trial, accompanied by the USA Marshals Service.”