DoJ charges Autonomy founder with fraud over $11BN sale to HP

Lynch used false and misleading statements from 2009 2010 and early 2011 “to make Autonomy more attractive

The former CEO and a former finance executive of Autonomy have been charged with lying about the United Kingdom software company's financial condition before it was taken over by Hewlett-Packard in 2011.

The charges, which were filed overnight and follow a six-year investigation, include 14 counts of conspiracy and fraud and carry a maximum penalty of 20 years in jail.

The two Brits are accused of essentially the same acts of fraud that Autonomy's former chief financial officer, Sushovan Hussain, was convicted of in April.

Hewlett-Packard acquired Autonomy in 2011 for $10.3bn and later had to write down the value by $8.8bn based on what it claims were false and misleading accounts.

Tech giant HP Inc has reported strong Q4 revenues of $15.4bn, yielding it a tidy $1.5bn in net income.

"HP has sought to blame Autonomy for its own crippling errors, and has falsely accused Mike Lynch to cover its own tracks", said Lynch's lawyers, Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson.

The indictment alleges that Mr Lynch conspired with individuals to engage in a fraudulent scheme to "deceive purchasers and sellers of Autonomy securities and HP about the true performance of Autonomy's business, financial condition and prospects for growth".

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British entrepreneur Lynch co-founded Autonomy in 1996 and served as its CEO. "These stale allegations are meritless and we reject them emphatically", his spokesman said.

It was also said that Lynch wasn't alone in this, as vice president of finance, Stephen Chamberlain, as well as "other conspirators", were also in on the action.

The Serious Fraud Office in the United Kingdom halted a two-year investigation into HP's acquisition of Autonomy back in January 2015.

Lawyers for Lynch, who has always denied any wrongdoing, said in a statement today that the indictment was a "travesty of justice" and he would contest the charges.

Hussain was found guilty of fraud earlier this year.

The statement added Dr Lynch "has done nothing wrong and will vigorously defend the charges against him".

He was chief executive of Autonomy for more than 15 years, helping it to become one of the UK's most successful technology companies on the FTSE100.

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