Mike Lynch files legal challenge to have fraud case thrown out by US courts
James Titcomb
Wed, 4 October 2023
The Autonomy founder’s lawyers claim the defrauding accusations lack ‘virtually any connection to the United States’ - Simon Dawson/Bloomberg
Mike Lynch, the tech entrepreneur accused of leading Britain’s biggest ever corporate fraud, has launched a legal bid to have a string of US criminal charges against him thrown out.
Mr Lynch, the founder of the former FTSE 100 software company Autonomy, has filed to dismiss the 17 charges against him, saying the US has no jurisdiction over the case.
His lawyers describe the charges, which could lead to decades in prison, as “impermissibly extraterritorial” and say they contain “fatal legal deficiencies”.
Mr Lynch, 58, is accused of inflating Autonomy’s value by manipulating its accounts ahead of its £7bn sale to Hewlett Packard in 2011. He was extradited to San Francisco earlier this year to stand trial and has pleaded not guilty.
HP wrote down almost all the value of Autonomy a year after buying the company and has accused executives of padding its revenues and profits.
Mr Lynch founded Autonomy in 1996 and served as its chief executive until its sale. He made around $800m (£658m) from the deal.
In legal filings, Mr Lynch’s lawyers argue that “the alleged conspiracy to defraud Autonomy shareholders lacks virtually any connection to the United States”.
They add that the “scant US touchpoints in the [charges] are at best incidental to the scheme, not in furtherance of it, much less ‘essential’ or ‘core’ components of the alleged fraud”.
Autonomy’s former financial chief, Sushovan Hussain, was sentenced to five years in prison over charges related to the deal
The filing states: “At all times between 2009 and 2011, Autonomy was fundamentally a UK-centric business. Autonomy listed its shares on the London Stock Exchange. All major decisions about the strategic direction of the company, its revenue-generating operations, and its compliance with financial reporting obligations were made in England.
“The ‘means and methods’ identified in the [indictment] – revenue recognition issues, allegedly fraudulent entries in Autonomy’s books, allegedly false and misleading quarterly and annual reports – all comprise conduct that occurred in another country.”
Mr Lynch has long maintained that any case against him should be heard in Britain, but the Serious Fraud Office dropped its investigation into the matter in 2015.
The Department of Justice filed charges against Mr Lynch and Autonomy’s former finance director, Stephen Chamberlain, in 2018 and added new charges the following year.
Autonomy’s former chief financial officer, Sushovan Hussain, was sentenced to five years in prison over charges related to the deal in 2019.
Mr Chamberlain, who has also pleaded not guilty, has separately filed to dismiss the charges against him, arguing that the US Justice Department filed them after statutes of limitations on the alleged crimes expired. He said that the charges were barred by the passage of time up to two years before they were brought.
Mr Lynch fought multiple legal battles to block extradition to the US but came close to exhausting his options and was taken to the country in May.
He remains under house arrest in San Francisco where he is being monitored by armed guards and video surveillance at his own expense. He awaits a trial scheduled to be heard next year.
The request to throw out the case will be heard by a US judge next month.
After the Autonomy sale, Mr Lynch became the founding investor in Darktrace, the UK-listed cybersecurity company. He remains one of its largest shareholders, although he has no operational role at the company.
Mr Lynch used $54m in the company’s shares to pay his US bail.
James Titcomb
Wed, 4 October 2023
The Autonomy founder’s lawyers claim the defrauding accusations lack ‘virtually any connection to the United States’ - Simon Dawson/Bloomberg
Mike Lynch, the tech entrepreneur accused of leading Britain’s biggest ever corporate fraud, has launched a legal bid to have a string of US criminal charges against him thrown out.
Mr Lynch, the founder of the former FTSE 100 software company Autonomy, has filed to dismiss the 17 charges against him, saying the US has no jurisdiction over the case.
His lawyers describe the charges, which could lead to decades in prison, as “impermissibly extraterritorial” and say they contain “fatal legal deficiencies”.
Mr Lynch, 58, is accused of inflating Autonomy’s value by manipulating its accounts ahead of its £7bn sale to Hewlett Packard in 2011. He was extradited to San Francisco earlier this year to stand trial and has pleaded not guilty.
HP wrote down almost all the value of Autonomy a year after buying the company and has accused executives of padding its revenues and profits.
Mr Lynch founded Autonomy in 1996 and served as its chief executive until its sale. He made around $800m (£658m) from the deal.
In legal filings, Mr Lynch’s lawyers argue that “the alleged conspiracy to defraud Autonomy shareholders lacks virtually any connection to the United States”.
They add that the “scant US touchpoints in the [charges] are at best incidental to the scheme, not in furtherance of it, much less ‘essential’ or ‘core’ components of the alleged fraud”.
Autonomy’s former financial chief, Sushovan Hussain, was sentenced to five years in prison over charges related to the deal
The filing states: “At all times between 2009 and 2011, Autonomy was fundamentally a UK-centric business. Autonomy listed its shares on the London Stock Exchange. All major decisions about the strategic direction of the company, its revenue-generating operations, and its compliance with financial reporting obligations were made in England.
“The ‘means and methods’ identified in the [indictment] – revenue recognition issues, allegedly fraudulent entries in Autonomy’s books, allegedly false and misleading quarterly and annual reports – all comprise conduct that occurred in another country.”
Mr Lynch has long maintained that any case against him should be heard in Britain, but the Serious Fraud Office dropped its investigation into the matter in 2015.
The Department of Justice filed charges against Mr Lynch and Autonomy’s former finance director, Stephen Chamberlain, in 2018 and added new charges the following year.
Autonomy’s former chief financial officer, Sushovan Hussain, was sentenced to five years in prison over charges related to the deal in 2019.
Mr Chamberlain, who has also pleaded not guilty, has separately filed to dismiss the charges against him, arguing that the US Justice Department filed them after statutes of limitations on the alleged crimes expired. He said that the charges were barred by the passage of time up to two years before they were brought.
Mr Lynch fought multiple legal battles to block extradition to the US but came close to exhausting his options and was taken to the country in May.
He remains under house arrest in San Francisco where he is being monitored by armed guards and video surveillance at his own expense. He awaits a trial scheduled to be heard next year.
The request to throw out the case will be heard by a US judge next month.
After the Autonomy sale, Mr Lynch became the founding investor in Darktrace, the UK-listed cybersecurity company. He remains one of its largest shareholders, although he has no operational role at the company.
Mr Lynch used $54m in the company’s shares to pay his US bail.
No comments:
Post a Comment