British tech billionaire Mike Lynch, the founder and chief executive of UK software giant Autonomy, has been charged with fraud in the US.
The charge relates to Autonomy’s US$11bn sale to computer behemoth Hewlett-Packard back in 2011 – a price that raised eyebrows in the City.
The court documents say Lynch, a rock star of the UK tech industry at the time, made US$815mln from the sale.
But less than a year after the deal went through, HP was forced to write down the value of the business by US$9bn.
Overstated earnings
HP claims that Lynch, along with Autonomy’s former finance chief, Sushovan Hussain, and vice president of finance Stephen Chamberlain, overstated revenues in order to inflate the company’s valuation.
Lynch and Chamberlain are also accused of making misleading statements to regulators and market analysts covering the company.
The rap sheet says the pair "intimidated, pressured and paid off persons who raised complaints about or openly criticised Autonomy's financial practices and performance".
Hussain was found guilty of fraud earlier this year.
Lynch’s lawyers have said he will “vigorously defend the charges” levelled against him.
Lynch's lawyers hit back
They called the indictment a “travesty of justice” and said the 53-year-old was being made a scapegoat for HP’s failures.
HP issued a statement welcoming the start of proceedings: “HPE believes that the facts uncovered during the course of this matter will further demonstrate the harm that was caused by Dr Lynch, Mr Chamberlain, Mr Hussain and others to HP and looks forward to seeing justice served once again.”
Lynch co-founded Autonomy back in 1996. It developed software that could analyse “unstructured” data sources such as phone calls, emails or videos.
The technology would then throw up some meaningful insights and could do things such as suggesting answers to a call-centre operator or monitor TV channels for certain words or subjects.