Mike Lynch, a British software magnate who was once one of his country’s most famous CEOs, was acquitted of fraud Thursday in federal court in San Francisco, clearing him of charges that he led one of the largest frauds in the technology industry.
A jury found him not guilty of falsely inflating the revenue of Autonomy, the company he founded and ran, when he sold it to Hewlett-Packard for $11 billion in 2011.
Lynch, 58, who faced decades in prison, had initially been charged with 16 counts of fraud and conspiracy, although one count of fraud was eventually dismissed.
Thursday’s verdict, which comes after a months-long trial in California, is a milestone in Lynch’s decade-long odyssey to clear his name.
HP acquired Autonomy, paying a 60 percent premium to its share price, in a bid to transform itself into a high-growth software provider. But questions soon arose about Autonomy’s numbers, and before long the California-based tech pioneer took an $8.8 billion accounting charge for the acquisition, citing “serious accounting irregularities.” HP’s stock price plummeted.
The company later accused Mr. Lynch and his lieutenants of providing misleading information about the company’s finances.
At the time, investors called the Autonomy acquisition one of the worst deals in history and a turning point in HP’s decline as a leading tech industry icon.
It also tarnished the reputation of Lynch, who rose from working-class origins outside London to the heights of British industry. Data analysis software maker Autonomy has become one of Britain’s biggest tech success stories. In 2011, Lynch was appointed scientific adviser to David Cameron, the prime minister at the time, and director of the BBC.
Lynch argued that HP executives, including Meg Whitman, the CEO who fired him, blamed him for his own mismanagement of Autonomy.
In 2018, US federal prosecutors accused Lynch of fraud, allegations the executive consistently denied.
The chances of an acquittal have only decreased over the years. Autonomy’s chief financial officer, Sushovan Hussain, was convicted of similar charges and served prison time. And in 2022, a London judge overseeing a civil trial against Lynch (a case described as “one of the longest and most complex in English legal history”) found him liable for defrauding HP. (HP has sought about $4 billion in damages; Lynch has argued it owes nothing.)
Last year, Lynch lost a fight to avoid extradition to the United States. He was taken to San Francisco and confined to a house under 24-hour surveillance and court-ordered private security, at his own expense.
In the California trial, which began in mid-March, prosecutors argued that Lynch was the “driving force” behind an elaborate fraud in which hardware sales were incorrectly classified as software to boost revenue and contracts were retroactive. Stephen Chamberlain, Home Rule’s former vice president of finance, was also tried on similar charges.
Mr. Lynch, who took the stand in his defense, testified that he was not involved in Autonomy’s day-to-day financial operations and that he delegated many tasks.
Jurors took about two days to reach their verdict, finding Lynch and Chamberlain not guilty on all charges.
“I am elated by today’s verdict and grateful to the jury for their attention to the facts over the past 10 weeks,” Lynch said in a statement. “I’m looking forward to returning to the UK and getting back to what I love most: my family and innovating in my field.”