HP Wins Huge Fraud Case Against Autonomy’s Mike Lynch

After years of wrangling, HP has won its civil fraud case against Autonomy founder and chief executive Mike Lynch. The ruling, the biggest civil fraud trial in UK history, came just hours before the UK home secretary Priti Patel approved Lynch’s extradition to the United States, where he faces further fraud charges.

The UK’s High Court found that HP had “substantially succeeded” in proving that Autonomy executives had fraudulently boosted the firm’s reported revenue, earnings, and value. HP paid $11 billion for the firm back in 2011 and later announced a $8.8 billion write-down of its value. In court, HP claimed damages of $5 billion, but the judge said the total amount due would be “considerably less” and announced at a later date. Kelwin Nicholls, Lynch’s lawyer and a partner at law firm Clifford Chance, said his client intends to appeal the High Court ruling. In a later statement, Nicholls said his client would also appeal the extradition order in the UK’s High Court.

This week’s events are the latest twist in an extradition process that began in November 2019, when the US Embassy in London submitted a request for Lynch to face trial in the United States on 17 counts, including wire fraud, conspiracy, and securities fraud. Lynch denies all charges against him. Nicholas Ryder, professor in financial crime at the University of the West of England describes it as the “Colt-45 for the US Department of Justice”—an all-pervasive and powerful move. “That’s their go-to charge. The ramifications for Mr. Lynch are significant.”

At the time of the Autonomy acquisition, HP’s then chairman said he had “serious cold feet” about the deal, according to claims subsequently made in court. The company claimed some former members of Autonomy’s management team “used accounting improprieties, misrepresentations, and disclosure failures to inflate the underlying financial metrics of [Autonomy].” Among them was Lynch, then CEO of the firm.

In 2015, HP filed a lawsuit in the UK against Lynch, alleging he was involved in the publication of false accounts that overstated how valuable Autonomy’s business was. Now, more than a decade after the ink dried on the deal, and nearly seven years after Lynch was taken to court, the civil case in the UK is complicated by a parallel case involving the United States’s Department of Justice—the ramifications of which could be huge for Lynch. In a related trial, his former colleague at Autonomy, chief financial officer Sushovan Hussain, was found guilty of fraud in a US court in May 2019, imprisoned for five years, and fined $4 million, as well as asked to forfeit $6.1 million more.

In July 2021 a London court ruled that Lynch could be extradited, with the judge saying that the UK civil case’s findings would be “of very limited relevance” to the US case. Until now, Patel had delayed signing an extradition request for someone currently being tried in the UK for largely similar crimes. But now Lynch might be running out of options. “He could be facing a significant amount of time in prison if convicted of the 17 counts of fraud,” Ryder says of the US criminal charges against Lynch.