Mike Lynch filed suit to dismiss fraud case in US courts

Lawyers for the founder of Autonomy argue that the fraud allegations have “virtually no connection with the United States.” Photo: Simon Dawson/Bloomberg

Mike Lynch, the tech entrepreneur accused of the UK's biggest ever corporate fraud, has filed a lawsuit to have a number of criminal charges against him dropped in the US.

Mr Lynch, the founder of former FTSE 100 software company Autonomy, has filed to dismiss 17 charges against him, saying the US does not have jurisdiction over the case.

His lawyers describe the charges that could lead to to decades in prison as «unacceptably extraterritorial» and said to contain «fatal legal flaws.»

Lynch, 58, is accused of inflating the value of Autonomy by manipulating its accounts before its sale to Hewlett Packard for £7 billion in 2011. He was extradited to San Francisco to stand trial earlier this year and pleaded not guilty.

< p>HP wrote off nearly the entire value of Autonomy a year after buying the company and blamed executives for boosting its revenue and profits .

Mr. Lynch founded Autonomy in 1996 and was its CEO until it was sold. . He earned around $800 million (£658 million) from the deal.

In court papers, Lynch's lawyers argue that «the alleged conspiracy to defraud Autonomy shareholders has little or no connection to the United States.»

They add that «the few points of connection with the United States in [the charges] are at best peripheral for the scheme, rather than facilitating it, and certainly not being “essential” or “key” components of the alleged fraud.” />Autonomy's former chief financial officer Sushovan Hussain was sentenced to five years in prison on charges related to the deal

The statement said: “Between 2009 and 2011, Autonomy was at its core a UK-focused business. Autonomy listed its shares on the London Stock Exchange. All major decisions about the company's strategic direction, its revenue-generating activities and its compliance with financial reporting obligations were made in England.

The «means and methods» alleged in [the indictment] — revenue recognition problems, allegedly fraudulent entries in Autonomy's books, allegedly false and misleading quarterly and annual reports — all involve conduct that occurred in a foreign country.»

Mr Lynch has long argued that any case against him should be tried in the UK, but the Serious Fraud Office dropped its investigation into the case in 2015.

The Justice Department brought charges against Mr. Lynch and Autonomy's former chief financial officer. director Stephen Chamberlain in 2018, with more charges added the following year.

Former Autonomy CFO Sushovan Hussain was sentenced to five years in prison on deal-related charges in 2019.

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Mr. Chamberlain, who has also pleaded not guilty, separately filed to dismiss the charges against him, arguing that the U.S. Justice Department brought them after the statute of limitations on the alleged crimes had expired. He said the charges were thrown out after up to two years had elapsed before they were brought.

Mr Lynch had fought several legal battles to block extradition to the US but came close to exhausted his options and was arrested. into the country in May.

He remains under house arrest in San Francisco, where he is monitored by armed guards and subject to video surveillance at his expense. He is awaiting trial next year.

The request to have the case dismissed will be heard by a US judge next month.

After the sale of Autonomy, Mr Lynch became a founding investor in Darktrace, a registered cybersecurity companies in the UK. He remains one of its largest shareholders, although he plays no operational role in the company.

Mr. Lynch used $54 million of the company's shares to post bail in the United States.