Mike Lynch, a British tech entrepreneur, has been extradited to the United States to face charges of securities and wire fraud related to the sale of his software company Autonomy to Hewlett Packard. Lynch arrived in San Francisco on Thursday and is currently detained until his bail conditions are met. He attended an arraignment hearing on Thursday and was ordered to pay $100 million bail to be released on house arrest. The U.S. court’s bail amount is much higher than U.K. standards and is a clear example of the differing approaches of the two countries when it comes to prosecuting allegations of white-collar crime, according to Thomas Garner, an extradition partner at law firm Fladgate.
Lynch sold Autonomy to HP in 2011 for $11.7 billion, making him one of the wealthiest tech founders in the U.K. The following year, HP announced an $8.8 billion write-down on the company, claiming that “accounting irregularities” led it to pay too much for Autonomy, which sold data analytics software to businesses. HP’s main accusation is that Autonomy’s executives inflated the company’s revenues by around $700 million. HP sued Autonomy for $5 billion, while Lynch counter-sued, leading to a complex legal battle that has been ongoing for a decade.
In January last year, then-U.K. Interior Minister Priti Patel approved Lynch’s extradition to the U.S. after a British judge ruled in favor of HP in a civil case against Lynch over claims that he plotted to inflate the value of Autonomy before it was bought by HP. Lynch is not the first Autonomy employee to face charges in the U.S. Former CFO Sushovan Hussain was charged with fraud and sentenced to five years in prison in May 2019.
Some in the U.K. tech industry believe that Lynch should not have been extradited. A number of entrepreneurs, including Made.com co-founder Brent Hoberman, wrote a letter to Prime Minister Rishi Sunak in February, complaining about America’s “unreasonable” use of an extradition treaty to deport the technology entrepreneur. Hoberman previously told The Sunday Times newspaper in an interview that he did not believe it was right for a U.K. businessman operating under U.K. laws to be extradited to the U.S.
After writing off three-quarters of Autonomy’s value, HP sold what was left of the company to British firm Micro Focus in September 2016 as part of an $8.8 billion deal that involved other HP business units.
Leave a Reply