Home Tech Mike Lynch fraud trial enters day two as prosecutors paint UK tech tycoon as ‘controlling’

Mike Lynch fraud trial enters day two as prosecutors paint UK tech tycoon as ‘controlling’

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Mike Lynch fraud trial enters day two as prosecutors paint UK tech tycoon as ‘controlling’

British entrepreneur Mike Lynch will return to court in San Francisco on Tuesday after prosecutors used the opening day of his criminal trial to portray him as a “dominant, controlling and intimidating boss” who orchestrated a massive fraud.

Lynch, co-founder of British software company Autonomy, is accused of artificially inflating the software company’s sales; mislead auditors, analysts and regulators; and intimidate people who raised concerns before its blockbuster takeover by Hewlett-Packard (HP) in 2011.

Lawyers for the tech mogul, once nicknamed “Britain’s Bill Gates,” revealed Monday that he plans to testify once the prosecution lays out its case against him.

Reid Weingarten, one of his lawyers, rejected the “black and white” argument he said was made by the government. “That’s not how the world works,” he said.

“We’re going to put Mike on the stand,” Weingarten told the jury. “In most trials you usually don’t do it, but we do it.”

Lynch has pleaded not guilty to 16 counts of wire fraud, securities fraud and conspiracy, after always denying allegations of wrongdoing. If convicted, he faces up to 25 years in prison.

HP bought Autonomy in an $11.1 billion (£8.72 billion) deal intended to boost its software business. Just a year later, however, it wrote down the value of the acquisition by $8.8 billion and alleged “serious accounting irregularities, disclosure failures and outright misrepresentations” at the company. .

As Lynch’s trial began this week and the government began building its case against the businessman and Steve Chamberlain, his co-defendant, the prosecution summoned Ganesh Vaidyanathan, Autonomy’s former U.S. accounting director -United, as his first witness. Vaidyanathan testified about accounting issues he first raised at the company in 2010.

Earlier Monday, Assistant U.S. Attorney Adam Reeves claimed that Lynch, in early discussions with HP, “told a fabulous story of corporate success” of a rapidly growing, purely niche software company. “HP ate it.”

But Autonomy’s financial statements turned out to be “materially false and misleading,” Reeves claimed, having been boosted by “a variety of accounting tricks” and hidden hardware sales.

Lynch’s lawyers objected to the assertion that he was desperate to sell autonomy. They said HP was in “desperate straits” and was rushing to buy a company that its executives believed could turn around its fortunes.

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Chamberlain, who served as chief financial officer at Autonomy, has pleaded not guilty to 15 charges. Reeves, representing the government, claimed Chamberlain falsified documents and played a key role in dealing with the firm’s auditors, and provided them with “an outright lie” regarding backdated contracts intended to boost quarterly revenue.

This characterization was disputed by Chamberlain’s attorney, Gary Lincenberg, who attempted to portray his client as a relatively junior executive who was not responsible for final accounting judgments. He was “taken like a pawn in a battle between titans,” Lincenberg suggested.

For years, Lynch has argued that Autonomy’s underperformance at HP was the result of mismanagement by its new owner, rather than pre-takeover fraud. He has spent much of the past year preparing for his trial under house arrest.

Lynch was extradited from the United Kingdom to the United States last May. After posting $100 million bail, he had to wear a GPS tag on his ankle and remain under 24-hour surveillance by security guards.

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