British entrepreneur Mike Lynch faced arrest on the first day of his criminal trial, where prosecutors portrayed him as a controlling boss who orchestrated a massive fraud. Lynch is set to appear in court in San Francisco on Tuesday.
Co-founder of Autonomy, Lynch is accused of inflating the software company’s sales, misleading auditors, analysts, and regulators, and threatening those who raised concerns before its acquisition by Hewlett-Packard (HP) in 2011.
Lynch’s lawyers plan to have him testify once prosecutors complete their case against him. He has denied all allegations of wrongdoing and faces up to 25 years in prison if convicted.
A deal by HP to acquire Autonomy for $11.1 billion soured when HP reduced the purchase price by $8.8 billion due to alleged accounting irregularities, omissions, and misstatements in the business.
As the trial commenced, prosecutors called on Ganesh Vaidyanathan, Autonomy’s former head of accounting, as the first witness to testify about accounting issues raised in 2010.
Assistant U.S. Attorney Adam Reeves argued that Lynch presented Autonomy as a successful company to HP but that its financial statements were false and misleading due to accounting tricks and concealing hardware sales.
Chamberlain, Autonomy’s financial director, also pleaded not guilty to charges related to falsifying documents and misleading auditors, with his attorney suggesting he was a pawn caught in a battle between giants.
Lynch alleges Autonomy’s poor performance post-acquisition was due to mismanagement by HP, not wrongdoing before the acquisition, as he spent time preparing for trial under house arrest.
Extradited from Britain to the U.S. last year, Lynch posted bail and wears a GPS tag on his ankle under 24-hour guard surveillance.
Source: www.theguardian.com
