Tech tycoon Mike Lynch, accused of ‘massive’ fraud, set to testify at US trial

The British entrepreneur Mike Lynch is expected to take the stand in a San Francisco federal courthouse on Thursday as a key witness in his own criminal fraud trial, which began in March.

US authorities have charged the former software tycoon with 16 counts of wire fraud, securities fraud and conspiracy relating to his company’s acquisition deal with Hewlett-Packard in 2011. If convicted, Lynch faces up to 25 years in prison. He has pleaded not guilty.

At the end of court proceedings on Wednesday, however, Lynch’s legal team suggested it may move for a mistrial over an alleged improper line of questioning during cross-examination by the prosecution. The team said it will decide whether to make a motion by Thursday morning when the court reconvenes. If granted, a mistrial could mean Lynch has to be retried at a later date.

Once hailed as “Britain’s Bill Gates”, Lynch sold his software firm Autonomy to Hewlett-Packard in a deal prosecutors say was built on “a series of lies”. The executive is accused of artificially inflating the software firm’s sales; misleading auditors, analysts and regulators; and intimidating people who raised concerns.

Just a year after the $11.1bn (£8.72bn) deal, from which Lynch received £500m, Hewlett-Packard reported “serious accounting improprieties, disclosure failures and outright misrepresentations” and wrote down the value of the acquisition by $8.8bn.

In his testimony on Thursday, Lynch is anticipated to continue the line of defense put forward thus far by his legal team, which attributes some financial discrepancies at the heart of the alleged fraud to differences between US and UK accounting standards and suggest he was not the driving force behind the decisions in question.

Reid Weingarten, Lynch’s attorney, has argued that the case amounts to a “routine business dispute” which spiraled into an “overblown fraud case”. While the prosecutors’ argument is “black and white”, Weingarten told the court, the reality is more nuanced.

“You’re going to see in this trial [that] that ain’t the way the world works,” he said. “The world works in grey. The world is complicated.”

Prosecutors, meanwhile, have painted Lynch as a domineering boss, and a driving force behind a “massive” years-long fraud.

“Autonomy’s financial statements were materially false and misleading,” assistant US attorney Adam Reeves said, claiming the company lied to auditors and investors “again and again” over 10 quarters, and fraudulently inflated its revenue between 2009 and 2011 to suggest growth.

Lynch was indicted by a federal grand jury in 2019 and extradited from the UK to the United States last May. After posting a $100m bond, he was released to house arrest at a property in San Francisco where he has spent the last year preparing for the trial.