Mike Lynch, former CEO of Autonomy.
Hollie Adams | Bloomberg via Getty Images
LONDON – Mike Lynch, one of Britain’s most notable tech entrepreneurs and a man often referred to as “Britain’s Bill Gates,” is on the verge of being extradited to the United States to be charged with felony criminal mischief with the sale of his company. Autonomy of Hewlett-Packard.
Lynch, 56, sold his software start-up Autonomy to HP in 2011 for $ 11.7 billion, instantly making him one of the richest and most famous technology founders in the UK
HP’s offer was 64% higher than Autonomy’s market value. The IT giant’s share price on Wall Street collapsed by 20% on the day the deal was announced, while Autonomy’s rose by over 70%.
A year later, HP announced a $ 8.8 billion write-down on the company, claiming that “accounting irregularities” made it pay too much for Autonomy, which sold data analytics software to companies.
HP’s main allegation is that Autonomy’s executives inflated the company’s revenue by about $ 700 million and sued for $ 5 billion. Lynch contradicted, leading to a very complex legal battle that has raged on for a decade.
However, there are signs that things may be about to be about to end.
The moment in the legal battle
On Friday, the British Home Office approved Priti Patel Lynch’s extradition to the United States. Earlier in the day, a British judge ruled in favor of HP in a civil case against Lynch over allegations he planned to increase the value of Autonomy before it was bought by HP.
HP won the majority of the charges, Judge Robert Hildyard said, even though the damages would be significantly lower than the $ 5 billion the company demanded.
Lynch would not be the first Autonomy employee charged in the United States. In May 2019, former CFO Sushovan Hussain was charged with fraud and jailed for five years.
A spokesman for HP told CNBC on Monday that the company is happy with the judge’s decision.
“Dr. Lynch and Mr. Hussain deliberately deceived and misled the market and Hewlett-Packard,” they said.
“HPE is pleased that the judge has held them accountable.”
Lynch’s lawyers did not immediately respond to a CNBC request for comment, but they are reportedly planning to appeal the decisions, and the process could take 12 months, according to legal experts. If his appeal fails, he risks 20 years in prison.
Some in the UK technology industry, including Lastminute.com co-founder Brent Hoberman, do not believe Lynch should be handed over.
“Is it right that a British businessman operating under British law should be extradited to the United States? I do not believe that, and I do not think other business people would think so either,” Hoberman told The Sunday Times. .
Hoberman, who asked Lynch to speak at his Founders Forum event last summer, described the Autonomy founder as “an iconic figure in British technology,” according to the newspaper report.
After writing off three-quarters of Autonomy’s value, HP sold what was left of the company to UK firm Micro Focus in September 2016 as part of a $ 8.8 billion deal involving other HP business units.
“It’s a sad thing that happened in the end,” Lynch said at a technology conference in 2016. “The British model is that there is no way to stop a takeover. So when Hewlett Packard came and wanted to make his offer , we could “not stop them.”
He added: “The problem was the week after the appointment, they [HP’s leaders] get fired and we are left with a hardware group that used to call us the stepchild. All the understanding of smart, high-growth software people was not there. “
The United States is also trying to extradite WikiLeaks founder Julian Assange from the United Kingdom. Assange is wanted by US authorities for publishing hundreds of thousands of classified military documents and diplomatic cables in 2010 and 2011. They say his actions endangered life and they charge him with 18 offenses, meaning he risks 175 years prison.
Earlier this month, Assange won the right to take his extradition case to the UK Supreme Court.
Following the sale of Autonomy, Lynch went on to set up Invoke Capital, a $ 1 billion venture capital firm that has invested in European tech start-ups such as cybersecurity firm Darktrace and life science firm Sophia Genetics.
Over the past few years, Lynch has retired from his public activities. He left the board of Darktrace and ceased to be an adviser to the British government. He also used to be a non-executive member of the BBC Executive Board.
In addition to his legal battle, Lynch has several hobbies that keep him busy. In a 2016 interview, the entrepreneur said he spends a lot of time learning and caring for rare animals, such as Red Poll cattle, at his home in Suffolk, England.
“I keep rare breeds,” Lynch told LeadersIn during an interview. “So I have cows that were slaughtered in the 1940s and pigs that no one has kept since the Middle Ages, and none of them have any Apple products whatsoever.”
Lynch was born on the outskirts of London in Essex on June 16, 1965 and had a relatively modest beginning. His mother was a nurse and his father was a firefighter.
Lynch said his father regretted that he did not have the chance to go to university. “He realized the importance of education, so it was something that was very much promoted in my home,” Lynch told LeadersIn.
At the age of 11, Lynch won a scholarship to attend the exclusive Bancroft’s School, which today charges standard students who are not on a scholarship £ 19,761 ($ 26,569) a year. At school, he was an avid musician and a member of a five-man jazz band.
Lynch attended the prestigious University of Cambridge, where he studied science with a focus on areas including electronics, mathematics and biology. After completing his bachelor’s degree, Lynch took a Ph.D. in signal processing and communication.
Towards the end of the 1980s, with his studies completed, Lynch founded a company called Lynett Systems Ltd, which produced design and sound products for the music industry. One product included a sampler for Atari ST computers known as Lynex. It was followed by the ADAS sampler for Atari, Mac and PC.
A few years later, in the early 1990s, Lynch founded a fingerprint recognition company called Cambridge Neurodynamics, which counts South Yorkshire Police among its customers.
But his big breakthrough came with Autonomy, which he founded in 1996 with David Tabizel and Richard Gaunt as a spinoff from Cambridge Neurodynamics.
The company, which has been scaled to one of the UK’s largest technology companies, began by launching a virtual dog for consumers designed to take commands and help people manage information while surfing the internet.
The virtual dog – based on Lynch’s otter dog, Gromit – proved to be very popular among companies that paid for access to the technology in large numbers. This, combined with the fact that there was a growing number of free consumer products online, convinced Lynch to focus on business. It was an important strategic decision that paid off.
Autonomy’s software, which consists of pattern-matching algorithms, was touted as something that could help employees abstract meaning from a tangle of information.
After floating on the Easdaq Stock Exchange in Brussels in 1998, Autonomy continued to list shares on the New York Nasdaq Stock Exchange and the London Stock Exchange in 2000.
It experienced the full boom and bust of the dotcom bubble.