In 2011, Mike Lynch was the toast of the tech world.
Hailed as Britain’s Bill Gates, Lynch sold Autonomy, his groundbreaking data management company, to Hewlett-Packard for $11 billion.
Shareholders and business commentators were puzzled about what HP, a hardware company, would do with Autonomy, a software company — and why it was worth $11 billion. HP’s executives said at the time that Autonomy had the potential to transform HP and usher the Silicon Valley titan into a new generation.
None of that happened. A year after the acquisition, HP wrote down $8.8 billion of the purchase value and accused Lynch of lying about Autonomy’s finances.
The claim led to a vicious decadelong series of legal disputes.
Another Autonomy executive, Sushovan Hussain, was convicted of fraud in 2018 and sentenced to five years in prison. Federal prosecutors brought criminal charges against Lynch and Stephen Chamberlain, the former vice president of finance.
Lynch’s court battles concluded with a 3-month criminal trial in San Francisco. After just two days of deliberation, jurors found Lynch and Chamberlain not guilty on all counts.
“The truth has finally prevailed,” his lawyer Charles Morvillo said.
Within months, Lynch, Chamberlain, and Morvillo were all dead.
A takeover doomed from the start
Lynch, who studied neural networks for his Ph.D. at Cambridge University, spun off Autonomy from a previous company, Cambridge Neurodynamics, in 1996.
Using sophisticated algorithms, Autonomy allowed users to organize and search through large amounts of unstructured data. It was a bright spot in Britain’s tech industry and was listed on the country’s stock market index.
According to the New York Times, Autonomy’s clients included Oracle, Adobe, Cisco, and HP itself.
But HP’s purchase of Autonomy was controversial. The hardware company’s CEO, Léo Apotheker, who had been in the position for less than a year, tried to shift the company’s direction. HP had struggled to sell printers and servers as part of its traditional hardware business. Apotheker wanted to spin off HP’s personal computing division and make a big bet on moving the company into software, which had higher margins.
Analysts hated the idea. Shareholders sued. HP’s value dropped by more than half. The company’s board fired Apotheker within weeks of the decision to buy Autonomy, before the deal even closed.
His successor, Meg Whitman, fired Lynch and wrote down the value of Autonomy by $8.8 billion, indicating HP paid nearly four times what it should have. New York Times columnist James B. Stewart floated the case that it was the worst acquisition in corporate history — even worse than AOL’s ill-fated purchase of Time Warner.
In a stunning move, HP accused Lynch of fraud the following year. The company alleged he and Hussain, a former CFO, inflated Autonomy’s sales figures. The FBI and the UK’s Serious Fraud Office both opened investigations.
Lynch fervently denied accusations of wrongdoing. He pointed out that Autonomy was audited by Deloitte, which hadn’t previously found issues. According to Lynch, HP strangled Autonomy with mismanagement and bureaucracy that pushed out employees and stymied sales.
The culture at HP, Lynch said, was poisonous.
“It was like boarding a plane, realizing the engine is on fire, and then going up to the cockpit only to find that the pilots are having a fight,” he told The Telegraph at the time.
According to The New York Times, the shareholder lawsuit against HP turned up the company’s own KPMG-prepared due diligence report. It found flashing warning signs in Autonomy’s financial transparency, but Apotheker moved forward with the takeover anyway, deciding that Autonomy’s potential was worth it.
A legal morass
The UK’s Serious Fraud Office announced in January 2015 that it closed its investigation of Autonomy, finding insufficient evidence for legal action, though it referred some issues to the US Department of Justice.
In the subsequent months, HP and Lynch sued each other in the UK. As those cases wound their way through the British court system, US prosecutors continued investigating HP’s purchase of Autonomy. In 2016, they brought fraud charges against Sushovan Hussain, who was found guilty in a 2018 jury trial. British regulators formally banned him from the financial industry earlier this year, after he completed a 5-year sentence served in the US.
HP unloaded itself of Autonomy altogether, selling parts of it in 2016 and 2017.
In November 2018, Justice Department prosecutors went directly after Lynch and Chamberlain, who had served as Autonomy’s vice president of finance.
According to their indictment, Lynch and Chamberlain falsified financial documents, lied to auditors and regulators, and suppressed the voices of people who criticized Autonomy’s financial practices.
Lynch was no longer looking at civil fights over money. He was facing the prospect of up to 20 years in prison.
For years, Lynch fought extradition to the US. Powerful in British political circles — he had advised David Cameron and served on the boards of the BBC and the British Museum — he and his lawyers argued that his legal issues should play out in the UK, not the US. American criminal laws were unfairly stacked against him, his lawyers said.
HP’s lawsuit against Lynch — still churning in the background — finally went to trial in 2019. Apotheker testified he would have abandoned the Autonomy acquisition if he had a better understanding of its finances. Lynch advanced the argument that the whole morass was orchestrated by Whitman, Apotheker’s successor, who harbored political ambitions (she ran for governor in California and is currently the US ambassador to Kenya) and wanted to shift the blame for Autonomy’s failures to someone else.
Robert Hildyard, the judge who oversaw the case, ruled mostly in HP’s favor. In a 2022 decision that ran over 1,700 pages, he wrote that HP overpaid for Autonomy due to deceit from Lynch and Hussein. Hildyard hadn’t yet decided how much they would owe in damages, but he wrote it would be “substantially less” than the $5 billion HP asked for.
While he wasn’t fighting legal battles, Lynch continued to be an entrepreneur. He founded a venture capital firm, Invoke Capital, and invested in and helped run the cybersecurity firm Darktrace, which, according to Politico, has deep ties to Britain’s intelligence agencies.
Financial disclosures Lynch filed last year as part of his criminal case indicated he was worth about $450 million.
The criminal trial
The UK finally extradited Lynch to the US in May 2023, where he prepared for his trial — alongside Chamberlain as a co-defendant — while under house arrest in San Francisco.
Lynch had a top-shelf legal team, but after the British court loss and Hussain’s conviction, the chances of an acquittal seemed bleak.
Lynch testified at the end of his three-month trial, which began in March, telling jurors he wasn’t involved in day-to-day financial oversight of the company. Misunderstandings, he said, could be chalked up to the differences between British and American accounting practices.
“A lot of what we’ve been looking at is like peering through the door of a kitchen and seeing the sausage-making machine, and that’s how it really works,” he told jurors, according to the Times of London. “If you take the microscope into even the most spotless kitchen, you’d find bacteria. If it wasn’t there, that’d be something very abnormal. I don’t think Autonomy was any different.”
Jurors believed him. In June, they declared Lynch not guilty of the 15 charges against him, clearing Chamberlain as well.
Charles Morvillo, one of Lynch’s lawyers in the trial — as well as in the preceding decade of legal disputes — praised the jury’s “rejection of the government’s profound overreach in this case.”
“This verdict closes the book on a relentless 13-year effort to pin HP’s well-documented ineptitude on Dr. Lynch,” Morvillo said in a joint statement with his attorney colleague Brian Heberlig. “Thankfully, the truth has finally prevailed.”
In an interview with the Times of London after the trial, Lynch reflected on how, with a great burden lifted at the age of 59, he could remake his life.
He mourned the deaths of his brother and mother, who both passed ahead of the criminal trial. He mused about using his fortune to start a British version of The Innocence Project, which prevents wrongful convictions in the US.
“Now you have a second life,” he told the Times. “The question is, what do you want to do with it?”
But first, a celebration. Lynch, his wife Angela Bacares, one of his two daughters, his attorney Morvillo and his wife Neda Morvillo, and several others went on a superyacht, The Bayesian, which was anchored outside Sicily and owned by Bacares.
Chamberlain moved back to the UK. While running near his home, a driver hit him with a car. He died in a hospital on Saturday.
On August 19, a sudden storm struck The Bayesian. The yacht capsized.
Of its 22 passengers, 15, including Bacares, were rescued.
But rescuers have pulled 5 corpses from the wreckage, including those of Morvillo and Lynch. A sixth remains trapped inside the boat. Lynch’s daughter Hannah remains missing.
