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Darktrace chiefs face US prosecutor demand for Mike Lynch emails

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mike lynch darktrace
mike lynch darktrace

The US government is seeking to force the boss of the FTSE 100 cyber security company Darktrace to hand over emails and documents as they build a fraud case against its founding investor, the technology entrepreneur Mike Lynch.

Prosecutors have applied for subpoenas against Poppy Gustafsson and six other former employees at Mr Lynch’s previous software company Autonomy.

They are seeking all documents relating to Autonomy, Mr Lynch, and former Autonomy finance director Stephen Chamberlain, in an effort to “show the financial and professional dependency of these persons on Lynch”, according to federal court filings.

Mr Lynch has been accused of 17 counts of conspiracy and fraud over the £7bn sale of Autonomy to Hewlett Packard in 2011, including claims that he has paid “hush money” to individuals to prevent them testifying.

Former Autonomy executives have been accused of inflating the company’s performance ahead of its sale.

Mr Lynch has said he “unequivocally” rejects the allegations, and is fighting US efforts to extradite him to face trial.

Last week, prosecutors asked the court to grant subpoenas against Ms Gustafsson and others associated with either Darktrace or Mr Lynch’s investment fund, Invoke Capital.

They include Nicole Eagan, its chief strategy officer and formerly Ms Gustafsson’s co-chief executive; Rob Sass, its managing director for North America; and Gary Szukalski, another US executive.

Corrado Broli, its Italy head; Peter Menell, a partner at Invoke, and Lisa Harris, an Invoke director, were also named. All are former Autonomy employees.

“All followed Lynch from Autonomy to HP in 2011, and then to Invoke Capital or Darktrace in 2012 or later. The circumstances under which these persons were hired and retained by Invoke Capital (or Darktrace, in which Invoke Capital held a controlling interest for years) are relevant,” the application says.

Mr Lynch has no formal role at Darktrace, but his legal battles have at times affected shares in the company, which went public this year.

Ms Gustafsson, Mr Broli, Ms Harris and Mr Menell are not US citizens, meaning that if they refuse to comply with potential subpoenas, the US may have to ask courts in the UK and Italy to acquire the files.

Mr Lynch has been charged alongside Mr Chamberlain. Mr Chamberlain has sought records from two City analysts who he claims had cooperated with short sellers to drive down the company’s price.

HP has separately sued Mr Lynch in the English courts for $5bn (£3.7bn), with a decision expected in the next few weeks.

Priti Patel, the Home Secretary, has set a deadline of November 29, a week on Monday, to choose whether to approve a judge’s finding that Mr Lynch should be extradited.

Darktrace did not comment.

A spokesman for Mr Lynch said: “Although Invoke created the original Darktrace and its founding technology, for years it has run independently of Invoke.

“The DOJ assertion contains inaccuracies. To our knowledge none of the individuals named were given packages differing from the modest end of industry norms.

“The fact that years later the low value options granted in the Darktrace startup have by virtue of its success become valuable is not relevant.

“This subpoena is a distraction from the recent revelations in the case.”

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