Yahoo Finance Tech titan Mike Lynch testifies at fraud trial that Autonomy was ‘not perfect’
The British entrepreneur Mike Lynch took the stand on Thursday in a San Francisco federal courthouse as a key witness in his own criminal fraud trial, defending his role at Autonomy, the tech firm he co-founded and then sold.
The trial continued as planned Thursday despite the defense team moving for a mistrial over alleged improper questioning of a witness by the prosecution. Lynch’s defense team called the questioning, which indirectly referenced the tech titan’s extradition, “egregious” and “highly improper” in a filing.
US district judge Charles Breyer denied the motion to dismiss, but acknowledged the prosecution’s questions were improper and ordered the jury to exclude the questions and subsequent testimony from their deliberation.
US authorities have charged Lynch with 16 counts of wire fraud, securities fraud and conspiracy relating to his company’s acquisition deal with Hewlett-Packard in 2011, alleging he artificially inflated Autonomy’s sales, misleading auditors, analysts, and regulators. If convicted, Lynch faces up to 25 years in prison. He has pleaded not guilty.
In his testimony, Lynch said his job involved delegating many tasks to employees, and that his background upon founding the company was more technical in nature than business-focused.
While the government has painted Lynch’s business dealings as clearly fraudulent, Lynch in his testimony on Thursday attempted to highlight more complexity, stating that like any business, Autonomy was “not perfect”.
“The reality of life is that it’s nuanced, and it is messy,” he said. “[In this trial] we are peering through the door and seeing the sausage being made. One thing to bear in mind is if you take the microscope into a spotless kitchen, you will always find bacteria. And I don’t think Autonomy is any different.”
Related: What have we learned from week one of Mike Lynch’s US fraud trial?
The Autonomy co-founder described the trial experience thus far as “surreal”, saying he has watched “a parade of witnesses [he’s] never met” describe decisions in which he had no involvement. Prosecutors have called upwards of 30 witnesses since the trial began in March.
Lynch addressed the jury directly throughout his questioning, explaining concepts central to the case including earnings reports, hardware sales and the timeline of Autonomy’s founding and ill-fated acquisition. He also paused to explain Britishisms to the American jury, including phrases like “bean counters” and “good bloke”.
Much of the questioning Thursday sought to address the government’s focus on Autonomy’s dealings in hardware sales. The prosecution claims that although the company had portrayed itself as a software company, it relied heavily on hardware sales, something Lynch “did everything he could” to conceal from the market.
Lynch said Autonomy often sold hardware and software together as a package, and that hardware sales were an important means to mitigate business risks, including changing relationships with suppliers.
Court adjourned Thursday afternoon before the defense finished questioning, which will resume on Tuesday following a US holiday. Lynch is the final witness the defense will call to the stand, meaning the trial will be wrapping in the coming weeks.
