Analysis Autonomy personnel were instructed to destroy hard drives at the company's offices nearly a year after the buyout of the software bz by HP, a court ruling in ex-CEO Mike Lynch's extradition battle has revealed.
District Judge Michael Snow ruled last week that Lynch can be extradited to America for trial on 17 criminal charges, sending the case to Home Secretary Priti Patel for rubberstamp approval.
Westminster Magistrates' Court has now released Judge Snow's full written judgment [PDF], which contained pointed criticisms of Lynch's legal team on top of dismissing all their arguments against extraditing the Autonomy founder.
It also revealed that the US accuses Lynch of a conspiracy to destroy evidence, including asking an unnamed "co-conspirator" to destroy hard drives and wipe a laptop and its backups. The latter two are said to have belonged to Autonomy finance veep Steve Chamberlain, who was indicted alongside Lynch in America.
The destruction was not referred to in the long-running High Court civil fraud trial between Lynch and Hewlett Packard Enterprise.
Lynch's solicitor told Westminster Magistrates' Court in a witness statement: "Nowhere is it explained that the destruction of hard drives was not at all unusual in light of Autonomy's legitimate and highly sensitive work" for GCHQ and other spy agencies, suggesting that "official directions for the destruction of classified information" might have been to blame.
Having allegedly taken place in May 2012, the same month that Lynch quit Autonomy after the buyout, the destruction of hard drives and a key finance bod's laptop are key to US Department of Justice accusations that Lynch tried to "obstruct proceedings."
Bad news for Lynch all round
As a separate criminal process from the long-running High Court civil case, the extradition case relies on separate findings of fact made by Judge Snow – none of which appear helpful to Lynch's team.
He wrote: "I am satisfied that the huge financial losses caused to HP in the USA, the losses suffered by American investors and the significant reputational damage caused to HP strongly favours extradition."
The US Embassy in London filed a request to extradite Lynch in December 2019. He is charged with wire fraud, specifically falsely inflating the value of Autonomy before it was sold to HP for circa $11bn in 2011. HP then wrote down the book value of Autonomy by $8.8bn. A separate civil case brought by HPE has been heard in the UK court system and judgment is pending.
Addressing evidence given by Lynch's solicitor Kelwin Nicholls, Judge Snow thundered: "I am satisfied that statements made by Mr Nicholls in relation to the standing of the evidence in the civil proceedings is a partisan view of the effect of the evidence and could easily be mistaken as being unarguable when the interpretation remains hotly contested."
Nicholls made two witness statements for the extradition case, describing the US government's extradition request as "misleading and/or misleadingly incomplete" and Lynch's version of events as "incapable of legitimate dispute." His second witness statement was a paragraph-by-paragraph fisking of the US Department of Justice's formal declaration [PDF, 45 pages] in support of extradition, and the 118 pages of dense analysis Nicholls produced seemed to have actively annoyed Judge Snow.
During the court hearing earlier this year, Nicholls was accused by the US's barrister, Mark Summers QC, of having "overstepped the line and advocated for Dr Lynch." In his ruling, Judge Snow adopted Summers' putdown of Lynch's solicitor as a statement of fact, adding: "Even on Mr Nicholls' own evidence it is agreed that the defendant performed alleged overt acts in furtherance of the conspiracy [to defraud HP by overinflating Autonomy's accounts]; this is sufficient to establish that conduct occurred in the USA."
Hit for six
A key part of any extradition case from the UK is establishing that allegedly criminal behaviour had an effect in the country requesting the extradition.
- Autonomy founder Mike Lynch loses first stage in fight against extradition to US
- Deloitte settled HPE's Autonomy lawsuit for $45m back in 2016 and agreed to cooperate with US DoJ
- HPE urges judge to pick through Deloitte-bashing report it claims demolishes Autonomy founder's defence
- Court witness describes how Autonomy founder Lynch would wash his rear-end in US prison showers and dorms
Judge Snow tossed aside Lynch's arguments that the Autonomy buyout and write-down's effects were not felt in the US, saying: "The money used to purchase Autonomy was HP's money whether it was held offshore (as part of it was) or within the USA (as part of it was)… harm is not to be assessed solely on the basis of where the money was paid."
Lynch's lawyers also tried claiming that the Americans waited for two years longer to charge him with criminal offences than they did for his co-conspirators. The British exec said this delay was because prosecutors were hoping to obtain documents from the UK civil trial against him – and that they were hoping to make Autonomy CFO (and jailbird) Sushovan Hussain testify against him, in the same way as Autonomy's top US salesman, Christopher "Stouffer" Egan, was brought in to testify against Lynch after signing a plea bargain forcing him to do so.
"Even if the reason for the delay was solely to 'flip' Mr Hussain, which is not my finding, I would not conclude that it would be unjust to order the Defendant's surrender," concluded Judge Snow.
He also threw out Lynch's legal arguments that HPE is colluding with the US Department of Justice in the bringing of parallel civil and criminal cases against him, ruling: "The Government was not a party to the civil suit which was brought on behalf of HP. The Government's criminal allegations are based on its own evidence. The Government's conduct of criminal proceedings is not bound by the way HP chose to run its civil suit."
Mr Justice Hildyard, the High Court trial judge presiding over the civil case, mentioned US pressure on his courtroom during the trial – especially during the early stages when US prosecutors coincidentally announced fresh charges against Lynch days before the civil trial began in London.
Forum bar was hurdled over
Damningly for Lynch, Judge Snow also comprehensively demolished his main argument against extradition: the UK's forum bar. Section 83A of the Extradition Act 2003 says an extradition can be halted if it is against "the interests of justice" to do so, having been brought in after the Gary McKinnon hacking allegations case in the 2000s.
On US criminal charges 1 to 16, Judge Snow ruled that Autonomy's alleged accounting fraud "was always intended to fall on a US-based entity," going on to approvingly quote HPE's assertions that the Autonomy "smear campaign" had caused "lasting reputational injury... inflicted immeasurable harm to us, to our reputation, and to our brand."
Despite suggestions that Britain's Serious Fraud Office (SFO) could prosecute Lynch in the UK if they felt like it, the SFO declined to to do and handed the case over to the US. Based on testimony from SFO solicitor Ronan Duff, Judge Snow said the SFO's witness evidence would "not have constituted admissible evidence in the English courts" and that it might be difficult to obtain the co-operation of US-based witnesses in a UK prosecution.
Numerous US-based witnesses testified during the High Court civil trial. Nonetheless, the SFO said America was the best place for a criminal prosecution and the judge adopted that.
Lynch's US attorney, Chris Morvillo, told the court a criminal trial is likely to take place in 2023. If he loses that case, Lynch faces being fined £578m ($804m) in forfeiture to the American government, with his co-defendant Stephen Chamberlain potentially on the hook for $4m.
The extradition case against Lynch continues. ®
There was also the delicate matter of Joel Sickler, Lynch's other live witness. Sickler, called to testify as an expert on US prison conditions, spent an inordinate amount of time ranting on about Lynch's specialised washing regime, necessary thanks to a medical condition, among other things. (sample: "Prison litigation in the US has become almost frivolous. Courts look at these suits as frivolous and they don't necessarily hold – few and far between, do they hold corrections agencies, departments and the BOP [Bureau of Prisons] accountable. The burden of proof is so, so high!")
The judge commented: "I am satisfied that Mr Sickler was an unreliable partisan witness who has exaggerated his evidence that he has presented, on occasions in a misleading way."