The previous chief monetary officer of Autonomy was convicted of fraud in San Francisco on Monday, within the first courtroom take a look at of claims by Hewlett-Packard that it was defrauded when it purchased the British software program firm.
Sushovan Hussain was convicted on all 16 counts of wire and securities fraud after a trial that lasted two months. The federal case was introduced after the UK’s Severe Fraud Workplace declined to pursue the allegations.
John Keker, Mr Hussain’s lawyer, mentioned the conviction can be appealed. “Mr Hussain defrauded nobody and acted always with the best requirements of honesty, integrity and competence,” he mentioned.
HP paid greater than $11.1bn for Autonomy in 2011 however wrote off $5bn of that a 12 months later after discovering what it mentioned was a fraud to inflate the corporate’s earnings forward of the deal. Autonomy’s founder and former chief government Mike Lynch accused the US tech firm of creating up the fraud declare to cover its mismanagement of the enterprise.
Mr Lynch is ready for a courtroom battle within the UK subsequent 12 months towards Hewlett Packard Enterprise, the successor firm to HP, which is claiming $5.1bn in damages from Mr Lynch and Mr Hussain. Mr Lynch has countersued over misplaced funding alternatives and reputational harm.
The US Securities and Trade Fee has already urged the fraud reached past the chief monetary officer, writing in a civil continuing that “Autonomy’s UK-based senior-most executives” issued “materially false and deceptive experiences” for 2 and a half years earlier than the HP takeover.
HPE welcomed Monday’s verdict. “As now we have constantly maintained, Mr Hussain engaged in outright fraud and intentionally misled the market about non-existent gross sales by a collection of calculated sham transactions,” it mentioned.
In summing up for the prosecution final week, Adam Reeves mentioned Mr Hussain had run an “unsustainable Ponzi scheme” that finally pressured Autonomy to hunt a purchaser. He was accused of engineering faux transactions to spice up the corporate’s revenues and earnings, usually by reserving gross sales to expertise resellers who in flip routed a reimbursement to Autonomy by matching transactions.
“Autonomy manipulated their income, and quarterly outcomes, making an correct valuation not possible,” HP mentioned. “That Mr Hussain tried to depict the fraud as nothing greater than a misunderstanding of worldwide accounting guidelines was, and nonetheless stays, patently ridiculous — and the jury has now held him accountable for his function in defrauding HP.”
Through the trial, Choose Charles Breyer dominated towards the defence’s try and current proof about what it claimed was turmoil inside HP surrounding the acquisition.
Mr Keker mentioned: “Defence proof of Hewlett-Packard’s conduct within the 12 months following the acquisition, which might have proven the jury that HP was not in actual fact misled in any respect, was excluded from proof and can be one foundation for the enchantment,” he mentioned.