Two former executives of Autonomy Corp., a British software development company, were charged with multiple counts of wire fraud Thursday in connection to the 2011 acquisition of their company by Hewlett-Packard.
Michael Richard Lynch, the former Autonomy CEO, and Stephen Keith Chamberlain, the former vice president for finance of the company, were accused of defrauding purchasers and sellers of company securities, according to a release issued by the U.S. Attorney’s Office for the Northern District of California.
The two Britons are alleged to have lied to Hewlett-Packard, which acquired Autonomy in 2011 for more than $10 billion, about the true performance of Autonomy by exaggerating the company’s financial conditions and prospects, according to the release.
Lynch and Chamberlain were accused of lying about company finances between 2009 and 2011, including backdating written agreements to falsely record past revenue, improperly recording revenue from round trip transactions — which involve selling and buying back assets at the same price — referring to Autonomy as a “pure software” company, despite secretly selling non-appliance hardware, and intimidating and paying off people who questioned the company’s financial practices, according to the release.
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They are also accused of lying to Autonomy’s independent auditor about transactions, lying to market analysts about the company’s performance and products, and lying to regulators in response to financial inquiries, prosecutors say.
At the behest of Lynch and Chamberlain, Autonomy allegedly provided false and misleading quarterly and annual financial statements to HP while it was considering purchasing Autonomy, according to the release.
If convicted, Lynch and Chamberlain face up to 20 years in prison, a fine of $250,000, and restitution for each of their 14 charges, according to the release.
In April, Bloomberg reported that Autonomy’s chief financial officer, Sushovan Hussain, was convicted of accounting fraud in connection with the HP acquisition.