Mike Lynch, the tech entrepreneur once hailed as Britain’s answer to Bill Gates, has lost an appeal against extradition to the US to answer criminal fraud charges.
Lynch, the founding investor of the British cybersecurity firm Darktrace, is facing allegations that he duped the US firm Hewlett-Packard into overpaying when it struck an $11bn deal (£8.2bn) for his software firm Autonomy in 2011.
Two high court judges considered Mike Lynch’s challenge at a recent hearing in London and on Friday issued a ruling rejecting his appeal against extradition to face the charges.
A spokesperson for Lynch said he was considering appealing to the European court of human rights. “Dr Lynch is very disappointed, but is reviewing the judgment and will continue to explore his options to appeal, including to the European court of human rights (ECHR),” he said.
“The United States’ legal overreach into the UK is a threat to the rights of all British citizens and the sovereignty of the UK.”
However, criminal defence law firm Corker Binning said that only 8% of applications to the ECHR in such cases – seeking a Rule 39 order to stop the UK extradition until it has considered the case – were successful last year.
“The decision signifies the exhaustion of domestic remedies in the UK against the order for his extradition,” said Edward Grange, a partner at Corker Binning. “There can be no appeal to the supreme court.”
Grange said the decision also set an uneasy precedent for UK/US business deals. “The decision by the high court will do little to ease the anxieties of many UK executives who had an eye on this case, fearing that fallout from business deals involving the US could see them being hauled before US courts many years later,” he said.
“Despite this case involving a British national and a British company, the court that will now try the matter will be in the US.”
Last year, Hewlett-Packard won a six-year civil fraud case in the UK against Lynch after a high court judge ruled that he had defrauded HP by manipulating Autonomy’s accounts to inflate the value of the company.
The then home secretary, Priti Patel, subsequently approved the extradition of Lynch to face criminal trial in the US for 14 counts of conspiracy and fraud over claims that investors in HP lost billions due to his actions.
Lynch, who could face a maximum prison sentence of 25 years if found guilty, has always denied the allegations and any wrongdoing.
Lord Justice Lewis and Justice Julian Knowles ruled on Friday that Lynch, who made £500m from the sale to HP and was hailed as one of Britain’s few global tech champions, should be extradited to the US to stand trial.
Sushovan Hussain, Autonomy’s former finance director, is already serving time in jail in the US after being found guilty of fraud relating to the same deal
Darktrace, which is aiming to become a European cybersecurity power in the US-dominated cybersecurity space, continues to struggle to emerge from Lynch’s shadow.
His investment fund Invoke Capital, which was Darktrace’s first and biggest shareholder, retains a 4.2% stake, while his wife, Angela Bacares, owns 6.5%. Jointly, they own shares worth almost £200m.
To create distance, Lynch stepped down from Darktrace’s board in 2018. However, he remained on its advisory council until 2021, when he moved to a newly created science and technology council, which he stepped down from last February.
“Dr Lynch has no operational, advisory or any other role at Darktrace,” said a spokesperson for the cybersecurity firm. “His relationship with Darktrace is purely limited to his shareholding in the business.”
Darktrace was founded in 2013 by mathematicians from the University of Cambridge, artificial intelligence (AI) experts and cyber specialists from GCHQ. Many of its staff formerly worked at Autonomy, including the chief executive, Poppy Gustafsson.
In 2018, Darktrace, which listed on the London Stock Exchange two years ago, was subpoenaed by US authorities for information about Invoke, warning there was a risk of money laundering claims if its backing money included cash from the Autonomy sale. Darktrace has said its liability in this regard is “low-risk”.
The company, which has seen its market valuation fall to £1.8bn after hitting a high of almost £7bn as investors rushed to buy in to the firm after its flotation, has also faced attacks from short sellers that have criticised its business practices and management ties with Autonomy.
