Former Autonomy Financial Chief Indicted on Felony Fraud Charges -- Update
November 11 2016 - 8:40PM
Dow Jones News
By Jay Greene
Federal prosecutors indicted former Autonomy Corp. finance chief
Sushovan Hussain over claims of deception in Hewlett-Packard Co.'s
$11 billion acquisition of the company in 2011.
The charges, filed on Thursday in a San Francisco federal court,
allege Mr. Hussain and others "engaged in a fraudulent scheme to
deceive purchasers and sellers of Autonomy securities and
Hewlett-Packard about the true performance of Autonomy's business,
its financial condition and its prospects for growth."
In the indictment, prosecutors accuse Mr. Hussain and others of
a variety of fraud including artificially inflating Autonomy's
revenue, making false and misleading statements about company
finances, and issuing false and misleading quarterly and annual
reports. The indictment also accuses the former CFO and others of
"intimidating, pressuring and paying off persons who raised
complaints about or openly criticized Autonomy's financial
practices and performance."
An email from Mr. Hussain's spokesman quoted the former
executive's attorney John Keker as saying his client is innocent
and expects him to be acquitted at trial.
"It is a shame that the Department of Justice is lending its
support to HP's attempts to blame others for its own catastrophic
failings," Mr. Keker said in the email.
Last year, Hewlett-Packard agreed to pay $100 million to settle
a shareholder lawsuit related to its troubled acquisition of the
British software maker. The California-based technology company
also accused Autonomy of improperly reporting $709 million in
revenue over 2 1/2 years before the acquisition.
Hewlett-Packard eventually took an $8.8 billion write-down on
the deal. Also last year, the company split into HP Inc. and
Hewlett Packard Enterprise, which in September sold off parts of
Autonomy.
The indictment charges Mr. Hussain with multiple felonies with a
maximum penalty of 20 years in prison. Prosecutors are seeking $7.7
million from Mr. Hussain, "representing the proceeds obtained"
through the alleged fraud.
H-P sued Mr. Hussain, along with former Autonomy CEO Mike Lynch
in March 2015 in London, seeking $5.1 billion in damages. The
indictment, though, doesn't name Mr. Lynch or any of the "others"
who prosecutors alleged aided Mr. Hussain's fraud.
Among the allegations, the indictment accuses Mr. Hussain of
firing a finance officer in 2010 who questioned the accuracy of
Autonomy's financial statements. The following year, the
indictments allege, Mr. Hussain "caused an Autonomy employee" to
email backdated licensing agreements to the company's auditors.
During the courtship with H-P, Mr. Hussain "caused Autonomy to
provide HP and its advisors false and misleading listings" of his
company's contracts and customers, according to the indictment.
Mr. Hussain's lawyer Mr. Keker said his client "properly applied
U.K. accounting rules," adding that the case doesn't belong in a
U.S. criminal court.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
November 11, 2016 20:25 ET (01:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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