Michael Lynch v Government of the United States of America
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewis,Mr Justice Julian Knowles |
| Judgment Date | 21 April 2023 |
| Neutral Citation | [2023] EWHC 876 (Admin) |
| Docket Number | Case No: CO/468/2022 |
| Court | Queen's Bench Division (Administrative Court) |
[2023] EWHC 876 (Admin)
Lord Justice Lewis
Mr Justice Julian Knowles
Case No: CO/468/2022
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
DIVISIONAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Alex Bailin KC, Aaron Watkins and Jessica Jones (instructed by Clifford Chance LLP) for the Applicant
Mark Summers KC and Rachel Barnes KC (instructed by CPS) for the Respondent
Hearing dates: 15–16 March 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 21 April 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Lord Justice Lewis and Mr Justice Julian Knowles handed down the following judgment of the Court:
Introduction
Before us is an application for permission to appeal by Dr Michael Lynch (the Applicant) against the decision of District Judge Snow under Part 2 of the Extradition Act 2003 (EA 2003) to send his case to the Secretary of State.
The Applicant's extradition has been sought by the Respondent so that he can stand trial in California for fraud. The American prosecutors have described the case as ‘one of the largest frauds ever prosecuted by the United States Department of Justice.’ The value of the alleged fraud runs into the billions of dollars.
It is right to record at the outset that the Applicant strongly denies all of the charges against him. Hence, where we describe in this judgment what he is said to have done, these are to be understood as allegations only. They remain to be proved, should there be a trial.
The district judge's ruling is dated 22 July 2021 and followed a four-day extradition hearing at which live evidence was called. In January 2022 the Secretary of State ordered the Applicant's extradition to the United States under s 93 of the EA 2003.
Pursuant to an order made by Julian Knowles J on 4 December 2022, on 15 and 16 March 2023 we held a ‘rolled up’ permission hearing, that is a hearing at which the application for permission and the substantive hearing were considered together. We reserved our decision. We are grateful to all counsel and their legal teams for their assistance.
We acknowledge that this judgment is unusually long for a permission decision. However, given the nature of the case and the Applicant's root and branch attack on all of the district judge's reasons, that is inevitable.
For the reasons which follow we have concluded that none of the grounds of appeal are arguable, and we therefore refuse permission to appeal. Of the five grounds of appeal argued by Mr Bailin KC, we only required Mr Summers KC to address us on one, that relating to the forum bar.
Factual background
In simple terms Autonomy Corporation plc was the holding company for a number of companies in the Autonomy Group. We will refer to this company as Autonomy. The background is as follows.
Following undergraduate, doctoral and post-doctoral research, in April 1996 the Applicant co-founded the computer software company Autonomy Corporation Group plc. That company used innovative techniques which the Applicant had developed to process data. Its products were of widespread application in many different sectors. The Applicant's solicitor, Mr Nicholls of Clifford Chance LLP, described these as follows in his witness statement of 29 May 2020 at [11]:
“Autonomy's principal business was the sale and supply of software to companies, in particular in the area of ‘unstructured data analysis’ through a platform called ‘IDOL’ (Intelligent Data Operating Layer). In short, IDOL was an engine designed to enable computers to make sense of unstructured data using probability-based theories. The technology was described by [Hewlett Packard's] Meg Whitman as ‘almost magical’. The algorithms designed and sold in Autonomy software were highly sophisticated, enabling analysis of unstructured data in the form of, inter alia, emails, telephone conversations, website pages etc. The wide utility of this technology is easy to see. By way of illustration, IDOL enabled financial institutions to monitor emails and telephone calls to identify suspicious conduct for compliance purposes. The attractiveness of this type of advanced technology enabled Autonomy to sell its products across the world to approximately 20,000 customers, including global leaders in the fields of consulting and professional services, media, pharmaceuticals and healthcare, telecommunications, aerospace, e-commerce, legal and manufacturing, as well as to government agencies, intelligence defence and technology services and to the public sector.”
From 1996 until 2012, the Applicant was Autonomy's CEO. In 2005 the company was listed on the London Stock Exchange, and it joined the FTSE 100 in 2008. Its shares were heavily traded, and many were held by US entities. Many of its staff were based in the US. It had headquarters in Cambridge in the UK and San Francisco in the US.
Autonomy had several US subsidiaries, including Autonomy Inc, with offices in San Francisco and San Jose, California; Interwoven Inc, with offices in San Jose; and Zantaz Inc, with offices in Pleasanton, California.
Autonomy received substantial revenues from the US. For example, in 2010, $592 358 000 of its $870 366 000 in reported revenues (approximately 68%) came from the US and other countries in the Americas.
This case primarily arises out of the acquisition in 2011 of Autonomy by Hewlett Packard Company (HP), a large, long-established and well-known American computer company. HP is incorporated in the US and headquartered in Palo Alto, California. It had about 349 000 employees at that time.
HP had traditionally focussed on hardware, where margins are relatively low. Its acquisition of Autonomy was intended to position it in the software market, where margins and profitability are higher.
In summary, the Applicant is accused of engaging in a conspiracy to provide dishonest financial and other information about Autonomy's performance to the markets from 2009, and then to HP from about 2011 during the purchase negotiations, thereby dishonestly maintaining or inflating Autonomy's share price, and hence, ultimately, the price which HP paid for it. The Applicant owned a substantial number of Autonomy's shares, and so the alleged fraud benefitted him personally.
The Applicant is also accused of attempting to obstruct justice in relation to the investigation into the alleged fraud, and of money laundering in relation to the money he personally received following HP's acquisition.
The Applicant has been indicted in the US District Court for the Northern District of California (San Francisco Division) together with Stephen Chamberlain, Autonomy's Vice-President of Finance until March 2012, in United States v. Michael Lynch and Stephen Chamberlain, Criminal No. 18-CR-577 (CRB). Mr Chamberlain returned voluntarily to the US and has been released on bail. The judge in charge of the case (US District Judge Charles Breyer) has expressed the wish that the Applicant and Mr Chamberlain be jointly tried, although we were also told that in the event that the Applicant is extradited, an application for severance would be made. Autonomy's former Chief Financial Officer, Sushovan Hussain, has already been tried and convicted in California and sentenced to five years imprisonment, and his conviction upheld on appeal: United States v Hussain 972 F 3d 1138 (9th Cir 2020).
The Superseding Indictment against the Applicant, on the basis of which his extradition is sought, is dated 29 March 2019. We will refer to this as ‘the Indictment’.
Paragraphs 4–5 of the affidavit of William Frentzen, an Assistant United States Attorney, and one of the California prosecutors, contained within the extradition request, summarises the Government's case as follows:
“4. This prosecution arose from an investigation by the Federal Bureau of Investigation (‘FBI’), which revealed that from January 2009 to October 2011, Michael Lynch, a citizen of the United Kingdom, was the leader of a corporate conspiracy to fraudulently inflate the reported revenue, earnings and value of a publicly traded company, Autonomy Corporation plc (‘Autonomy’), and to sell Autonomy to Hewlett-Packard (‘HP’), a publicly traded company based in the Northern District of California, for approximately $11.7 billion. Additionally, Lynch conspired with others to conceal the fraudulent nature of the accounting at Autonomy and engaged in activity to further that goal, including violating internal controls of a publicly traded company, obstruction of justice, and money laundering.
5. The FBI's investigation established that from 2009 to 2011, Autonomy's founder and Chief Executive Officer Michael Lynch, Autonomy's Chief Financial Officer Sushovan Hussain, and Autonomy's Vice President of Finance Stephen Chamberlain (and others) carried out a fraudulent scheme to deceive purchasers and sellers of Autonomy securities — traded on the London stock exchange — and potential buyers of the company such as HP. The core of the fraud was to falsely portray the performance of Autonomy's business, its financial condition, and its prospects for growth. Using a variety of different fraudulent means, Lynch, Hussain, and Chamberlain made it appear that Autonomy's revenues were growing by 10–25% a year when, in reality, during each of the quarters for most of 2009–2011, Autonomy was not growing or was slowing …”
The evidence concerning the process by which HP came to purchase Autonomy is fairly lengthy, but can be summarised as follows. This is taken mainly from Mr Frentzen's affidavit and the declaration of Robert S. Leach, an Assistant United States Attorney who is also involved in the Applicant's prosecution.
In...
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