California court sentences ex-Autonomy CFO Sushovan Hussain to five years in clink for fraud Former Autonomy chief financial officer Sushovan Hussain has been sentenced to five years in a US prison for fraud over the 2011 sale of the British software company to Hewlett Packard. US District Judge Charles Breyer imposed a 60-month sentence along with a $10m fine, comprising a $4m penalty and forfeiture of $6.1m of …
"A fair cop, apparently."
The US legal system finds a man guilty of 'being near a US company that fucks something up while foreign'. Yes, a fair cop.
When wire fraud for someone outside the US turns up on the docket, expect the case to be utter bullshit through and through. The argument that some data went over a US cable is absurd.
" it was useful in breaking the FIFA corruption case. But I'll admit that's a rare example."
Useful is not the same as good. It was also bullshit that the US prosecuted the FIFA guys. Just because they were baddies does not make the law right. As demonstrated when it is used against the goodies.
Stupidity and greed are usually what dives acquisitions. Also add in a bit of quest for more power. The fact HP skimped on their due diligence points to the fact the board was in a hurry and just wanted to acquire them. The morning after scene was probably a bit of the classic "what the hell did we do last night" thing that one usually has after a night of pub crawling.
I came on to say something similar. A company whose revenues are inflated by 193 million does not equate to an 8.8 billion write down, no matter how creative the accounting.
I'll also point out that the civil case HP brought against Hussain and Lynch was thrown out by the US courts. It's now playing out in the UK courts instead.
As I recall key defence evidence was disallowed in the US criminal trial, and / or came to light after the trial was started. An appeal is currently underway regarding that.
In the UK the civil case could benefit Lynch who is seeking up to 160 million in damages, if the case goes his way. I also doubt he'll ever visit the US any time ever again.
I guess Hussain has a month to bribe someone to smuggle him out of the US, for a share of the millions he would otherwise have to pay to the US.
When determining a price for the purchase of a business the company has a valuation often based on earnings or net earnings and then a multiplier is attached to it. I have seen in other articles a x11 mentioned(maybe in the comments). If the valuation of a business is fraudulently 193M off, with a x11 mulitplier, that would be 2.123B. This is oversimplified, but good enough for those of us not involved to understand.
I don't know about your juries, but ours are selected specifically for their ignorance. That said, it is the duty of the attorneys, under the supervision of the judge, to instruct the jury regarding the relevant principles of law in the jurisdiction of the trial.
If you do business in the US, you are required to abide by US laws. Whatever other rules you wish to follow are not the concern of US authorities, to include judges and juries.
Which is a big reason why I like how Germany often does it with a jury of judges (for at least some proceedings I have seen). I know historically why the US didn't go this route (king packing court and all) but those days are long past. As they say if you are innocent you should prefer trial by judge, if you are guilty prefer a trail by jury.
The contrast between the court case in the UK and US are going to be interesting. In principal the conviction of Hussain should have been harder to obtain because of the presumption of evidence an dteh burden of proof on the prosecution in a criminal case. In practice the civil case in the UK seems to be struggling despite facing a lower burden of proof.
Overall it puts concerns about sovereignty and the EU in perspective. The US can prosecute you for how you ran a UK business in the UK under US laws if you embarass a large US corporation and profit from their gross incompetence.
It is ironic that the criminal trial went better than the civil trial, but there is a critical difference: In the criminal trial, the issues are the activities and intentions of the accused, with the actions of outside parties only at issue if they somehow prompt the behavior. In a civil trial, at least in the UK, "He was so stupid, I just HAD to defraud him" appears to be a meaningful defense.
Oh, the alleged fiddling is indeed a crime in the US.
More to the point, where is Hussain in relation to the US penal system? Already in their grasp? Or subject to an extradition battle? Or still able to flee to somewhere that doesn't take orders from Uncle Sam?
This is why the UK trial is so interesting.
I don’t dispute that some of the transactions in the US are dodgy. The question is who was responsible and how fair are charges as a whole? There’s a lot of focus on one transaction but it comprises no more than 10% of the alleged fraud.
Who benefits the most? Egan, who appears to have got away with a $900k fine and a slap on the wrist in exchange for parroting HP and the US prosecutions lines or Hussain who has six years and a multimillion pound fine or HP that are staring down the barrel of an investor lawsuit that could cost them billions if they can’t pin this on somebody else?
London and NYC criminal laws regarding financial transactions have different loopholes, weaknesses. That's one reason why there is room for both in the big-money world. If the UK pursued financial fraud on a "wire fraud" basis as energetically as the US seems to, fewer people would need The City. When AIG's idiots started selling massive amounts of under-priced credit insurance, Credit Default Swaps, the deals were done in London under the direction of the office in Connecticut. Ever wonder why?
It's something of a puzzlement as to why only Autonomy staffers have been strung up when the (former) management of HP (Mad Leo et al) are frankly just as culpable. HP/HPE has been in a free fall pretty much ever since the Autonomy acquisition. It could be argued that far more value (money) has been stolen (lost) from shareholders by laughingly inept management and boards since then than was ever "lost" in the Autonomy deal. It's really sad to see one of the former giants pretty much sidelined as a result of all the management insanity.
So Autonomy fiddled the books to make it look like they had more value than they really did -- however, worth is really defined by quantifying how much someone is willing to pay for it. HPE was obviously willing the pay the amount they paid, so there is a valid argument that Autonomy was "worth" the amount in HPE's myopic eyes.
If Autonomy overstated the number of contracts, etc. then there is a clear case of misrepresentation of the goods being sold, but if they just obscured them using "valid" accounting gimmicks then the case isn't as clear cut. So over-inflated yes, but nothing that I have seen has convinced me that they were able to overinflate the value in an amount anywhere close to what HPE wrote off.
Now it was obvious from the get go that Autonomys numbers were pure fantasy. But there again so was AOL's when it was acquired by Time Warner and The Learning Company when it was acquired by Mattel. But for some reason neither Steve Case or Kevin O Leary were ever charged and most certainly never went to jail for their equally transparent accounting frauds. Because they know how to play the game and generated enough of a smoke screen when the bill became due, with huge write downs, a few years later. They made sure they had the goods on the other side of deal if the law ever came a knocking.
The goods in this case being the wilful negligence and disregard of two of the board members of HP for all the negative reports and opinions they receive from senior officers of the company and outside parties. A good defense would have dragged Ray Lane and Mark Andreessen into the center of the trail defense strategy and made a huge deal about their many egregious abrogations of their legal responsibilities as board members in order to make the deal happen on the HP side. This would have muddied the water nicely. Then make a big deal about the differences between US and UK accounting practices to further muddy the waters then pull in the multiple internal HP documents showing that the board were made aware of these differences but Lane and Andreessen brow beat the rest of the senior management and board into ignoring these many warning. Now that tack would have stood more than a sporting chance of a mistrial and given a strong position to do a non custodial plea bargain before the retrial.
That is how the game is played. Sure Hussain is as guilty as hell. But so is Ray Lane and Mark Andreessen. The deal would never had happened without those two. Its not like Autonomy had not been shopped around the Valley and was already know as a pig in a poke. Hell, even Larry Ellison laughed in their face and did not try to screw them over for a cheap deal as Autonomy was such an obvious mess.
So the ideal outcome would be for Lane and Andreessen to join Huesein. Probably down in San Luis Obispo. If that happy day ever arrives then there are several bus loads of VC's who would quickly be following them to the pokey. Even happier day.
...arguing that whatever he had done had been done in the UK and not in America, and thus charging him with wire fraud in America was an "impermissible extraterritorial application of federal criminal law". District Judge Breyer threw this out because Hussain's actions had been transmitted to HP over domestic US wires.
With this and Assange being sold down the river, isn't it time for the world to subsume all their legal systems to the USA's system[s] for Law and simply say that because any defendant or accuser once held an item made in the USA or ate some gross food prepared by American scientists or spoke to an American online America's Law trumps all ?
Oracle called it extremely overvalued at half the price HP paid.
Even commentards here thought the deal absurd.
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