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 12, 2016 02:47 ET (07:47 GMT)
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