Case 3:18-cr-00577-CRB Document 146 Filed 05/11/23 Page 1 of 9
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`United States,
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`Plaintiff,
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`v.
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`Michael Richard Lynch,
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`Case No. 18-cr-00577-CRB-1
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`ORDER GRANTING BAIL AND
`IMPOSING CONDITIONS ON
`RELEASE
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`Defendant.
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`After lengthy extradition proceedings in the United Kingdom, Defendant Michael
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`Richard Lynch (“Lynch”) has finally landed on our shores to stand trial, accompanied by
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`the United States Marshals Service. After a bail hearing, the Court now determines
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`whether Lynch is a serious risk of flight, and what conditions might reasonably assure his
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`appearance at trial, pursuant to 18 U.S.C. § 3142.
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`Presently, based upon the circumstances of the defendant, it is clear that he presents
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`a serious and substantial risk of flight. A number of factors lead to this conclusion.
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`Mr. Lynch has vigorously contested extradition for nearly four years. As recently
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`as last month, the defendant publicly announced that his extradition proceedings constitute
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`a “legal overreach into the United Kingdom.”1 He has no significant ties either to this
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`District or the United States. He is a citizen of the United Kingdom, owns no property in
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`the United States, and resides abroad. Further, he has significant financial resources
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`1 Mark Sweney, Autonomy Founder Mike Lynch Loses Appeal Against Extradition to US,
`Guardian (Apr. 21, 2023), https://www.theguardian.com/business/2023/apr/21/autonomy-founder-
`mike-lynch-loses-appeal-against-extradition-to-us-hewlett-packard (“The United States’ legal
`overreach into the UK is a threat to the rights of all British citizens and the sovereignty of the
`UK.”).
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`estimated at $450 million, which could easily sustain him for the remainder of his life,
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`were he to abscond.
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`Added to these personal circumstances is the fact that the subject matter of the
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`indictment has been litigated before this Court and the United Kingdom. While the Court
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`has no opinion concerning the defendant’s culpability, his alleged co-conspirator, the Chief
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`Financial Officer of the defendant’s company, was convicted of multiple counts of fraud.
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`Those convictions were affirmed on appeal notwithstanding the claim that this Court did
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`not have jurisdiction, the very same claim that Lynch has advanced in his unsuccessful
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`attempt to defeat extradition.
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`For all these reasons, flight from prosecution appears to this Court to be almost a
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`certainty. Indeed, if it were the only inquiry, the court would order detention. However,
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`the Bail Reform Act requires a determination as to whether conditions of release can be
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`fashioned which would assure a defendant’s presence at trial, given the individual
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`circumstances of this defendant. Because of Lynch’s unique financial resources, the Court
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`concludes that there are certain restrictions that, if met, will reasonably assure his presence
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`at trial. These minimum restrictions are set forth below.
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`I.
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`BACKGROUND
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`A.
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`The Indictment
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`In the superseding indictment in this case, the government alleges the following:
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`From 1996 to 2011, Lynch was the CEO and a director of Autonomy, a public
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`software company incorporated in the United Kingdom. SI (dkt. 21) ¶¶ 1, 3–4. From
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`2009 to 2011, Lynch, his co-defendant and Vice President of Finance Stephen
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`Chamberlain, and Chief Financial Officer Sushovan Hussain2 “engaged in a fraudulent
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`scheme to deceive purchasers and sellers of Autonomy securities about the true
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`2 After trial in 2018, Hussain was convicted of conspiracy to commit wire fraud, wire fraud, and
`securities fraud, and sentenced to sixty months in prison. See Jury Verdict, United States v.
`Hussain, 16-cr-462, dkt. 394 (Apr. 30, 2018); Minute Entry re: Sentencing, dkt. 552 (May 13,
`2019). Hussain’s convictions were affirmed on appeal. See United States v. Hussain, 972 F.3d
`1138 (9th Cir. 2020).
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`2
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`Northern District of California
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`United States District Court
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`Case 3:18-cr-00577-CRB Document 146 Filed 05/11/23 Page 3 of 9
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`performance of Autonomy’s business,” including by artificially inflating revenue figures,
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`and making false and misleading statements to Autonomy’s independent auditor, market
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`analysts, and regulators. Id. ¶¶ 19, 22. In 2011, Lynch met with representatives from HP
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`about a potential acquisition of Autonomy, using the false and misleading financial
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`statements created by Chamberlain to “make Autonomy look more attractive to a potential
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`purchaser like HP.” Id. ¶ 21.
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`In August 2011, HP agreed to acquire Autonomy for $11 billion, noting in the press
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`release announcing the acquisition that “Autonomy’s recent operating and financial
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`performance has been strong.” Id. ¶¶ 8–9. Because Lynch owned seven percent of
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`Autonomy’s outstanding shares at the time the deal closed, he made approximately $804
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`million from the acquisition. Id. ¶ 12. The indictment charges Lynch with conspiracy to
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`commit wire fraud, wire fraud, securities fraud, and a conspiracy to commit offenses
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`against the United States. Id. ¶¶ 25–34.
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`B.
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`Procedural History
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`In September 2019, the government issued a formal request for Lynch’s extradition,
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`delivered to the U.K. Central Authority in November 2019. See ECF 49-1. On July 22,
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`2021, District Judge Michael Snow rejected Lynch’s extradition challenge, and on April
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`21, 2023, that ruling was affirmed by the U.K. High Court. Having exhausted his appellate
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`rights, Lynch was extradited to the United States and appeared before this Court on May
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`11, 2023.
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`II.
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`LEGAL STANDARD
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`Pursuant to the Bail Reform Act of 1984, 18 U.S.C. § 3142 governs pretrial
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`detention of criminal defendants. See United States v. Hir, 517 F.3d 1081, 1085–86 (9th
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`Cir. 2008). While defendants are ordinarily entitled to go free before trial, in “rare
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`circumstances,” a court may order a defendant detained. United States v. Motamedi, 767
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`F.2d 1403, 1405 (9th Cir. 1985); see also United States v. Townsend, 897 F.2d 989, 994
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`(9th Cir. 1990). To detain a defendant pretrial, the Court must find by a preponderance of
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`the evidence that that the defendant presents a serious risk of flight, and that “no condition
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`Case 3:18-cr-00577-CRB Document 146 Filed 05/11/23 Page 4 of 9
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`or combination of conditions will reasonably assure the appearance” of the defendant. See
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`Motamedi, 767 F.2d at 1406; 18 U.S.C. § 3142(e).
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`In determining whether there are conditions of release that will reasonable assure
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`the appearance of a defendant and the safety of the community, the Court considers: (1) the
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`nature and seriousness of the offense charged; (2) the weight of the evidence against the
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`defendant; (3) the defendant’s character, physical and mental condition, family and
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`community ties, past conduct, history relating to drug and alcohol abuse, criminal history,
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`and record concerning appearance at court proceedings; and (4) the nature and seriousness
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`of the danger to any person or the community that would be posed by the defendant’s
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`release. See 18 U.S.C. § 3142(g).
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`III. DISCUSSION
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`The Court first addresses Lynch’s risk of flight, and then the conditions that would
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`reasonably assure his appearance at trial.3
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`A.
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`Risk of Flight
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`Lynch clearly presents a serious risk of flight, for at least three reasons.
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`First, Lynch is not facing these charges voluntarily. After spending over three years
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`fighting extradition in his native United Kingdom and exhausting his remedies there,
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`Lynch was finally extradited on and appeared before the Court for the first time on May
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`11, 2023, more than four years after the initial indictment in this case was filed. Clearly,
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`Lynch’s conduct signifies that he would rather be in the United Kingdom—or perhaps
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`anywhere else—than in the United States facing these charges. See, e.g., United States v.
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`Amar, 300 F. Supp. 3d 287, 290 (D.D.C. 2018) (holding that the defendant represents a
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`risk of flight in part because he is a citizen of Israel and “the last time he was in Israel
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`Defendant fought his extradition for nearly seven months, and consented only after
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`receiving two adverse court rulings”); United States v. Botero, 604 F. Supp. 1028, 1034
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`(S.D. Fla. 1985) (reasoning that while the defendant may have had “entirely legitimate
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`3 The parties—and the Court—agree that Lynch does not present a danger to the community.
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`tactical reasons for resisting extradition, the fact remains that the defendant has absented
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`himself from this jurisdiction and refused to answer these charges”), aff’d, 853 F.2d 928
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`(11th Cir. 1988); United States v. Jones, 143 F. Supp. 3d 78, 85 (W.D.N.Y. 2015)
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`(concluding that the defendant was a flight risk in part because he “did not voluntarily
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`produce himself to face these charges” but instead fought extradition in the United
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`Kingdom), aff’d, No. 15-3723 (2d Cir. Feb. 11, 2016); cf. United States v. Khashoggi, 717
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`F. Supp. 1048, 1050–51 (S.D.N.Y. 1989) (finding that because the defendant “waived his
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`right to appeal extradition in Switzerland and travelled immediately to the United States
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`for arraignment . . . [that] evince[d] a willingness, albeit overdue, to submit to the
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`jurisdiction of this Court”). While Lynch has argued that exhausting his legal remedies in
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`extradition proceedings does not indicate that he would resort to illegal remedies by
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`absconding before trial in this case, the Court is convinced that Lynch’s “refusal to
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`voluntarily return is indicative of a mental state which could easily rationalize flight on
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`legal, moral, or intellectual grounds.” Botero, 604 F. Supp. at 1034.
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`Second, Lynch has significant financial resources with which to fund flight. At his
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`bail hearing, Lynch’s counsel represented that he is worth between $400 and $450 million,
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`with approximately $93 million of those assets in unencumbered shares of publicly traded
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`stock. Courts frequently find that defendants with such vast wealth present a substantial
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`risk of flight. See Townsend, 897 F.2d at 996 (affirming an order of pretrial detention
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`where defendants had “access to substantial sums of cash”); United States v. Madoff, 586
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`F. Supp. 2d 240, 248–49 (S.D.N.Y. 2009) (affirming an order of 24-hour home monitoring
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`and $10 million bond where the government argued that the defendant had “assets that
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`[could] not be effectively restrained”); United States v. Epstein, 425 F. Supp. 3d 306, 323
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`(S.D.N.Y. 2019) (“The Defendant’s vast wealth and influential contacts have provided him
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`with the means to pay individuals to assist him in unlawful endeavors, including
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`potentially fleeing the jurisdiction.”); United States v. Esposito, 309 F. Supp. 3d 24, 31
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`(S.D.N.Y.) (holding that the defendant posed a risk of flight in part because “there is a high
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`probability that Esposito has access to significant amounts of . . . liquid assets”), aff’d, 749
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`Case 3:18-cr-00577-CRB Document 146 Filed 05/11/23 Page 6 of 9
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`F. App’x 20 (2d Cir. 2018).
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`Third, Lynch does not have significant ties to United States, and particularly to the
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`San Francisco area. While Lynch’s alienage is not dispositive, see Motamedi, 767 F.2d at
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`1408, he has not been living or working in the United States, nor does he have family ties
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`here. Lynch is a British citizen; while his wife was once a U.S. citizen, she is now solely a
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`British citizen; they have two teenage children, and all live in the United Kingdom; and he
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`owns property in the United Kingdom, and not the United States. In short, there is nothing
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`keeping him here, beyond the charges he faces in this Court.
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`Accordingly, given Lynch’s years-long fight against extradition from the United
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`Kingdom, coupled with his vast wealth and lack of significant connections to the United
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`States, the Court finds that Lynch presents a serious risk of flight.
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`B.
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`Conditions to Reasonably Assure Lynch’s Appearance
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`Considering the four required factors under 18 U.S.C. § 3142(g), the Court finds
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`that there are (stringent) conditions of release that will reasonably assure Lynch’s
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`appearance at trial.
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`First, there is no question that the charged offenses and underlying circumstances
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`alleged—wire fraud, securities fraud, and conspiracy to commit offenses against the
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`United States, involving years of falsified records culminating in a deal worth billions—
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`are serious. See, e.g., Townsend, 897 F.2d at 994 (holding that charges against the
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`defendants, which included a violation of 18 U.S.C. § 371, were “accusations . . . of
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`sophisticated criminal conduct” that weighed against granting bail); United States v.
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`Cohen, No. C 10-00547 SI, 2010 WL 5387757, at *7 (N.D. Cal. Dec. 20, 2010) (finding
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`that charges, including wire fraud, were serious even if the defendant faced a sentence
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`between four and nine years, because “[y]ears in prison, even if only a few, represents a
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`significant hardship for Mr. Cohen considering his former luxurious lifestyle”); United
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`States v. Possino, No. CR 13-00048-SVW-3, 2013 WL 1415108, at *1–3 (C.D. Cal. Apr.
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`8, 2013) (charges for a “pump and dump” securities fraud scheme were serious and
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`weighed in favor of pretrial detention).
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`Second, the weight of the evidence is undoubtedly substantial. Because of the multi-
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`year delay in moving this case forward, the Court has the benefit of two “fiercely litigated”
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`proceedings on the same events: First, a 29-day criminal trial in this Court against
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`Autonomy’s Chief Financial Officer, Sushovan Hussain, who was convicted on wire fraud,
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`conspiracy to commit wire fraud, and securities fraud charges, see United States v.
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`Hussain, No. 16-CR-00462-CRB, 2018 WL 3619797, at *1 (N.D. Cal. July 30, 2018),
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`aff’d, 972 F.3d 1138 (9th Cir. 2020), and aff’d, 818 F. App’x 765 (9th Cir. 2020); and
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`second, a 93-day civil trial in the United Kingdom, which “may rank amongst the longest
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`and most complex in English legal history.” Judgment ¶ 7, ACL Netherlands BV v. Lynch
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`[2022] EWHC 1178 (Ch) (17 May 2022), 2022 WL 01557021. While Lynch “vigorously
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`denied both the fact of and his involvement in any impropriety” in the civil proceedings,
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`Justice Hildyard found that HP had “substantially succeeded” in its case against Lynch. Id.
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`¶ 5; Summary ¶ 3. While the Court is mindful that this is the least important of the factors
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`to be considered, Motamedi, 767 F.2d at 1408, and passes no judgment on Lynch’s guilt or
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`innocence, Townsend, 897 F.2d at 995, it does not escape the Court’s attention that the
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`evidence has already been tested so thoroughly.
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`Third, as discussed in the prior section, Lynch’s lack of connection to the United
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`States and the San Francisco area, coupled with his immense wealth, require more
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`stringent conditions of release than would otherwise apply in a comparable case where the
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`defendant has more ties to the community. See, e.g., United States v. Treselyan, 20-cr-
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`549, 2021 WL 3055040, at *3 (D. Ariz. July 20, 2021) (holding that the “defendant’s
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`personal and professional connections to the United States are sufficient to mitigate the
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`risk of flight when coupled with the additional conditions of release” ordered, including
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`electronic monitoring and home detention, but no security personnel). While Lynch’s
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`resources would allow him to fund flight, they can also fund the kind of extraordinary
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`supervision that courts have routinely held can reasonably assure such a defendant’s
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`appearance. See Madoff, 586 F. Supp. 2d at 244 (describing the conditions imposed on
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`Madoff’s pretrial release, including a $10 million bond and home detention with 24-hour
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`monitoring at his wife’s expense); United States v. Dreier, 596 F. Supp. 2d 831, 833–34
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`(S.D.N.Y. 2009) (accepting a defendant’s bail package that included a $10 million bond
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`and home detention secured by on-premises security guards, who were allowed to use
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`“temporary preventive detention and the use of reasonable force to thwart any attempt to
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`flee”); Esposito, 309 F. Supp. 3d at 32 (holding that the presence of an armed guard, rather
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`than video surveillance, was necessary to offset the defendant’s risk of flight, and the
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`increased cost of the guard was “marginal in light of Esposito’s significant resources”); cf.
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`Possino, 2013 WL 1415108, at *6 (finding that the defendant’s risk of flight was not
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`mitigated by hiring a security service to escort him to the courthouse, rather than 24-hour
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`monitoring, because the Court “assume[d] Defendant cannot fund [the] expensive
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`monitoring” necessary “to offset the flight risk”). Though the Court must impose “the
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`least restrictive . . . combination of conditions” that will reasonably assure Lynch’s
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`appearance, 18 U.S.C. § 3142(c)(1)(B), as prior cases before this Court have made
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`abundantly clear, strict restrictions on wealthy defendants’ security are necessary to
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`prevent them from attempting to use those resources to circumvent their supervision. See
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`Order Denying Motion for Compassionate Release at 2, United States v. Cohen, 10-cr-
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`547-CRB, dkt. 659 (N.D. Cal. June 22, 2022) (discussing a prior defendant’s attempt to
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`bribe one of his security guards while on pretrial release).
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`Fourth, because Lynch does not present a danger to the community, this final factor
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`weighs in favor of release. See Townsend, 897 F.2d at 996.
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`IV. CONCLUSION
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`Accordingly, it is hereby ordered that Defendant Michael Richard Lynch be
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`released from custody upon the satisfaction of the following conditions, in addition to the
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`standard conditions, pursuant to 18 U.S.C. § 3142(c). This order shall be operative, and
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`Defendant released, only when each of the following conditions are met:
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`1.
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`Defendant shall deliver to the Clerk of Court a bond in the amount of
`$100 million, secured by $50 million in cash or unencumbered shares
`of publicly traded stock, accompanied by power of sale.
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`Case 3:18-cr-00577-CRB Document 146 Filed 05/11/23 Page 9 of 9
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`—_OoOaANYDnnA&-WWN
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`Defendantshall be confined to an addressin the city and county of
`San Francisco, subject to the approval of the United States Attorney’s
`Office and the Court, and may only travel for meetings with counsel,
`medical appointments, and court appearances,all of which must be
`located in the city and county of San Francisco. Any further travel
`must be approved by the United States Attorney’s Office and the
`Court.
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`Defendant shall be guarded on a 24-hour basis by a private security
`company at Defendant’s expense, including video surveillance and
`armed guards. The costs of supplying the private security for six
`months shall be paid in advance. The private security company, the
`security arrangement, and any changesthereto, shall be approved by
`the United States Attorney’s Office and the Court.
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`Defendant shall surrenderall travel documents of any kind
`whatsoever, including any document which may be usedto enter or
`exit any country, genuine or not. Defendantshall not apply for or
`otherwise obtain any new travel documents, genuine ornot.
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`Defendant shall be subject to strict supervision by Pretrial Services
`and adhere to any other conditions imposed by the Court.
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`IT IS SO ORDERED.
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`Dated: May 11, 2023
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`CHARLES R. BREYER
`United States District Judge
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`NorthernDistrictofCalifornia
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`Pd=
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