Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 1 of 9
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`Gary S. Lincenberg - State Bar No. 123058
` glincenberg@birdmarella.com
`Ray S. Seilie - State Bar No. 277747
` rseilie@birdmarella.com
`Michael C. Landman - State Bar No. 343327
` mlandman@birdmarella.com
`BIRD, MARELLA, BOXER, WOLPERT, NESSIM,
`DROOKS, LINCENBERG & RHOW, P.C.
`1875 Century Park East, 23rd Floor
`Los Angeles, California 90067-2561
`Telephone: (310) 201-2100
`Facsimile: (310) 201-2110
`
`Attorneys for Defendant
`Stephen Keith Chamberlain
`
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION
`
` CASE NO. 3:18-cr-00577-CRB
`
`Defendant Stephen Chamberlain’s Motion
`in Limine to Exclude Irrelevant and
`Prejudicial Documents Pursuant to Federal
`Rule of Evidence 403
`
`February 21, 2024
`Pretrial Conference:
`March 18, 2024
`Trial Date:
`
`
`Assigned to Hon. Charles R. Breyer
`
`UNITED STATES OF AMERICA,
`
`Plaintiff,
`
`vs.
`
`MICHAEL RICHARD LYNCH AND
`STEPHEN KEITH CHAMBERLAIN
`
`Defendants.
`
`
`3911353.2
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`Case No. 3:18-cr-00577-CRB
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`Chamberlain's Motion in Limine to Preclude Irrelevant/Prejudicial Evidence
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 2 of 9
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`I.
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`INTRODUCTION AND BACKGROUND
`Defendant Stephen Chamberlain moves in limine for an order prohibiting the government
`from introducing certain email communications that reflect Autonomy employees’ deliberative
`process in connection with accounting decisions that were either never ultimately made, or which
`have not been challenged as improper. The Government’s theory of fraud in this case is that Mr.
`Chamberlain participated in a conspiracy to defraud Autonomy’s investors and its ultimate
`purchaser, HP. The Government alleges that this conspiracy was effectuated using false statements
`contained in Autonomy’s public financial disclosures and material misstatements or omissions to
`HP during the due diligence process preceding the purchase.
`Based on its presentation in the Hussain proceeding, as well as its most recent exhibit list,
`the Government intends to present to the jury certain categories of email communications in which
`Autonomy’s employees were deliberating about Autonomy’s internal accounting decisions, but
`which do not ultimately relate to allegedly false or misleading statements (to the public or HP). In
`other words, the Government is seeking to introduce evidence that shows “how a sausage is
`made,” even in situations where that sausage was not made. These categories of communications
`should be excluded under Federal Rules of Evidence 401, 402 and 403.
`ARGUMENT
`II.
`Applicable Law
`A.
`Evidence is relevant if “(a) it has any tendency to make a fact more or less probable than it
`would be without the evidence; and (b) the fact is of consequence in determining the action.” Fed.
`R. Evid. 401. “Irrelevant evidence is not admissible.” Fed. R. Evid. 402. Relevant evidence may
`be excluded “if its probative value is substantially outweighed by a danger of one or more of the
`following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time,
`or needlessly presenting cumulative evidence.” Fed. R. Evid. 403 (emphasis added). The
`determination of whether to exclude certain evidence under Rule 403 “must be made . . . in the
`view of the availability of other means of proof and other facts appropriate for making decision of
`this kind under [Rule] 403.” Old Chief v. United States, 519 U.S. 172, 184–85, 117 S. Ct. 644,
`652, 136 L. Ed. 2d 574 (1997) (citing Advisory Committee’s Notes on Fed. Rule Evid. 404, 28
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`3911353.2
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`Case No. 3:18-cr-00577-CRB
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`Chamberlain's Motion in Limine to Preclude Irrelevant/Prejudicial Evidence
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 3 of 9
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`U.S.C. App., p. 861).
`Irrelevant and Unduly Prejudicial Documents
`B.
`Mr. Chamberlain requests that the Court enter an order precluding the Government from
`introducing evidence that falls into three specific categories:
`
`•
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`•
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`Email communications in which Mr. Chamberlain and Mr. Hussain deliberate
`accounting “options,” none of which reflect the ultimate accounting treatment
`presented to and approved by Autonomy’s auditors. Mr. Chamberlain specifically
`requests the exclusion of Trial Exhibit 1763. Declaration of Gary S. Lincenberg
`(“Lincenberg Decl.”) Ex. 1.
`
`Email communications in which Mr. Chamberlain asks Autonomy employees to
`engage in a “credit hunt”—i.e., search for unused credits that Autonomy could use
`to offset its costs—even though there is no allegation that any such “hunt” resulted
`in an improper credit being recognized on Autonomy’s financial statements. Mr.
`Chamberlain has identified Trial Exhibits 735, 3305, 3308, 14221, 15296, 15298,
`15299, 15300, 15303, and 16196 as examples of documents that fall into this
`category. Lincenberg Decl. Exs. 2–11.
`
`•
`
`Email communications in which Autonomy employees use the term “dummy cash”
`to refer to accounting entries placed in the company’s ledger before a merger to
`ensure that assets were offset by appropriate liabilities where necessary—again,
`with no allegation by the government that any of these entries were inaccurate or
`misleading. Mr. Chamberlain specifically requests the exclusion of Trial Exhibit
`816. Lincenberg Decl. Ex. 12.
`Exhibit 1763: April 12, 2011 Email
`1.
`Trial Exhibit 1763, Lincenberg Decl. Ex. 1, is an email from Mr. Chamberlain to Mr.
`Hussain, which is set forth below:
`
`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 4 of 9
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`During the Hussain trial, the Government asked Lee Welham, a Deloitte auditor who had
`no firsthand knowledge of the email, to speculate whether he would have been “troubled” by this
`email had he seen it. See Hussain Tr. 3986:9-3987:25. Mr. Welham testified that the email would
`have “troubled” him because, as he sat in court ruminating about it while testifying six years later,
`he “couldn’t think of a reason why 12 days after the quarter ends you would still be debating how
`to recognize that revenue and when to recognize it.” Id. at 3988:11-13.
`None of the three options discussed in the email were used in Autonomy’s public financial
`statements. The Government did not claim otherwise during the Hussain trial. Nor did the
`Government present any evidence that any of the options would have been inconsistent with
`applicable accounting standards based on the information known to the Autonomy Finance team at
`the time. Autonomy’s ultimate accounting treatment of each of the transactions referenced in the
`email was based on the final evidence that the Finance team reviewed and presented to Deloitte.
`The email, discussing options that were never pursued, is irrelevant to the question of
`whether Mr. Chamberlain had an intent to defraud. Further, it creates an unfair risk that the jury
`will judge Mr. Chamberlain not on the actual accounting decisions that were made but on Mr.
`Welham’s speculation about what Mr. Chamberlain might have meant when discussing
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`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 5 of 9
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`accounting considerations that never came to be. To undo the Government’s improper suggestion,
`Mr. Chamberlain would be forced to explain options that were discussed in a brief email twelve
`years ago that were never even pursued. On top of the massive number of accounting decisions
`that are under attack, trial time will be diverted to potential accounting decisions that were never
`actually made. In addition to creating unfair prejudice and confusion, such an exercise will cause
`undue delay.
`
`2.
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`Credit Hunt Emails
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`Trial Exhibits 735, 3305, 3308, 14221, 15296, 15298, 15299, 15300, 15303, and 16196,
`Lincenberg Exs. 2–11, are all emails with words “Credit Hunt” in the subject line.1 For example,
`Exhibit 735 is presented below:
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`The term “credit hunt” was informally used to refer to searches by Autonomy employees
`for potentially overlooked “credits.” For example, employees would find that some revenue
`
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`1 Mr. Chamberlain reserves the right to identify additional exhibits that raise similar issues
`because of ongoing issues related to the Government’s exhibit list. For example, the Government’s
`descriptions of Trial Exhibits 3324 and 3325 suggest that these two documents are also “credit
`hunt” emails, but the Bates numbers provided for those exhibits reference unrelated documents.
`For avoidance of doubt, Mr. Chamberlain’s motion requests the exclusion of all email
`communications that reference so-called “credit hunts.”
`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 6 of 9
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`deferred in prior quarters by Autonomy subsidiaries should now be recognized. There is no
`suggestion anywhere in these emails that Mr. Chamberlain was encouraging inaccurate or
`misleading accounting. Nor has the Government ever presented evidence that any of the
`accounting decisions made in connection with these so-called “credit hunts” resulted in false or
`misleading statements about the specific transactions that the Government has identified as part of
`its case. As far as counsel can glean, no such credits appear among the transactions set forth in the
`bill of particulars.
`Based on the testimony it elicited in the grand jury proceeding, the Government appears to
`be using these emails to elicit testimony that some accounting department personnel found it to be
`an “unusual” exercise. In other words, the Government is likely to use these materials to ask a
`particular witness about their subjective sense of what is “usual” versus “unusual” and
`misleadingly suggest that any substantive accounting decisions resulting from the “credit hunt”
`were incorrect. In doing so, the Government would be encouraging the jury to improperly treat the
`Finance team’s efforts to include all revenue as somehow inappropriate because some accounting
`personnel had not gone through this exercise prior to their subsidiary becoming part of Autonomy.
`The Government should not be permitted to pursue this strategy. These “credit hunt”
`emails are not relevant to the specific allegations involving sales to resellers, sales of hardware,
`OEM, or hosting transactions. In order to address this confusion, Mr. Chamberlain would need to
`spend significant time and energy discussing and defending every “credit” found as part of this
`“hunt,” even though the Government has not alleged that they are fraudulent. This will cause juror
`confusion, will be potentially misleading, and will undoubtedly waste the Court’s and the jury’s
`time.
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`3.
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`“Dummy Cash”
`
`Trial Exhibit 816, Lincenberg Decl. Ex. 12, is an email from Lisa Harris, a member of
`Autonomy’s finance department, to other members of the finance department, regarding
`Autonomy’s acquisition of Microlink:
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`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 7 of 9
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`The Government is likely to present this email through the testimony of Ganesh
`Vaidyanathan, who did not testify in the Hussain trial but is on the Government’s witness list. Mr.
`Vaidyanathan testified that the concept of “dummy cash” troubled him because “you don’t post
`dummy things into any sort of books anyway.” USAO_GJTX00007762 at 29:16-21. Mr.
`Vaidyanathan did not testify that he reviewed the accounting for the transaction or that the
`accounting was itself improper or fraudulent. Additionally, he also testified that Ms. Harris’ use of
`the term “dummy cash” “is not necessarily true.” Id. at 28:3. Mr. Vaidyanathan added, “there’s no
`dummy cash that was recorded in the books.” Id. at 28:4-5. In other words, according to Mr.
`Vaidyanathan, Ms. Harris’ use of the term “dummy cash” in her email was not reflective of the
`actual transaction that occurred; moreover, there was nothing wrong with the transaction itself.
`The Government should not be permitted to elicit similar testimony from Mr.
`Vaidyanathan at trial. It is not expected to present any evidence that the action of posting “dummy
`cash” was itself improper. As Alan Rizek, the former CFO of Microlink, testified in Hussain: the
`reason Autonomy had to make that accounting entry was because, following the acquisition,
`Microlink could no longer hold Autonomy inventory. Hussain Tr. 1577:23-25. Accordingly, both
`the inventory (the asset) and the accounts payable balance (the liability) needed to be written off.
`Id. The Government did not present any evidence that, following Autonomy’s acquisition of
`Microlink, it was improper for Autonomy to make an accounting entry that had the effect of
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`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 8 of 9
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`transferring Microlink’s outstanding accounts payable balance to an intercompany balance.2 The
`Government also did not present any evidence that the term “dummy cash” reflected an improper
`or illegal accounting transaction. Nevertheless, during closing argument, the Government used this
`term three times to pejoratively suggest that the accounting entry was fraudulent. Hussain Tr.
`5750:11-21.
`The admission of this email is confusing and unfairly prejudicial because there is no proof
`that the “dummy cash” accounting entry was fraudulent. Use of a term that may sound pejorative
`to a lay juror will mislead and confuse the jury and any attempt to cure the resulting prejudice will
`likely cause unnecessary delay in the trial.
`III. CONCLUSION
`The Government’s bill of particulars has been ever-expanding. But it does not include
`email communications discussing possible accounting decisions that were never made. It does not
`include searches for deferred revenue to properly record them in the right quarter. And it does not
`include informal terms used by accountants, such as “dummy cash” that were proper entries.
`Allowing the Government to introduce the documents discussed in this motion creates a serious
`risk the jury determines Mr. Chamberlain’s fate based on communications that do not relate in any
`way to the transactions that the Government alleges in the bill of particulars. If the Court permits
`the introduction of these exhibits, it will also require Mr. Chamberlain to delve into time-
`consuming, substantial detail about tangential accounting tasks. The Court should grant Mr.
`Chamberlain’s motion.
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`2 The Government’s principal argument, which it is entitled to make, is that Autonomy
`purchased Microlink for the sole purpose of writing off its outstanding balances. The Government
`can make this argument without misusing the pejorative term “dummy cash” to suggest that the
`accounting for the purchase was improper.
`3911353.2
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`Case 3:18-cr-00577-CRB Document 290 Filed 01/17/24 Page 9 of 9
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`DATED: January 17, 2024
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`BIRD, MARELLA, BOXER, WOLPERT, NESSIM,
`DROOKS, LINCENBERG & RHOW, P.C.
`
`
`By:
`
`/s/ Gary S. Lincenberg
`Gary S. Lincenberg
`Ray S. Seilie
`Michael C. Landman
`Attorneys for Defendant Stephen Keith
`Chamberlain
`
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`3911353.2
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