Ex-Autonomy CFO Sushovan Hussain Loses US Appeal Bid Against Fraud Convictions And 5-year Prison Sentence
Former Autonomy CFO Sushovan Hussain has lost a US appeal bid against his criminal conviction for fraud committed during the sale of the British software company to Hewlett-Packard back in 2011.
"We hold that Hussain's wire fraud convictions did not involve an impermissible extraterritorial application of United States law to foreign conduct because the 'focus' of the wire fraud statute is the use of the wires in furtherance of a scheme to defraud, and Hussain used domestic wires to perpetrate his fraud," the US Ninth Circuit Court of Appeals ruled yesterday [PDF].
Hussain had appealed against his 14 US wire fraud convictions for his part in the Autonomy scandal, where Hewlett-Packard (as was) paid $11bn for the British company before writing it down by $8.8bn and crying foul.
The three-judge American appeals court, sitting in San Francisco, added: "A reasonable jury could conclude that Hussain's approval of false and misleading financial information in an HP press release distributed to the investing public reflected a fraudulent scheme 'in connection with' US securities."
The court ruled that Hussain's convictions were safe and did not need to be overturned, stating:
A joint press release issued by HP and Autonomy in 2011, announcing the former's sale to the latter, stated that Autonomy would "enhance HP's financial profile". While not strictly untrue in the everyday language of people baffled by HP's decision-making, its legal meaning was enough to earn Hussain a criminal conviction – as was the assertion that Autonomy's margins were nudging 87 per cent gross.
Hussain's sentence was 60 months in prison, along with fines totalling $10.1m and three years of post-prison probation. He will begin his prison term later this year, the sentence having been stayed during his appeal.
A UK civil case brought by Hewlett Packard Enterprise against Hussain and Autonomy CEO Mike Lynch concluded in January, though the High Court has yet to deliver judgment. Hussain had refused to testify to the High Court in the belief that American prosecutors would use his testimony in the UK as extra ammunition for the US case against him. That refusal did not impress trial judge Mr Justice Hildyard, who remarked in court at the closing of the case: "We rather regard any resort to the privilege against self-incrimination as a black mark."
Lynch is currently in the early stages of an extradition attempt by the US authorities on a bundle of criminal charges that were extended halfway through the High Court proceedings.
The former Autonomy CEO denies all wrongdoing over the Autonomy buyout, having told the court he acted on the advice of auditors from Deloitte who cleared Autonomy's accounting practices. He was indicted alongside former in-house accountant Stephen Chamberlain. ®
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