4 ms·

Some details here: https://www.justice.gov/usao-ndca/pr/former-autonomy-cfo-sentenced-60-months-prison https://www.justice.gov/usao-ndca/pr/former-autonomy-cfo

Some details here: https://www.justice.gov/usao-ndca/pr/former-autonomy-cfo-sentenced-60-months-prison https://www.justice.gov/usao-ndca/pr/former-autonomy-cfo-sen... > The evidence at trial demonstrated that for more than two years prior to the sale, Hussain, 55, a citizen and resident of the United Kingdom, used sophisticated accounting methods to falsely inflate Autonomy’s revenues to make it appear Autonomy was growing when it really was not. Specifically, Hussain used backdated contracts, roundtrips, channel stuffing, and other forms of accounting fraud to fraudulently inflate Autonomy’s publicly-reported revenues by as much as 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter of 2011, and 12.4% in the second quarter of 2011.

guiriduro 5y ago
Sounds like something that would potentially be criminal in the jurisdiction in which the company operated, and for whom any questions of interpretation of accounting as criminal or otherwise would be wholly circumscribed: that jurisdiction is the UK. Nothing - especially a US-style "plea bargain" of trumped up charges threatening long incarceration unless the victim pleads 'guilty' to them, akin to torture in the worthlessness of any admission or incrimination of others so obtained - combined with jurisdictional overreach, this should be laughed out of court in the UK.
- freeopinion 5y ago
  https://www.crunchbase.com/organization/autonomy https://www.crunchbase.com/organization/autonomy says that Autonomy HQ is in San Francisco, CA.
  - cycomanic 5y ago
    You have read the article saying the company was sold in 2011?
    - hermitdev 5y ago
      The article states: "Before it was bought by HP, it had headquarters in San Francisco and Cambridge in the UK." So, the sale has no bearing here? Pre-sale and post-sale it had offices in San Francisco.
gnufx 5y ago
This was supposed to wait on the verdict in the civil case brought by HP(E?) on that sort of thing, which at least seems right. The Register covered it in detail, and currently has https://www.theregister.com/2021/07/22/mike_lynch_extradition_bid_first_stage_loss/ https://www.theregister.com/2021/07/22/mike_lynch_extraditio...
bartread 5y ago
> channel stuffing I'm slightly confused, and forgive my ignorance: how do you channel stuff software? I mean, granted this is 2009 - 2011, but even back then were Autonomy really selling software as a physically packaged good, or is there some way that virtual goods can be channel stuffed? (E.g., selling a shedload of license keys to resellers, many of which remain unsold to end users? Would that be something that even applied to the software Autonomy made?) EDIT: Similarly, for roundtripping, doesn't there need to be another company or companies involved? Doesn't there have to be some collusion? And if so, who are these other parties and why aren't we hearing about them? EDIT 2: This might explain the channel stuffing comment, and provide some mechanism for it: "fraudulently concealed from investors and market analysts the scale of Autonomy’s hardware sales".
- nyc_pizzadev 5y ago
  I am a bit familiar with Autonomy, but I don’t know the exact specifics. They were in the software license business, so if I were to speculate, they would get a new channel partner and then forward them 250 server licenses, book the full revenue during that quarter, and then the partner has to sell all the licenses. But that could possibly take years. Repeat with a handful of fresh partners and you could book a significant amount of revenue growth. Given Autonomy had access to huge amounts of credit, money could have been fronted and exchanged to make these transactions look very legitimate and this could have been lucrative for the partner. The roundtripping is not very clear. Maybe the same thing thru one of their acquisition companies?
  - monkeydust 5y ago
    Which accounting measure looks at actually receivables rather than booked revenue? Surely that would have uncovered this practice?
boomskats 5y ago
This is a big deal if it's a public company, sale or no sale. The ex-CEO of CA served 8 years for seemingly doing a lot less[0]. [0] https://en.wikipedia.org/wiki/35_day_month https://en.wikipedia.org/wiki/35_day_month

guiriduro 5y ago

Sounds like something that would potentially be criminal in the jurisdiction in which the company operated, and for whom any questions of interpretation of accounting as criminal or otherwise would be wholly circumscribed: that jurisdiction is the UK. Nothing - especially a US-style "plea bargain" of trumped up charges threatening long incarceration unless the victim pleads 'guilty' to them, akin to torture in the worthlessness of any admission or incrimination of others so obtained - combined with jurisdictional overreach, this should be laughed out of court in the UK.

freeopinion 5y ago
https://www.crunchbase.com/organization/autonomy https://www.crunchbase.com/organization/autonomy says that Autonomy HQ is in San Francisco, CA.
- cycomanic 5y ago
  You have read the article saying the company was sold in 2011?
  - hermitdev 5y ago
    The article states: "Before it was bought by HP, it had headquarters in San Francisco and Cambridge in the UK." So, the sale has no bearing here? Pre-sale and post-sale it had offices in San Francisco.

gnufx 5y ago

This was supposed to wait on the verdict in the civil case brought by HP(E?) on that sort of thing, which at least seems right. The Register covered it in detail, and currently has https://www.theregister.com/2021/07/22/mike_lynch_extradition_bid_first_stage_loss/ https://www.theregister.com/2021/07/22/mike_lynch_extraditio...

bartread 5y ago

> channel stuffing I'm slightly confused, and forgive my ignorance: how do you channel stuff software? I mean, granted this is 2009 - 2011, but even back then were Autonomy really selling software as a physically packaged good, or is there some way that virtual goods can be channel stuffed? (E.g., selling a shedload of license keys to resellers, many of which remain unsold to end users? Would that be something that even applied to the software Autonomy made?) EDIT: Similarly, for roundtripping, doesn't there need to be another company or companies involved? Doesn't there have to be some collusion? And if so, who are these other parties and why aren't we hearing about them? EDIT 2: This might explain the channel stuffing comment, and provide some mechanism for it: "fraudulently concealed from investors and market analysts the scale of Autonomy’s hardware sales".

nyc_pizzadev 5y ago
I am a bit familiar with Autonomy, but I don’t know the exact specifics. They were in the software license business, so if I were to speculate, they would get a new channel partner and then forward them 250 server licenses, book the full revenue during that quarter, and then the partner has to sell all the licenses. But that could possibly take years. Repeat with a handful of fresh partners and you could book a significant amount of revenue growth. Given Autonomy had access to huge amounts of credit, money could have been fronted and exchanged to make these transactions look very legitimate and this could have been lucrative for the partner. The roundtripping is not very clear. Maybe the same thing thru one of their acquisition companies?
- monkeydust 5y ago
  Which accounting measure looks at actually receivables rather than booked revenue? Surely that would have uncovered this practice?

boomskats 5y ago

This is a big deal if it's a public company, sale or no sale. The ex-CEO of CA served 8 years for seemingly doing a lot less[0]. [0] https://en.wikipedia.org/wiki/35_day_month https://en.wikipedia.org/wiki/35_day_month