United States v. Lynch

1

United States, Plaintiff, v. Michael Richard Lynch, Defendant.

No. 18-cr-00577-CRB-1

United States District Court, N.D. California

May 11, 2023

ORDER GRANTING BAIL AND IMPOSING CONDITIONS ON RELEASE

CHARLES R. BREYER, DISTRICT JUDGE

After lengthy extradition proceedings in the United Kingdom Defendant Michael Richard Lynch (“Lynch”) has finally landed on our shores to stand trial, accompanied by the United States Marshals Service. After a bail hearing, the Court now determines whether Lynch is a serious risk of flight, and what conditions might reasonably assure his appearance at trial, pursuant to 18 U.S.C. § 3142.

Presently based upon the circumstances of the defendant, it is clear that he presents a serious and substantial risk of flight. A number of factors lead to this conclusion.

Mr Lynch has vigorously contested extradition for nearly four years. As recently as last month, the defendant publicly announced that his extradition proceedings constitute a “legal overreach into the United Kingdom.”^[1] He has no significant ties either to this District or the United States. He is a citizen of the United Kingdom, owns no property in the United States, and resides abroad. Further, he has significant financial resources estimated at $450 million, which could easily sustain him for the remainder of his life, were he to abscond.

Added to these personal circumstances is the fact that the subject matter of the indictment has been litigated before this Court and the United Kingdom. While the Court has no opinion concerning the defendant's culpability, his alleged co-conspirator, the Chief Financial Officer of the defendant's company, was convicted of multiple counts of fraud. Those convictions were affirmed on appeal notwithstanding the claim that this Court did not have jurisdiction, the very same claim that Lynch has advanced in his unsuccessful attempt to defeat extradition.

For all these reasons, flight from prosecution appears to this Court to be almost a certainty. Indeed, if it were the only inquiry, the court would order detention. However, the Bail Reform Act requires a determination as to whether conditions of release can be fashioned which would assure a defendant's presence at trial, given the individual circumstances of this defendant. Because of Lynch's unique financial resources, the Court concludes that there are certain restrictions that, if met, will reasonably assure his presence at trial. These minimum restrictions are set forth below.

I. BACKGROUND

A. The Indictment

In the superseding indictment in this case, the government alleges the following: From 1996 to 2011, Lynch was the CEO and a director of Autonomy, a public software company incorporated in the United Kingdom. SI (dkt. 21) ¶¶ 1, 3-4. From 2009 to 2011, Lynch, his co-defendant and Vice President of Finance Stephen Chamberlain, and Chief Financial Officer Sushovan Hussain^[2] “engaged in a fraudulent scheme to deceive purchasers and sellers of Autonomy securities about the true performance of Autonomy's business,” including by artificially inflating revenue figures, and making false and misleading statements to Autonomy's independent auditor, market analysts, and regulators. Id. ¶¶ 19, 22. In 2011, Lynch met with representatives from HP about a potential acquisition of Autonomy, using the false and misleading financial statements created by Chamberlain to “make Autonomy look more attractive to a potential purchaser like HP.” Id. ¶ 21.

In August 2011, HP agreed to acquire Autonomy for $11 billion, noting in the press release announcing the acquisition that “Autonomy's recent operating and financial performance has been strong.” Id. ¶¶ 8-9. Because Lynch owned seven percent of Autonomy's outstanding shares at the time the deal closed, he made approximately $804 million from the acquisition. Id. ¶ 12. The indictment charges Lynch with conspiracy to commit wire fraud, wire fraud, securities fraud, and a conspiracy to commit offenses against the United States. Id. ¶¶ 25-34.

B. Procedural History

In September 2019, the government issued a formal request for Lynch's extradition, delivered to the U.K. Central Authority in November 2019. See ECF 49-1. On July 22, 2021, District Judge Michael Snow rejected Lynch's extradition challenge, and on April 21, 2023, that ruling was affirmed by the U.K. High Court. Having exhausted his appellate rights, Lynch was extradited to the United States and appeared before this Court on May 11, 2023.

II. LEGAL STANDARD

Pursuant to the Bail Reform Act of 1984, 18 U.S.C. § 3142 governs pretrial detention of criminal defendants. See United States v. Hir, 517 F.3d 1081, 1085-86 (9th Cir. 2008). While defendants are ordinarily entitled to go free before trial, in “rare circumstances,” a court may order a defendant detained. United States v. Motamedi, 767 F.2d 1403, 1405 (9th Cir. 1985); see also United States v. Townsend, 897 F.2d 989, 994 (9th Cir. 1990). To detain a defendant pretrial, the Court must find by a preponderance of the evidence that that the defendant presents a serious risk of flight, and that “no condition or combination of conditions will reasonably assure the appearance” of the defendant. See Motamedi, 767 F.2d at 1406; 18 U.S.C. § 3142(e).

In determining whether there are conditions of release that will reasonable assure the appearance of a defendant and the safety of the community, the Court considers: (1) the nature and seriousness of the offense charged; (2) the weight of the evidence against the defendant; (3) the defendant's character, physical and mental condition, family and community ties, past conduct, history relating to drug and alcohol abuse, criminal history, and record concerning appearance at court proceedings; and (4) the nature and seriousness of the danger to any person or the community that would be posed by the defendant's release. See 18 U.S.C. § 3142(g).

III. DISCUSSION

The Court first addresses Lynch's risk of flight, and then the conditions that would reasonably assure his appearance at trial.^[3]

A. Risk of Flight

Lynch clearly presents a serious risk of flight, for at least three reasons.

First Lynch is not facing these charges voluntarily. After spending over three years fighting extradition in his native United Kingdom and exhausting his remedies there, Lynch was finally extradited on and appeared before the Court for the first time on May 11, 2023, more than four years after the initial indictment in this case was filed. Clearly, Lynch's conduct signifies that he would rather be in the United Kingdom-or perhaps anywhere else-than in the United States facing these charges. See, e.g., United States v. Amar, 300 F.Supp.3d 287, 290 (D.D.C. 2018) (holding that the defendant represents a risk of flight in part because he is a citizen of Israel and “the last time he was in Israel Defendant fought his extradition for nearly seven months, and consented only after receiving two adverse court rulings”); United States v. Botero, 604 F.Supp. 1028, 1034 (S.D. Fla. 1985) (reasoning that while the defendant may have had “entirely legitimate tactical reasons for resisting extradition, the fact remains that the defendant has absented himself from this jurisdiction and refused to answer these charges”), aff'd, 853 F.2d 928 (11th Cir. 1988); United States v. Jones, 143 F.Supp.3d 78, 85 (W.D.N.Y. 2015) (concluding that the defendant was a flight risk in part because he “did not voluntarily produce himself to face these charges” but instead fought extradition in the United Kingdom), aff'd, No. 15-3723 (2d Cir. Feb. 11, 2016); cf. United States v. Khashoggi, 717 F.Supp. 1048, 1050-51 (S.D.N.Y. 1989) (finding that because the defendant “waived his right to appeal extradition in Switzerland and travelled immediately to the United States for arraignment . . . [that] evince[d] a willingness, albeit overdue, to submit to the jurisdiction of this Court”). While Lynch has argued that exhausting his legal remedies in extradition proceedings does not indicate that he would resort to illegal remedies by absconding before trial in this case, the Court is convinced that Lynch's “refusal to voluntarily return is indicative of a mental state which could easily rationalize flight on legal, moral, or intellectual grounds.” Botero, 604 F.Supp. at 1034.

Second, Lynch has significant financial resources with which to fund flight. At his bail hearing, Lynch's counsel represented that he is worth between $400 and $450 million, with approximately $93 million of those assets in unencumbered shares of publicly traded stock. Courts frequently find that defendants with such vast wealth present a substantial risk of flight. See Townsend, 897 F.2d at 996 (affirming an order of pretrial detention where defendants had “access to substantial sums of cash”); United States v. Madoff, 586 F.Supp.2d 240, 248-49 (S.D.N.Y. 2009) (affirming an order of 24-hour home monitoring and $10 million bond where the government argued that the defendant had “assets that [could] not be effectively restrained”); United States v. Epstein, 425 F.Supp.3d 306, 323 (S.D.N.Y. 2019) (“The Defendant's vast wealth and influential contacts have provided him with the means to pay individuals to assist him in unlawful endeavors, including potentially fleeing the jurisdiction.”); United States v. Esposito, 309 F.Supp.3d 24, 31 (S.D.N.Y.) (holding that the defendant posed a risk of flight in part because “there is a high probability that Esposito has access to significant amounts of . . . liquid assets”), aff'd, 749 Fed.Appx. 20 (2d Cir. 2018).

Third Lynch does not have significant ties to United States, and particularly to the San Francisco area. While Lynch's alienage is not dispositive, see Motamedi, 767 F.2d at 1408...