MicroTech Denies Involvement In Autonomy Founders' Alleged Fraud

Federal systems integrator MicroTech says it had "no involvement" or "prior knowledge" of any fraud by Autonomy's founders.

The denial of wrongdoing came in a federal breach-of-contract lawsuit that Vienna, Va.-based MicroTech filed Monday in the U.S. District Court for the Northern District of California.

[Related: MicroTech Fights Back In HP Autonomy Dispute With Breach Of Contract Suit]

MicroTech has been accused by Hewlett-Packard of engaging in "contrived VAR transactions" relating to sales of Autonomy software. The disputed transactions occurred before HP closed its $10 billion-plus acquisition of Autonomy in October 2011.

id
unit-1659132512259
type
Sponsored post

HP, in a lawsuit filed in April against former Autonomy executives, alleges that MicroTech was involved with nine "contrived" transactions Autonomy used to misrepresent its financial results.

But MicroTech denies those HP allegations and has filed a lawsuit demanding that HP either repay $16.5 million in cash paid by MicroTech to Autonomy for software never delivered or provide the software itself.

The MicroTech lawsuit against HP Autonomy is based on two instances in which MicroTech claims it paid for Autonomy software that was never delivered: a June 30, 2011, $7 million sale of Autonomy software to HP itself and an $11 million March 31, 2010, sale of Autonomy software to the Vatican Library.

"MicroTech had no involvement in -- or prior knowledge of -- any fraud allegedly committed by Autonomy," said MicroTech in the lawsuit.

The denial comes after HP filed on April 17 a $5 billion lawsuit in the High Court in London alleging Autonomy founder Mike Lynch and former CFO Sushovan Hussain engaged in "improper transactions and accounting practices." In that lawsuit, HP singled out MicroTech, alleging it engaged in nine "contrived VAR transactions" with Autonomy.

MicroTech is not the only reseller singled out in the lawsuit. There are 37 instances of the alleged "VAR contrived transactions" in the lawsuit. Those transactions "misrepresented [Autonomy's] rate of organic growth and the nature and quality of its revenues, and overstated its gross and net profits," HP alleged in the London lawsuit.

Lanny Davis, an attorney representing MicroTech, vehemently denied the allegations that there were "contrived" VAR transactions involving MicroTech.

"We deny categorically the word 'contrived,' " asserted Davis. "If somebody accuses us of that, prove it, because it is false."

All of the nine transactions in the HP Autonomy lawsuit against Lynch and Hussain "were in good faith and consistent with our position as a reseller in good faith over the years," said Davis.

MicroTech, in fact, was not notified by HP directly for "doing anything contrived" with regard to those nine transactions, said Davis.

What's more, MicroTech said, it is still an active reseller of Autonomy software and other HP software and hardware products.

Davis called on HP to fulfill the contractual licenses that Autonomy entered into with MicroTech. "You bought a company that has our money and you have the license key we purchased," he said. "Please explain why you are entitled to both. If you want to file a case against us because we did other things you don’t like, that is up to you. But you have no right to keep both the $16.5 million and the license key we purchased. What is fair is fair."

MicroTech accused HP in a news release announcing the lawsuit of "taking unfair advantage of a certified service disabled veteran-owned small business."

"Just because HP is a big company with billions in revenues doesn't mean it can bully a small business owned by a veteran into not demanding our money back for something never delivered," said MicroTech Chairman and CEO Tony Jimenez, who is the sole owner of MicroTech, in the news release.

Jimenez said if HP is willing to allow MicroTech to re-license the software for a "reasonable period of time," then the lawsuit would be dropped. "HP may think because they are so big they don't need to negotiate a reasonable and fair solution," he said in the news release. "Well, they will someday realize they were wrong -- we are confident a court will agree, the money or the software -- you can't keep both -- under the law and principles of fairness."

PUBLISHED MAY 18, 2015