Autonomy Corp.'s former U.K.-based chief financial officer failed to convince the Ninth Circuit Wednesday that he was unlawfully convicted of wire fraud based on an extraterritorial application of U.S. law, as his misuse of interstate communications involved contacts in California.
The U.S. government presented extensive evidence at trial that Sushovan Hussain and his co-conspirators used “sophisticated tactics” to artificially inflate the software company’s revenue ahead of its 2011 acquisition by Hewlett-Packard to the tune of $11 billion, Judge Daniel A. Bress said for the U.S. Court of Appeals for the Ninth Circuit.
The purchase price of the company that now operates as HP Autonomy represented a 64% premium on the market price for Autonomy’s shares on the London Stock Exchange, and Hussain personally made about $16 million in the deal, according to the court’s opinion.
Evidence at trial showed that Hussain participated in conference calls with individuals based in California, was associated with emails originating or terminating in California, and that he approved false and misleading financial information for press releases that were distributed from England to California, the court said.
His multiple convictions for wire fraud based on the conduct he engaged in while based in the U.K. therefore weren’t an improper application of U.S. law, the court said.
The Ninth Circuit further held, as a matter of first impression, that the focus of the wire fraud statute isn’t on the general fraudulent scheme undertaken by a defendant, but instead on the defendant’s misuse of interstate communications in carrying out that scheme.
The court also rejected Hussain’s challenge to his securities fraud conviction, which had been based on the role he played in drafting the press release announcing Autonomy’s acquisition by HP. “Ample evidence” presented at trial would have supported any rational jury in concluding that Hussain knew he hadn’t provided accurate or truthful information about Autonomy’s financials to HP for the press release, the court said.
The court affirmed Hussain’s 60-month prison sentence, as well as the $4 million fine and $6.1 million restitution order levied against him.
Judge Ryan D. Nelson and District Judge James S. Gwin, sitting by designation, joined the opinion.
The Department of Justice represented the U.S. Shapiro Arato Bach LLP represented Hussain.
The case is USA v. Hussain, 9th Cir., No. 19-10168, 8/26/20.