In United States v. Lynch, the defense faced a novel issue: Rather than using percipient witnesses to introduce evidence central to their accounting fraud case, the government introduced vast amounts of evidence through their accounting expert, thus preventing the defense from cross examining witnesses with first-hand knowledge of the transactions the government’s expert claimed were fraudulent. After an 11-week criminal trial, Dr. Michael Lynch was acquitted of all charges. Had the outcome been different, the government’s aggressive use of expert testimony would have offered fertile grounds for appeal. Nonetheless, an assessment of the government’s strategy and the defense’s response illustrates how defense counsel can effectively rebut the use of such expert testimony.

Expert Testimony in ‘United States v. Lynch’

In United States v. Lynch, prosecutors accused former Autonomy CEO Dr. Michael Lynch of deceiving Hewlett Packard Co. (HP) about Autonomy’s financial results in the years preceding HP’s $11.7 billion acquisition of the British software company. At trial, the government alleged in part that Autonomy falsely inflated its revenue through accounting fraud. According to the government, Autonomy concealed that it engaged in loss-making sales of hardware for the purpose of inflating its reported revenue while maintaining publicly that it was a “pure software” company. The government further alleged that Autonomy engaged in round-trip transactions and transactions that improperly accelerated revenue in furtherance of the alleged scheme to defraud HP. In the lead up to trial, the government announced that it intended to prove that Autonomy engaged in roughly 85 fraudulent transactions—a case that rivaled Enron in complexity.