Roys Poyiadjis and Lycourgos Kyprianou and AremisSoft Corp. et al.

Litigation Release No. 17641 / July 31, 2002

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1606 / July 31, 2002

SECURITIES AND EXCHANGE COMMISSION V. ROYS POYIADJIS, LYCOURGOS KYPRIANOU AND AREMISSOFT CORP., et al, CIVIL ACTION NO. 01-CV-8903 (CSH) (S.D.N.Y.)

SEC SETTLES FINANCIAL FRAUD CLAIMS AGAINST AREMISSOFT CORPORATION

On July 22, 2002, the Hon. Charles L. Brieant of the United States District Court for the Southern District of New York signed a Final Judgment of Permanent Injunction and Other Relief as to Defendant AremisSoft Corporation, which was a software company with offices in New Jersey, London, Cyprus, and India. The judgment, to which AremisSoft consented without admitting or denying the allegations in the Commission's complaint, prohibits AremisSoft and its successor entity, Softbrands, Inc., from violating the antifraud and reporting provisions of the federal securities laws [Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder].

The Commission's complaint alleged, among other things, that AremisSoft and two of its former officers, Roys Poyiadjis and Lycourgos Kyprianou, overstated the Company's revenues in its annual report for 2000 and inflated the value of acquisitions made in 1999 and 2000 and that the two former officers engaged in massive insider trading during the period of the reporting fraud. AremisSoft previously consented to a preliminary injunction that was entered by the Hon. Charles S. Haight, Jr., U.S. District Judge, on October 19, 2001.

AremisSoft filed a petition for relief under Chapter 11 of the Bankruptcy Code on March 15, 2002. On July 15, 2002, the Hon. Joel A. Pisano, U.S. District Judge, entered an order confirming AremisSoft's Chapter 11 Plan and authorizing AremisSoft to enter into the settlement with the Commission.

In connection with the resolution of the Commission's civil injunctive action, AremisSoft also consented to the issuance of a Commission Order, pursuant to Section 12(j) of the Exchange Act, revoking the registration of AremisSoft's common stock, without admitting or denying the findings in the Commission's Order. For further information on this proceeding, see Exchange Act Release No. 34-46285.

The SEC's civil enforcement action remains pending against Poyiadjis, Kyprianou and two relief defendants, Olympus Capital Investment, Inc. and Oracle Capital, Inc. On October 19, 2001 Judge Haight entered a preliminary injunction as to Poyiadjis, Kyprianou and the relief defendants that, among other things, froze the proceeds of the former officers' fraudulent AremisSoft stock sales and directed all defendants to repatriate such assets to the United States and make an accounting. Poyiadjis, Kyprianou and the relief defendants have not answered the Commission's complaint, nor have they complied with the court's order.

On December 19, 2001 a federal grand jury sitting in the Southern District of New York returned an indictment of Poyiadjis for securities fraud. On March 22, 2002, the U.S. Attorney initiated a civil in rem forfeiture action in the U.S. District Court for the Southern District of New York, seeking forfeiture of funds held in four bank accounts in the Isle of Man. These funds had previously been frozen by the High Court of the Isle of Man on application of the Isle of Man Attorney General at the request of the U.S. Attorney General, based on information provided by the Commission. On June 3, 2002 the U.S. District Court entered a default judgment in the civil forfeiture action. Thereafter, the Isle of Man Attorney General at the request of the U.S. Attorney General applied to the High Court for registration of the civil forfeiture judgment as an external confiscation order, a required step under Isle of Man law preliminary to obtaining a High Court order repatriating the funds to the United States. On June 24, 2002 a federal grand jury sitting in the Southern District of New York returned a superseding indictment against Poyiadjis, Kyprianou and another former AremisSoft officer, M.C. Mathews, on counts of conspiracy to commit securities fraud, mail fraud, wire fraud, and money laundering, and substantive counts of securities fraud and money laundering.

The Commission would like to acknowledge the Office of the U.S. Attorney for the Southern District of New York and the Federal Bureau of Investigation for the assistance they have provided in this matter.

See also Litigation Release No. 17172 (October 4, 2001).