The former chief of
agreed to pay $200 million to settle charges he defrauded investors by making false statements about the software company's finances.
Without admitting or denying the charges, Roys Poyiadjis agreed to settle a
Securities and Exchange Commission
fraud case brought in October 2001. The agency says Poyiadjis agreed to disgorge $200 million of unlawful profit from his trading in AremisSoft stock. The SEC called the deal "among the largest recoveries the SEC has obtained from an individual."
The SEC will distribute the funds to defrauded investors in the AremisSoft post-bankruptcy estate. Poyiadjis also agreed to a final judgment permanently enjoining him from future violations of the antifraud, reporting and other provisions of the federal securities laws and prohibiting him from ever acting as an officer or director of a public company.
The complaint alleged that AremisSoft inflated the value of certain contracts, its revenue and its stock price through fraudulent means. Of some $123.6 million the company reported in revenue in 2000, the SEC said, more than $45 million was based on "purported sales to entities that either do not exist as operating businesses or did not purchase product."
The SEC's complaint charged that AremisSoft and co-CEOs Poyiadjis and Lycourgos Kyprianou made fraudulent statements in public filings and press releases, including:
Reporting in AremisSoft's 2000 financial statements millions of dollars in sales to entities that either did not exist as operating businesses or did not purchase product from AremisSoft.
Reporting in AremisSoft's 1999 and 2000 financial statements that the company paid a total of $32.7 million to acquire three software companies, when in fact the actual purchase prices paid ranged from roughly $100,000 to $300,000.
Misrepresenting the value of and revenue earned from a contract with Bulgaria's Health Insurance Fund in press releases and public filings.
In July 2001, AremisSoft sued short-sellers and
, publisher of this Web site, claiming they were conspiring to drive down the company's stock price by distributing false and misleading information.
AremisSoft dropped that suit a month later after revealing that it was under investigation over some of the very same issues. The executives resigned in August 2001 following a lengthy trading halt, when the company conceded that its revenue would miss expectations and that it was being investigated by the SEC.