IT chief pays $200m to settle case

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The former head of a failed US software company has handed over $200m in unlawful profits made from selling stock in his company during the tech boom, the Securities and Exchange Commission said on Thursday.

The payment, made to settle a civil fraud complaint brought by the SEC, amounts to “one of the largest two or three [personal settlements] ever”, said Paul Berger, an associate director in the agency's enforcement division.

Roys Poyiadjis, a British-educated Greek Cypriot, had been charged with fraud while at US-listed software company AremisSoft, as well as engaging in “massive insider trading” in the company's shares through a number of off-shore entities, according to the complaint against him.

AremisSoft's founder, Lycourgos Kyrpianou, faces similar charges but remains a fugitive from justice and is believed to be in Cyprus, said Mr Berger.

The payment by Mr Poyiadjis accounts for all the profits he made from selling AremisSoft stock, according to the SEC. The biggest personal settlement ever was from junk bond pioneer Michael Milken, who paid around $1bn in disgorged profits and penalties. The small software company was based in New Jersey and went public on the Nasdaq stock market close to the peak of the tech boom in 1999, though much of its operations were conducted from London and Cyprus.

According to the SEC, AremisSoft claimed in 1999 to have won a $37.5m contract to automate Bulgaria's healthcare system, when in fact the deal was worth only a tenth as much. Also, nearly three quarters of the $120m in revenues it claimed in 2000 was booked through a division in Cyprus known as its “emerging markets group”, and most of this reflected sales to entities that either didn't exist or weren't customers of AremisSoft, the agency added.

The software executives were also accused of claiming they spent $32.7m to buy three small software companies when the actual amounts paid ranged from $100,000-$300,000. US regulators have spent three years trying to recoup profits the two AremisSoft executives made from selling stock in their company. The money was tracked to four bank accounts in the Isle of Man and frozen through a US court order.

Mr Poyiadjis eventually agreed to disgorge his profits in April under an settlement in which he was also disbarred from acting as an officer or director of a public company in the US, the SEC said yesterday. He did not admit or deny the SEC complaint.

The SEC said the money would be paid out to shareholders who lost money after AremisSoft collapsed. The company filed for bankruptcy in 2001.

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