wmlro.com: AremisSoft-related trial due to start in Isle of Man

Trevor Baines is very clear about his involvement: he set up a trust for Roys Spyros Poyiadjis, then head of a software house in the USA. Funds were transferred into the trust from Switzerland. But Baines became suspicious and reported his suspicions to the Isle of Man authorities. That, he says, is an absolute defence to any allegations of money laundering.

But the charges allege that between 1 June and 3 October 2001, Baines knew or suspected that Poyiadjis was engaged in criminal activity and that the sums involved - totalling USD195 million - were proceeds of that activity. The moneys were, it is alleged, paid into or through Flemings Isle of Man and Standard Bank, Isle of Man as well as The Isle of Man Bank (that is its name).

And the charges are not quite so simple as Baines makes out: he is charged with falsifying a document on or about 21 May 2001 in connection with the transactions. And his wife, Wendy Nicolau de Almeida Baine, is also charged - in her case that on or about 31 May 2001 she falsified an invoice from Mainstream Limited to Quantum Group Management for USD920,000.

AremisSoft (not to be confused with AmeriSoft) collapsed in 2002 when it entered Chapter 11 Administration with huge debts - despite claims that it was profitable and had a cash-pile as well as lucrative government contracts e.g. to provide a new computer systems for the National Health Insurance Fund of Bulgaria - a claim that it later "clarified" to say that it had won a small portion of a large overall contract. The company was subject to a class-action by shareholders commencing in 2002. It reversed into a company called "Softbrands, Inc" in which AremisSoft shareholders were to get shares as part of the "re-organisation."

But the SEC became involved and injuncted the company. The SEC said "

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."

It secured an order: "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."

In 2005, paid USD200 million to the SEC, neither admitting or denying wrongdoing. Then he pleaded guilty to a federal fraud case to one count of conspiracy.

The first point of call for the US Authorities were banks: Lloyds TSB and Bank of Cyprus and in July 2006, AremisSoft's "liquidating trust" sued the banks. The case against LloydsTSB related not to Poyiadjis but to the co-founder of AremisSoft, Lycourgos Kyprianou. The case against LloydsTSB alleged that the bank - in which AremisSoft did not hold accounts - accepted some USD44 million from Kyprianou. The money, it was said, was proceeds of the pair's pump and dump activities in relation to AremisSoft. Then LloydsTSB compounded its activity, the case alleged, by issuing a letter to the company's auditors saying that they held USD9.98 million in a "blocked" account. The final accounts filed at the death of AremisSoft made no reference to any such funds.

In 2007, the US District Attorney in Manhattan charged both LloydsTSB and Bank of Cyprus with money laundering. It claimed USD130 million from LloydsTSB. That action has not been completed and is unrelated to the recent action in which LloydsTSB agreed to pay USD350 million in relation to suppressing data relating to targets of US sanctions.

LloydsTSB (now Lloyds Banking Group) denies all charges as do Bank of Cyprus and Mr and Mrs Baines.