U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19622 / March 22, 2006

Accounting and Auditing Enforcement Release No. 2398 / March 22, 2006

SEC v. Savvides & Partners/PKF Cyprus, Pavlos Meletiou, R.K. Dhawan and Co., and R.K. Dhawan, Civil Action No. 06 CV 2223 (S.D.N.Y.)

SEC Files Fraud Action Against Savvides & Partners/PKF Cyprus, Pavlos Meletiou, R.K. Dhawan and Co., and R.K. Dhawan in Connection With Their Audits of AremisSoft Corporation

On March 21, 2006, the Commission filed a civil injunctive action against accounting firms Savvides & Partners/PKF Cyprus ("PKF Cyprus") and R.K. Dhawan and Co., and two partners from those firms, Pavlos Meletiou and R.K. Dhawan, alleging that the defendants violated the federal securities laws by failing to conduct basic audit procedures in their audits of subsidiaries of AremisSoft Corporation ("AremisSoft"). AremisSoft purported to be a multinational software development and marketing company. Its stock traded publicly on the Nasdaq National Market until trading was halted in 2001. The fraudulent audits failed to discover that AremisSoft grossly inflated its revenues and profit. After the fraud was exposed in 2001, AremisSoft declared bankruptcy.

The Commission's complaint, filed in the United States District Court for the Southern District of New York, charges that PKF Cyprus, a Cyprus-based firm and a member of PKF International Ltd., issued audit reports for AremisSoft subsidiaries in 1999 and 2000 signed by Pavlos Meletiou that falsely stated that its audits were conducted in accordance with U.S. Generally Accepted Auditing Standards (U.S. GAAS) and that the subsidiaries' financial statements were fairly presented in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). The false financial statements of these companies were included as part of AremisSoft's consolidated financial statements filed with AremisSoft's year 1999 and 2000 Forms 10-K filed with the Commission, and in AremisSoft registration statements. Meletiou had attended meetings with senior AremisSoft executives in which the AremisSoft financial fraud was openly discussed.

The complaint further charges that Dhawan and Co., an Indian-based accounting firm, issued audit reports on nine AremisSoft subsidiaries in 2000 signed by its partner R.K. Dhawan that falsely stated that its audits were conducted in accordance with U.S. GAAS and the financial statements complied with U.S. GAAP. The companies' false financial statements were included as part of AremisSoft's consolidated financial statements filed with AremisSoft's year 2000 Form 10-K. But five of the nine companies were never in fact acquired by AremisSoft and four were shells with insignificant assets, revenues, and income.

In its action, the Commission seeks penalties, disgorgement of all profits realized from the unlawful conduct, with prejudgment interest, from all defendants and injunctions against all defendants prohibiting future violations of the anti-fraud, reporting, books and records, and internal control provisions of the federal securities laws (Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B)of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, and 13b2-1 under that Act).

SEC Complaint in this matter