Amherst Regional graduate Kaleil Isaza Tuzman, star of ‘Startup.com,’ jailed in Colombia



Last modified: Tuesday, October 13, 2015

AMHERST — A graduate of Amherst Regional High School who gained fame in a documentary about the rise and fall of a dot-com startup company is in prison in Colombia awaiting extradition to the United States.

Kaleil Isaza Tuzman was arrested in September on a U.S. Securities and Exchange Commission indictment alleging accounting fraud and market manipulation.

The complaint against Isaza Tuzman, one of the featured stars of the movie “Startup.com,” alleges that between 2008 and 2011, during his tenure as the CEO of KIT Digital, he and the company’s former chief financial officer, Robin Smyth, tried to defraud investors and auditors.

“This action involves a number of schemes by Isaza Tuzman and Smyth ... to defraud the company’s investors and auditors by materially misstating KIT Digital’s financial statements and other public disclosures and engaging in accounting transactions that violated generally accepted accounting principles in the United States.”

SEC complaint against Kaleil Isaza Tuzman



If convicted, Isaza Tuzman, 44, faces a maximum of 20 years in jail and $5 million in fines for his role. Isaza Tuzman, who celebrated his birthday Monday, continues to be held at La Picota prison, near the capital city of Bogota.

At the time of the alleged illegal behavior by Isaza Tuzman, KIT’s mission was to assist video content providers make their content available on the Internet and via Internet-enabled television.

The complaint lists several actions that are against federal rules, including:

∎ falsely recognizing $1.5 million in revenue from a software product that KIT never delivered and for which a customer never paid;

∎ diverting nearly $8 million, allegedly for purchase of another company, to instead create a slush fund for making round-trip payments that resulted in a phony reduction of receivables;

∎ hiding the fact that he was aggressively trading KIT Digital stock on the open market;

∎ hiding the loss of $2 million in cash or cash equivalent with an offshore money management firm.

Attempts were unsuccessful to seek comments from Kaleil through Amanda Blaurock, the acting president for KIT Capital, an outgrowth of KIT Digital.

Isaza Tuzman is listed as the founder of KIT Capital and is described as a “serial entrepreneur and former Goldman Sachs investment banker.”

He graduated from Amherst Regional in 1989 and, after studying at Harvard University, created govWorks in the late 1990s, a company that offered to provide communities the ability to have residents conduct more transactions online. In 2000, Barry Del Castilho, then the Amherst town manager, considered using govWorks, though officials determined the fees would be too high.

In a press release issued last month by the U.S. Department of Justice’s Southern District of New York, Manhattan U.S. Attorney Preet Bharara said Isaza Tuzman and Smith “engaged in an elaborate conspiracy to mislead investors and regulators about the financial health of the publicly traded company they oversaw.”

“I want to thank the FBI and the Postal Inspection Service for helping to bring these two alleged fraudsters to justice,” Bharara said in the statement.

There are eight counts in the complaint. For the market manipulation scheme, Isaza Tuzman is charged with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud and one count of wire fraud. For the accounting fraud scheme, he is charged with one count of conspiracy to commit securities fraud, making false statements in annual and quarterly SEC reports, and making false statements to auditors, one count of securities fraud, and two counts of making false statements in annual and quarterly SEC reports.

Isaza Tuzman is the son of Ani Tuzman, a Hatfield-based writer and founder of the Dance of the Letter Writing Center, and Luis Orlando Isaza, a Colombia native and former Leeds resident who worked in various capacities in the Pioneer Valley, including as a part-time faculty member at Smith College, special assistant to the Holyoke Community College president and director of the northern Springfield office for the Massachusetts Department of Transitional Assistance.

Isaza Tuzman’s Twitter feed, updated Monday afternoon, thanked those who offered birthday greetings: “Thank you to all for well wishes today. They give strength. A birthday under these circumstances teaches gratitude.”

In a post to her Facebook page late Sunday, Tuzman expressed appreciation to those thinking about her son.

“On behalf of Kaleil, and the hearts of the many who love him dearly, thank you, thank you, thank you for your continued prayers for Kaleil’s immediate safety,” Tuzman wrote. “We continue to pray and work to have him moved to a safer section of the prison and that he be extradited to the U.S. as soon as possible to face the charges alleged against him.”

She goes on to indicate that the possibility of writing letters may also be influential for her son. “In the meantime, please keep him in your thoughts and hearts.”

Efforts to reach Ani Tuzman by phone and email were unsuccessful.

Scott Merzbach can be reached at smerzbach@gazettenet.com.




 


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