Tech Startup Bosses|Arrested Overseas

MANHATTAN (CN) – The top two officers of Kit Digital, a startup, have been arrested overseas and charged with “millions of dollars” worth of market manipulation and accounting fraud.
     Former CEO Kaleil Isaza Tuzman was arrested Tuesday in Colombia and is being held for extradition. CFO Robin Smyth was arrested today in Australia and is being held for extradition, the U.S. Attorney’s Office said.
     Prosecutors accuse them of “an elaborate conspiracy” with an unnamed co-conspirator, involving matched trades and deceptions of investors and market regulators. A U.S. Postal inspector who helped the FBI in the investigation accused them of “arrogance and disregard” of laws and regulations.
     Their co-conspirator ran a hedge fund and helped them inflate Kit Digital share price and trading volume, prosecutors said in the nine-count indictment.
     From 2012 to 2012 the conspiracy falsely declared $6 million in revenue, and added $7.9 million in a bogus “restructuring fee” for a supposed corporate acquisition, the U.S. Attorney’s Office said in a statement announcing the arrests.
     Tuzman, 43, is charged with eight counts, including conspiracy, wire fraud and securities fraud.
     Smyth, 61, is charged with five counts, including conspiracy and securities fraud
     The conspiracy counts are punishable by up to 5 years in federal prison, the fraud charges by 20 years.

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