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Date: 08-19-2021
Case Style:
Case Number: 1:15-cr-00536-PGG-4
Judge: Paul G. Gardephe
Court: United States District Court for the Southern District of New York (New York County)
Plaintiff's Attorney: United States Attorney’s Office
Defendant's Attorney:
Description: New York, NY: Criminal defense lawyer represented Defendant charged with securities fraud.
Omar Amanat, an associate of codefendant Kaleil Isaza Tuzman, the former chairman and chief executive officer of the technology start-up company KIT digital, Inc. (“KITD”), was indicted for participating in various securities fraud-related offenses. AMANAT and Tuzman were found guilty in 2017 after a two-month trial presided over by Judge Gardephe. AMANAT was convicted of conspiracy to commit wire fraud, wire fraud, aiding and abetting investment advisor fraud, and conspiracy to commit securities fraud.
U.S. Attorney Audrey Strauss said: “Omar Amanat defrauded investors of millions of dollars through years of lies and deceit. Among his many fraudulent tactics, Amanat teamed up with Kaleil Tuzman and others to manipulate stock prices and hide investment losses through years of false account statements. When finally caught, Amanat doubled down on his lies by introducing fake emails into the trial record as ‘exculpatory’ evidence. Neither the Government nor the jury was fooled. Amanat was convicted on all counts and remanded by the Court into federal custody, where he will remain until his sentence is served.”
According to the Indictment and other filings in Manhattan federal court and the evidence presented at trial:
The Scheme to Defraud Maiden Capital Investors
Stephen Maiden[1] was the managing member of Maiden Capital, a hedge fund that managed portfolios of securities. Between in or about February 2009 and in or about June 2012, AMANAT, along with Maiden and others, devised and carried out a scheme to hide from Maiden Capital investors the fact that Maiden Capital’s investments in Enable – an investment fund run by AMANAT’s brother and codefendant, Irfan Amanat, for which AMANAT raised money (based, in part, on false and misleading representations) – had been lost. To facilitate the scheme, Maiden, with the knowledge and approval of AMANAT, generated false client account statements that failed to disclose the Enable losses. In addition, AMANAT wired hundreds of thousands of dollars to a Maiden Capital bank account to support Maiden Capital, including to allow Maiden to repay investors whose redemption requests could not be forestalled and thus to continue to keep secret from Maiden Capital investors the Enable losses for over three years.
The Market Manipulation Scheme
Between in or about December 2008 and in or about September 2011, AMANAT, Tuzman, and Maiden engaged in efforts to artificially inflate the share price and trading volume of KITD shares. During this time period, KITD shares traded on the OTC Bulletin Board and on the NASDAQ. Maiden, at Tuzman and AMANAT’s direction, purchased and sold shares of KITD through Maiden Capital, for the purpose of manipulating KITD’s stock price and creating the illusion of greater volume in the trading for KITD shares.
For instance, Maiden, with Tuzman’s knowledge and approval, frequently engaged in match trading in which Maiden caused an account under Maiden’s control to buy or sell KITD stock, and on the same day caused an account under Maiden’s control to take the opposite position. Tuzman also directed Maiden to make timely purchases of KITD stock in an effort to manipulate the price of KITD shares at certain critical times, including, for example, when KITD was seeking to raise additional capital and in the weeks before KITD’s stock was uplisted to the NASDAQ. At times, Maiden was responsible for nearly all of the day’s trading activity in KITD stock.
Amanat’s Fabrication of Evidence
Evidence at trial also revealed that AMANAT produced to the Government and entered into evidence at trial emails that had been fabricated. After two evidentiary hearings, the Court allowed the Government to present to the jury evidence of AMANAT’s use of false and fabricated email evidence during the trial. After the verdict, Judge Gardephe revoked AMANAT’s bail and ordered him remanded into custody, citing numerous factors, including that “substantial evidence was introduced at trial that Mr. Amanat fabricated emails” showing “disdain for the court” and its procedures.
* * *
AMANAT, 48, was also sentenced to three years of supervised release and ordered of pay a fine of $175,000.
Tuzman, 49, is scheduled to be sentenced by Judge Gardephe on September 10, 2021, at 12:00 p.m.
Irfan Amanat, 50, was convicted at a separate trial before Judge Gardephe in October 2018. He is scheduled to be sentenced by Judge Gardephe on September 8, 2021, at 1:00 p.m.
Ms. Strauss praised the investigative work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service. She also thanked the Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Andrea M. Griswold, Joshua A. Naftalis, and Daniel M. Tracer are in charge of the prosecution.
18:1349.F ATTEMPT AND CONSPIRACY TO COMMIT WIRE FRAUD
(1)
18:1349.F ATTEMPT AND CONSPIRACY TO COMMIT WIRE FRAUD
(1s)
18:1349.F ATTEMPT AND CONSPIRACY TO COMMIT WIRE FRAUD
(1ss)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(2)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(2s)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(2ss)
15:80B.F DISCLOSURE OF INFORMATION BY COMMISSION (INVESTMENT ADVISOR FRAUD, AIDING AND ABETTING)
(3)
15:80B.F DISCLOSURE OF INFORMATION BY COMMISSION (AIDING AND ABETTING INVESTMENT ADVISER FRAUD)
(3s)
15:80B.F DISCLOSURE OF INFORMATION BY COMMISSION (AIDING AND ABETTING INVESTMENT ADVISER FRAUD)
(3ss)
18:371.F CONSPIRACY TO COMMIT SECURITIES FRAUD
(4)
18:371.F CONSPIRACY TO COMMIT SECURITIES FRAUD
(4s)
18:371.F CONSPIRACY TO COMMIT SECURITIES FRAUD
(4ss)
Outcome: Defendant was sentenced to five years in prison for participating in various securities fraud-related offenses.
Plaintiff's Experts:
Defendant's Experts:
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