Omar Amanat, Securities Fraud, New York 2017

Defendant Omar Amanat, an associate of codefendant Kaleil Isaza Tuzman, the former chairman and chief executive officer of KIT digital, Inc. (‘KITD’), was sentenced to five years in prison for participating in various securities fraud-related offenses.

U.S. District Judge Paul G. Gardephe handed down the sentence on February 28, 2017. Amanat was convicted of conspiracy to commit wire fraud, wire fraud, aiding and abetting investment advisor fraud, and conspiracy to commit securities fraud in 2017 after a two-month trial.

Amanat and Tuzman were found guilty of manipulating stock prices and hiding investment losses through false account statements. The scheme involved Amanat’s company, Maiden Capital, a hedge fund that managed portfolios of securities.

Between February 2009 and 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, had been lost. To facilitate the scheme, Maiden generated false client account statements that failed to disclose the Enable losses.

The market manipulation scheme involved Amanat, Tuzman, and Maiden engaging in efforts to artificially inflate the share price and trading volume of KITD shares between December 2008 and September 2011. 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.

Amanat also fabricated evidence, producing to the Government and entering into evidence at trial emails that had been fabricated. The Court allowed the Government to present to the jury evidence of Amanat’s use of false and fabricated email evidence.

Amanat was remanded by the Court into federal custody, where he will remain until his sentence is served. The scheme to defraud Maiden Capital investors resulted in hundreds of thousands of dollars being wired to a Maiden Capital bank account to support Maiden Capital.

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