The Man Who Went From Harvard to Goldman to Colombian Jailby
Kaleil Isaza Tuzman charged in U.S. with cheating investors
Lawyers say prosecutors overzealous in arresting him overseas
As a baby-faced entrepreneur, Kaleil Isaza Tuzman once symbolized the tech industry’s meteoric meltdown. Just years out of Harvard College and a stint at Goldman Sachs, he launched an Internet company only to see it collapse three years later.
Today, he finds himself in a South American maximum-security prison, begging to return to the U.S to face securities fraud charges that could send him to an American jail cell for as long as 20 years. For now, he shares a 90-square-foot cell with an accused murderer and a drug trafficker in Patio 16, a wing of the Colombian prison reserved for often-violent defendants.
Just how Isaza Tuzman, a 44-year-old U.S. citizen, ended up there is now the subject of a legal fight in New York. He was arrested in September in Colombia at the request of U.S. prosecutors after he was indicted for allegedly cheating investors in mobile-video company KIT Digital Inc. They said he was a risk to flee and now needs to go through Colombia’s extradition proceedings.
His lawyers, Reed Brodsky and Avi Weitzman, say in court filings that he’s in “life-threatening conditions” at La Picota prison, a lockup in Bogota decried by the nation’s inspector general for its harsh conditions. And they argue that the arrest of a non-violent, white-collar defendant on foreign soil marked an unprecedented departure for U.S. authorities.
Isaza Tuzman, who is developing a luxury hotel in Colombia, was often in America, the lawyers said, most recently to attend his 20th reunion at Harvard in May. The government should have followed policy and waited for another visit to the U.S. to make the arrest, said the lawyers, both former U.S. prosecutors.
On Friday, U.S. District Judge Paul Gardephe in Manhattan will hear arguments on Isaza Tuzman’s motion asking the government to drop the arrest warrant so he can circumvent the Colombian extradition process. He would then promise to return immediately to the U.S. to face the charges. The Colombian extradition could take months longer, his lawyers say.
In a court filing, prosecutors said that dropping the arrest warrant now has no legal basis and would leave Isaza Tuzman free to travel anywhere. Isaza Tuzman was a flight risk, especially to the United Arab Emirates where he had retained an attorney who herself had fled U.S. charges years ago, they said.
And prosecutors insisted his arrest in Colombia was hardly novel or meant as a signal to non-violent offenders. About a dozen U.S. citizens, including “numerous white-collar defendants,” have been held at La Picota in recent years -- many in Patio 16 -- pending extradition, they wrote. In any case, they said the U.S. has made robust efforts to have Isaza Tuzman transferred away from “his alleged tormentors” even while casting doubt on his claims.
Some legal experts said the arrest on foreign grounds appeared unusual for white-collar offenses; defendants often negotiate their surrender in advance. Rarely do U.S. prosecutors have American citizens locked up overseas if they can devise another way to bring a defendant home, said Jens David Ohlin, a professor of international law at Cornell Law School.
“I’ve never encountered anything like this situation before,” Ohlin said in a telephone interview. “It’s a rare situation where someone is fighting with the U.S. on how quickly they can get back here to stand trial.”
Isaza Tuzman spent more than four years at Goldman Sachs Group Inc., working in emerging markets arbitrage. In 1998, while still at the bank, he co-founded govWorks.com, a website that promised to link people to local municipalities. In the 2001 documentary “Startup.com,” he could be seen pitching venture capitalists and chatting with Bill Clinton at a summit about the Internet.
After govWorks collapsed in bankruptcy in 2001, Isaza Tuzman went on to head at least three tech startup firms, including one that eventually was renamed KIT Digital. He left the company in April 2012, a year before it declared bankruptcy.
In August, federal prosecutors in New York returned a sealed indictment against Isaza Tuzman. Prosecutors say that while at KIT Digital, he engaged in an elaborate scheme to mislead investors and regulators about the financial health of the company for at least three years. He’s also accused of secretly operating a hedge fund that artificially inflated the company’s share price and of using funds from KIT Digital to secretly invest in his hedge fund.
Isaza Tuzman, who holds dual U.S.-Colombian citizenship, was arrested Sept. 7, just days before he was to return to Philadelphia for the Jewish holidays, his lawyers said.
“His life is in danger,” his mother, Ani Tuzman, said in an interview. “He’s sick. There is violence and assaults that are part of everyday life at La Picota. Every day I wake and I don’t know if he’s still alive. This is beyond anything I could imagine.”
According to lawyers Brodsky and Weitzman, he has developed a respiratory ailment, suffered an infected and swollen eye, lost 20 pounds and “lives in a constant state of fear.” Details of a prison incident cited in their legal brief are blacked out from the public version to protect Isaza Tuzman’s privacy.
Prosecutors say the descriptions of his condition are “uncorroborated.”
La Picota prison has been hit by repeated scandals in recent years. While some accounts describe grim, overcrowded conditions, Colombian media reports also portray wealthy inmates organizing barbecues, drinking Scotch and receiving visits from prostitutes in what they dubbed the “luxury” wing of the prison.
That appears to be the wing that Isaza Tuzman wants to get moved to. He has enlisted the support of U.S. officials in Colombia to relocate to the “R-Sur” section, according to his lawyers and prosecutors. That unit, reserved mostly for Colombian officials charged with public corruption, boasts home decoration, down comforters, flat-screen televisions, as well as pool tables and a full gym, according to prosecutors.
Colombian prison officials rejected the move because Isaza Tuzman didn’t qualify, prosecutors said. Instead, they offered a transfer to what his lawyers said was a “snitch cell” -- an area for inmates cooperating with authorities that they said would make him vulnerable to harm. He was also offered relocation to Combita, another prison that defense lawyers say is more dangerous and not as accessible to his Bogota counsel. The lawyers said they declined both offers.
Looking haggard and wearing a brown tweed suit and speaking in Spanish, Isaza Tuzman appeared in a courtyard of La Picota in a recent interview with “Los Informantes,” a weekly Colombian television news program.
“Why would a U.S. federal prosecutor arrest me in Colombia when he could
have knocked on my door in New York?” Isaza Tuzman said. “I was not hiding in Colombia.”