Goldman banker-turned-tech investor avoids prison despite fraud conviction

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NEW YORK — A former Goldman Sachs analyst and technology entrepreneur who spent 10 months in harrowing conditions in Colombian prisons avoided being sentenced to additional time in a U.S. prison on Friday following his conviction on fraud offenses.

Kaleil Isaza Tuzman, 49, the former chief of Kit Digital Inc, had been convicted in December 2017 of conspiring to commit both securities fraud and wire fraud at the video technology company.

U.S. District Judge Paul Gardephe in Manhattan, however, said the “horrors” Tuzman experienced in Colombia put him at little risk of committing further crimes.

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“The risk associated with sending Mr. Tuzman back to prison, the risk to his mental health, is just too great,” Gardephe said. “While in many other cases it has been my practice to sentence white-collar defendants for these sorts of crimes to a substantial sentence, in good conscience I can’t do that here.”

Gardephe also ordered three years of supervised release.

Tuzman, a 1995 magna cum laude Harvard University graduate, has been under home confinement since July 2016.

He achieved earlier renown when his company govWorks.com was featured in the 2001 documentary “Startup.com.”

The office of U.S. Attorney Audrey Strauss in Manhattan declined to comment. Prosecutors had sought 17-1/2 to 22 years in prison.

Tuzman was charged with deceiving shareholders of Kit Digital, a name drawn from his initials, by inflating revenue with sham software license agreements, and inflating trading volume in its shares to justify a higher stock price.

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Kit Digital filed for bankruptcy in 2013.

Tuzman had said that after his 2015 arrest in Colombia, he endured “subhuman” conditions in three maximum-security prisons there, including five months in solitary confinement, food and water contamination, and being raped at knifepoint.

Before being sentenced, Tuzman expressed contrition.

“I was a liar. I was dishonest,” he said. “I will never make these mistakes again.”

Last month, Gardephe sentenced Tuzman’s co-defendant Omar Amanat, who invested in the studio behind the “Twilight” films, to five years in prison on his fraud conviction.

The case is U.S. v. Tuzman, U.S. District Court, Southern District of New York, No. 15-cr-00536. (Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)