From Invisible To Infamous – For All The Wrong Reasons

Posted Thursday, July 28th, 2016 by Angela Fabek

Chelsey Franks
Vice President, Investigations
Bishops Services

Once dubbed “the most powerful person in Hollywood you’ve never heard of” by The Wrap in 2011, Omar Amanat is now a household name, but for all the wrong reasons. As reported by Bloomberg and numerous other media outlets, Amanat was arrested on July 13th and charged with participating in a conspiracy to defraud investors in Kit Digital Inc. Bloomberg reports that “his arrest widens the criminal case against Kit Digital, a technology startup. The company’s former chief financial officer, Robin Smyth, pleaded guilty to fraud in March. Kaleil Isaza Tuzman, the company’s former chief executive officer, is in custody in Colombia and is fighting extradition to the U.S.” And Stephen E. Maiden of Maiden Capital LLC, and Rima Jameel, an attorney based in the U.A.E., “were also charged in connection with the case, according to court papers made public [on the day of his arrest]. Maiden, who is 43, pleaded guilty on July 1, while Jameel, 49, remains a fugitive.” Bloomberg notes that Maiden was sentenced in February 2015 to seven years in prison for defrauding 39 investors out of $8.9 million, as part of a Ponzi scheme, while Jameel is charged with conspiracy, securities fraud and money laundering. Prosecutors allege that “he set up a U.A.E.-based escrow fund that Kit Digital used to fund fraudulent transactions, using its own money to pay off uncollectible bills owed to the company.”

Amanat, Tuzman, Maiden and an unnamed individual are reported to have used an investment vehicle controlled by Tuzman to purchase shares in Kit Digital. Tuzman and Maiden allegedly worked in conjunction to use the vehicle to inflate the share price and trading volume of Kit Digital, according to Prosecutors. Using money from Tuzman and Kit Digital, according to Bloomberg, “they invested $2 million from December 2008 to September 2011, in effect using the company’s money to invest in itself, prosecutors said. Maiden was rewarded with loans and investments from Kit Digital, according to the charges against him.” Reportedly, Maiden Capital told investors that their money was still in the fund when in fact it had already been lost in Kit Digital (which filed for bankruptcy in 2013 and is now known as Piksel Inc.).

This scandal serves as a cautionary tale of Hollywood proportions. A thorough investigation into Amanat’s past would have scared even the most risk-friendly investor away.

In the years leading up to this scandal, Amanat’s background was riddled with “red flags.” He was barred by the Financial Industry Regulatory Authority (FINRA) in 2008. Amanat’s FINRA registration also revealed that he was terminated from a prior employer in 2002 for violations of the company’s Code of Professional Conduct. On top of that, he was found to have been subject to four NASD Arbitration Awards between 1993 and 2003.

Additionally, Amanat filed for bankruptcy in 2004, and has been tied to at least nine corporate bankruptcy petitions and other related proceedings between 2004 and 2010.

He has been taken to court over 25 times since 1997 (no small feat for someone who had only graduated from high school seven years prior), and has been subject to multiple tax liens since 1995, at least one of which was for more than $200,000.

The icing on the Amanat cake, however, concerns a prior employer, a media enterprise for which he served as Spokesman and “advocated for Muslims to undo negative misperceptions of themselves in media.” As it turns out, partners of this entity included an individual who served as Chief Executive Officer and was charged with beheading his own wife in 2009 after she filed for divorce. Another partner was reportedly “the chief propagandist for [the terrorist organization] Hamas in the United States,” and was under investigation (and soon to be named as an unindicted co-conspirator) in the government’s case against the Holy Land Foundation, “the principal front for Hamas in the United States.” Amanat was said to have been aware of this information when he chose this individual to partner with him.

Needless to say, any investor who had done thorough due diligence on Amanat prior to throwing millions of dollars his way would have found a myriad of reasons to run for the door.

Amanat was once the guy no one had ever heard of. Now, everyone knows his name. Would you want your firm to be in the same situation because you didn’t do your due diligence?