Prosecutors nix bail deal in fraud case over $70,000 watch

NEW YORK, N.Y. – Federal prosecutors demanded an extra $2.5 million in bail on Friday for a Harvard University-educated businessman extradited from Colombia on fraud charges after they discovered he was wearing a $70,000 watch.

U.S. Magistrate Judge Frank Maas in Manhattan agreed to boost bail for Kaleil Isaza Tuzman from $2.5 million to $5 million, but he did not require a doubling of the $500,000 in collateral that the government had requested. He did, though, say Tuzman must post the watch as collateral, too.

Tuzman, a former Goldman Sachs analyst, pleaded not guilty on Friday to an indictment charging him with misleading investors and regulators as chairman and CEO of technology startup KIT digital. Tuzman gained a measure of fame when he was featured in the film “,” which won the Sundance Film Festival Grand Prize in 2001.

Assistant U.S. Attorney Damian Williams said investigators found it “very disturbing” when Tuzman stepped off a government plane on Thursday with an expensive watch. Williams said Tuzman, 44, claimed he was desperately raising money for his bail from friends and relatives.

Williams said a closer look at Tuzman’s credit card charges revealed “lavish spending habits” that included tens of thousands of dollars on furs, jewelry and cars, including $110,000 on jewelry in one week.

He also said the government considered Tuzman a flight risk in part because of his access to money, his connections overseas and his minimal travel to the United States in recent years.

To counter arguments about travel to the U.S., defence attorney Avi Weitzman said Tuzman attended a Harvard class reunion last year and has a picture taken with U.S. Attorney Preet Bharara to prove it. Bharara heads the office prosecuting Tuzman.

Weitzman said the purchases of jewelry and furs were made on credit as Tuzman tried to start a company to distribute the items. He said his client had agreements with nine distributors to sell watches, clothing and fur.

Since his arrest 10 months ago, Tuzman’s “life has been destroyed,” Weitzman said.

The lawyer said Tuzman was now $6.5 million in debt and his supposed assets were mostly liabilities, including homes in Prague and the South of France. His collateral to meet bail conditions consisted of a $370,000 property in New York, $130,000 from family and friends and the watch.

Tuzman was ordered to submit to electronic monitoring. It seemed he might be released Friday. A wealthy friend waited to sign his bond at a Florida courthouse, one of eight signatures of financially responsible people required to do so. But the courthouse was closed by the time the bail hearing finished. So another friend sitting in the Manhattan courtroom offered to sign instead.

Tuzman will have to wait until at least Monday, the earliest a probation official can arrange to connect his electronic monitoring to a phone at the Holyoke, Massachusetts, home where he will reside with his father.