Robin Smyth, the former chief financial officer of Kit Digital Inc pleaded guilty to securities fraud. Smyth, along with the company’s former chief executive, Kaleil Isaza Tuzman, allegedly deceived investors about the financial health of the now-bankrupt online video poker management company by overstating the revenue and performance of the company.
Smyth was extradited from Australia last November and has been held without bail since. As part of a plea bargain, Smyth agreed to cooperate with authorities against Tuzman.
More from Reuters:
Prosecutors said from 2010 to 2012, Smyth worked with Tuzman to deceive Kit Digital’s investors and auditors into believing the company was more profitable than in reality.
That scheme involved the improper recognition of revenue for “perpetual license” contracts for software and the execution of fraudulent round-trip transactions, prosecutors said.
After Tuzman and Smyth resigned in 2012, the company, which was based in New York and Prague, that November announced it would restate financial results going back to 2009.
On the first trading day after the announcement, Kit Digital’s shares opened down 52 percent at $1 and fell a further 26 percent to 74 cents by the day’s end, the U.S. Securities and Exchange Commission said in a related civil lawsuit.
Nasdaq subsequently delisted the company, which ultimately filed for bankruptcy in April 2013.
Smyth’s lawyer, Michael Bachner, declined comment on the case.
Photo by ccarlstead via Flickr CC License
