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It's tough to speculate how Sheldon Zelitt felt on May 19, 2005, as he boarded a Czech Airlines jet in Prague, bound for Montreal. We know that he joined two strangers aboard the Airbus A310, who cordially introduced themselves and sat down with him for the seven-hour flight. Zelitt would have known that no friendly faces would be there to greet him in Calgary, his ultimate destination. But then again, he'd been less than thrilled with Czech hospitality during the past year. He could have delayed his trip further, but had decided against it.
Zelitt's seatmates were George Prouse and Eric Ampoma. For them, the flight was routine. "Other than it being a long flight, which required a little more vigilance on our part, it was pretty straightforward," says Prouse. He politely declines to reveal what the three men chatted about as they wiled away the journey across the Atlantic. "We try to be as low-key as possible," Prouse adds. "I would venture to say that the majority of passengers on our plane coming back didn't know there was a prisoner being escorted."
The three landed in Calgary at 10 that night. Uniformed RCMP officers escorted an expressionless Zelitt past journalists and curious onlookers. His mustard coat draped over his handcuffs, Zelitt answered no questions. He got into an unmarked police car, which took him to an RCMP facility in nearby Airdrie. The next day, he began serving what he had long sought to avoid: a prison sentence.
As RCMP commercial crimes investigators, Prouse and Ampoma were intimately familiar with Zelitt's history. He was the man behind VisuaLabs Inc., a fraudulent Calgary-based technology company that imploded in 2001. For them, his return was a long-awaited triumph; they had been part of a multijurisdictional effort to have him extradited from the Czech Republic to face the music. That they succeeded sends a strong message to corporate miscreants: fleeing the country does not guarantee an easy life of pina coladas and palm trees in some distant tax haven.
Extradition, though, is a blunt instrument. It's a process governed by bilateral treaties that are difficult to negotiate and vulnerable to changing governments, diplomatic relations and other historical meanderings. And the world's legal systems can be as diverse as its languages. Meanwhile, global communications make it easier for criminals to plan and execute cross-border crime, and steady improvements in international travel make it convenient for them to evade justice. For all too many white-collar offenders, freedom can be just a flight and a few bank transfers away.
He had a ponytail. He was obsessed with security. He drove his family about in a large bus. These were just some of the signs that Zelitt was no ordinary CEO. But he told people he was developing leading-edge display technologies, and as investors eagerly awaited a commercial breakthrough, Zelitt's eccentricities were overlooked, ignored or forgiven. Behind them lay a more disturbing trait: a singular ability to deceive.
Zelitt claimed he'd developed a technology that would display three-dimensional images on modified TV screens, avoiding the bulky headgear employed by existing 3-D systems. With that claim, he took VisuaLabs public in 1997. Later, he unveiled GroutFree, another technology, which purported to "stitch together" smaller display panels to make large screens. Deals announced by Zelitt generally failed to materialize, but VisuaLabs nevertheless managed to win over about 3,000 retail and institutional investors, many journalists and even some in the scientific and engineering community. At one point, the company's market capitalization exceeded $300 million.
Zelitt's actual, more modest achievements came to light shortly after VisuaLabs' annual general meeting in July 2001, at which he showed investors a new GroutFree "prototype." Some board members were suspicious, however, and upon investigation discovered that the device was nothing more than a barely modified plasma TV set that Zelitt had bought at a local electronics retailer. Board-appointed investigators quickly learned that the 3-D technology didn't exist, either: Zelitt was merely showing people a VHS tape of cleverly filmed images he'd acquired elsewhere.
VisuaLabs shares became nearly worthless overnight. Zelitt and his wife, Joy, who also worked at VisuaLabs, were promptly fired.
The following January, the Alberta Securities Commission charged Sheldon Zelitt with 11 violations of the Securities Act for making misrepresentations in VisuaLabs' filings to investors. The ASC took the unusual step of prosecuting Zelitt before the Provincial Court of Alberta, rather than its own tribunal--likely in part due to the severity of the penalties sought. (Securities fraud, after all, rarely results in prison.)
Zelitt hired lawyer Allan Shewchuk, through whom he protested innocence. Shewchuk entered a not guilty plea; he assured reporters that Zelitt planned to remain in Canada and prove his innocence. "My understanding is that he's trying to finish work on the GroutFree prototype so he can show it to people," Shewchuk told me in September 2001. Actually, Zelitt adopted a different strategy: he ran like hell.
In 2000, the year before the fraud came to light, Zelitt's family moved from Strathmore, Alta., to the Czech Republic. The company guaranteed a $1.5-million loan so they could buy a mansion in Brázdim, a small town of 600 on the outskirts of Prague; the corporate justification for the loan was that Joy Zelitt could open a Czech office for VisuaLabs. The Globe and Mail observed in 2001 that Zelitt's family had, "by all accounts, set up another life" in Brázdim.
Nothing prevented Zelitt from joining them after his deception was discovered. The ASC's charges were all summary conviction offences--that is, offences typically deemed less serious than indictable ones. There was therefore no warrant issued for his arrest; he was merely served a summons to appear in court. Shewchuk could make that appearance on Zelitt's behalf; Zelitt was at liberty to come and go from Canada as he pleased. "I don't think there had been any indication of a severing of attachments with the jurisdiction," said John Petch, the ASC's director of enforcement, in an interview last year. And so, Zelitt quietly slipped away. Nobody seems to know when or how he escaped. "I presume there would be some kind of travel record, but I don't know that anyone's looked into the precise date that he left Canada," says Petch. "He may have chosen to holiday in the Czech Republic and then never returned."
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