Sheldon Zelitt, the man accused of trying to pass off a conventional TV set as a technological breakthrough at the company he founded, is keeping a low profile on his land in small-town Alberta.
His lawyer, Allan Shewchuk, says he will stay there until the bizarre and twisted saga of VisuaLabs Inc. is finally sorted out. The Calgary high-tech company's stock imploded on the Canadian Venture Exchange (CDNX) last week and more than one person has called it a "mini-Bre-X."
Mr. Zelitt's wife has already moved to the Czech Republic with their 12 children, eight of whom are adopted, and has, by all accounts, set up another life there, complete with the horse ranch she attempted to maintain here.
Neighbours say they've recently spotted Mr. Zelitt around the yard, where weeds are slowly engulfing more than half a dozen old collectible cars and a big bus that was the family vehicle.
He doesn't answer his phone, however, and has spurned media attention.
Mr. Zelitt also faces criminal charges in an unrelated matter. But Crown prosecutor Shirley Jackson said there's nothing in his bail conditions that prevents him from leaving the country. Ms. Jackson said on Friday, however, that she is seeking a modification of the bail conditions since the VisuaLabs shares he posted for bail are now worth only a tiny fraction of their value when they were turned over.
Mr. Zelitt, 55, was the chairman, chief executive officer and chief scientist of VisuaLabs until two weeks ago, when his company fired him for alleged "serious misrepresentations" made during the company's annual meeting. It also fired his wife, Joy, who served as corporate secretary and vice-chairwoman from the Czech Republic, where she was supposed to be managing the company's fledgling European operations. In a statement that also announced the dismissals of the Zelitts, the company said it is cancelling those operations to reduce expenses by half.
The same statement said Mr. Zelitt, the developer of company's two key technologies -- one a 3D-imaging screen, and the other a large, seamless liquid-crystal display screen -- was supposed to present a working model of the LCD screen at the company's annual meeting on July 3.
Instead, VisuaLabs, a company touted by Calgary brokerage firm Acumen Capital Partners, charges that Mr. Zelitt went to a local consumer electronics store before the meeting. There, according to the company, he bought a 107-centimetre standard plasma television, made a few minor modifications, then hauled it to the meeting and used it in a presentation before eager investors.
In a hearing later at the Alberta Securities Commission, ASC case manager Marc Arseneault testified that the TV set, examined later, had a large piece of glass with one vertical line etched on it glued to the front of the screen. It was supposed to represent a large, high-resolution LCD screen created by putting together four separate screens, or "tiles."
The revelation by the company, after an internal investigation, was paired with the announcement that it now concluded both developments Mr. Zelitt was responsible for -- the LCD technology and the 3D-imaging product -- were nothing more than smoke and mirrors.
Company stock, when the CDNX trading halt was lifted last week, promptly evaporated. It was $3.80 when it was frozen on July 23, and it closed at 22 cents when trading resumed on Aug. 2, wiping out $60-million in market capitalization. The stock, which closed as high as $19.75 at the peak of the tech craze in February, 2000, fell again on Friday to 20 cents.
The company is also examining whether there's anything to the agreements it had touted under Mr. Zelitt, including one with a Japanese electronics manufacturer, and another with an illustrious film studio in the Czech Republic. The company has raised millions along the way, without ever closing a sale.
"We have all sorts of deals," said John Kendall, a former dean of science at the University of Calgary who served as a company director since May, 2000, before being named president. "But we have never delivered a single item."
Disclosure documents reveal VisuaLabs had guaranteed a $1.5-million loan to Ms. Zelitt to set up a home in the Czech Republic. Ms. Zelitt, who raised horses on the land in Alberta, is apparently in the ranch business in the Czech Republic.
Mr. Kendall said he does not know what will happen to that loan.
"At this point, everything has to be questioned," he said.
One of the biggest questions is just who the man at the centre of the storm is. To business colleagues and investors, Sheldon Zelitt was persuasive and charismatic, and his touches of eccentricity -- he liked to describe himself as a mad inventor and he affected a ponytail -- were taken as tokens of genius.
"He told a good story," said the manager of a Calgary investment firm that bought, and subsequently sold, VisuaLabs shares for one of its clients. "When you saw the images he was projecting, it was very interesting."
The manager said although he liked the potential applications of the 3D-imaging technology VisuaLabs said it had, he became concerned when the company didn't produce a demonstration model.
Mr. Zelitt, who is believed to be from the Toronto area, seemed obsessed with security. He insisted that all of his research and development be done away from the eyes of fellow staff members -- so much so that Mr. Kendall said nobody else in the company could have known the technology wasn't what it was cracked up to be.
According to a 1996 company prospectus, filed before VisuaLabs' $2.5-million initial public offering by Yorkton Securities Inc., Mr. Zelitt graduated from the University of Toronto in 1971 with a bachelor of applied science degree. He spent more than 20 years developing optical and imaging technology under his own company, S. Zelitt and Associates Inc. It's unclear who his clients were, but colleagues said Mr. Zelitt told them of contracts with the Israeli military, and "unnamed U.S. government organizations" developing such things as top-secret satellite spy lenses.
To his neighbours outside Strathmore, Alta., a town of 7,500 residents half an hour's drive from Calgary, Mr. Zelitt projected an entirely different image from the exuberant and spotlight-hungry head of VisuaLabs. He and his family were seen as extremely reclusive, discouraging any contact with the community -- an oddity in the casual and neighbourly environment of rural Alberta.
Mr. Zelitt's obsession with security was evident in his home. When Ms. Zelitt and the children still lived there -- they moved about a year ago, neighbours estimate -- two security guards were posted on the property 24 hours a day, in all seasons, for several years.
Garry Jensen, a neighbour who seemed to know them best because he did farm work for them over the years, said he thought the security guards, who lived in a trailer on the property, were odd but put it down to city people being uneasy in the country.
"They were concerned all the time with people coming out, and theft," said Mr. Jensen, who baled hay for the Zelitts.
Mr. Jensen said the Zelitts were nice, "good to work for," and generous about lending equipment. But Bob and Nadine Hymas, a retired couple living next door, said the Zelitts rudely rejected any friendly overtures.
"They just wanted to be left alone," Mr. Hymas said.
But despite the contradictory images Mr. Zelitt presented to those who came in contact with him, most people agree on one thing -- his spectacular audacity.
In his only public statement since his company accused him of presenting the TV set as a multimillion-dollar breakthrough, he acknowledged he had "done something which has embarrassed the directors, my company and myself."
But it didn't stop him from offering to keep helping the company develop its technology.
In an interview, Mr. Kendall said he wasn't interested.