Ozy Media founder Watson busted in fraud case
Ozy Media CEO Carlos Watson, a journalist, entrepreneur and television host, was arrested on Thursday and charged with misleading investors about revenue and projections, authorities said.
The anchor-turned-CEO was busted after a former startup partner pleaded guilty to fraud charges in a secret federal court proceeding, according to prosecutors.
Watson was arrested by the FBI at a Manhattan hotel and is scheduled to be arraigned in Brooklyn Federal Court on charges of conspiring to commit securities fraud and conspiring to commit wiring fraud, authorities said.
Watson, 53, “engaged in a scheme to defraud Ozy’s potential investors, potential acquirers, lenders and potential lenders” by misrepresenting the company’s audience numbers and financial results, prosecutors for the Eastern District of New York said in a court document dated Wednesday.
“Carlos Watson is a con man whose business strategy was based on outright deceit and fraud — he ran Ozy as a criminal organization rather than as a reputable media company,” U.S. Breon Attorney Peace said in a statement.
The company announced plans to shut down in 2021 after the New York Times reported Ozy co-founder Samir Rao had impersonated a YouTube executive during a February business call with Goldman Sachs.
But the content-creation company decided to keep its operations going.
Rao, Ozy’s chief operating officer, and Suzee Han, Ozy’s chief of staff from June 2019 to October 2021, previously pleaded guilty to charges relating to their roles in the scheme, officials said.
Prosecutors said Watson was aware of Rao’s impersonation and, over a series of text messages, instructed him about what to say during the call.
According to an indictment, Watson committed the fraud to secure tens of millions of dollars in investments and loans to offset the fledgling company’s mounting debt.
The company executives forged documents, faked financials and impersonated media executives in a desperate bid to keep the struggling company afloat, according to the indictment.
Watson pleaded not guilty at his arraignment and was released on a $1 million bond. A federal judge said he could not contact Ozy employees or raise money for the company.