Left-wing media start-up chief in court on fraud charges
THE founder of a Left-wing US media start-up has been arrested on charges of fraud and identity theft over accusations that he schemed to con investors out of millions of dollars.
Carlos Watson, who ran Ozy Media, was arrested at a Manhattan hotel on Thursday, days after another top executive, Samir Rao, admitted fraud charges.
Later that day, Mr Watson appeared in court to deny the fraud charges. If convicted, he faces at least two years in prison up to a maximum of 37 years.
Prosecutors allege that Mr Watson and Ozy attempted to defraud investors of tens of millions of dollars between 2018 and 2021 by misrepresenting the company’s debt and other key finances.
Ozy Media, which was founded in California in 2013, promoted itself as a progressive digital media platform for “the new and the next” in a bid to emulate the success of Left-leaning sites such as Vice and Buzzfeed.
But the company imploded in 2021 after The New York Times reported that Mr Rao had impersonated a Youtube executive on a conference call with Goldman Sachs discussing a potential $40m (£30m) investment.
Ozy has previously said Mr Rao was suffering from a “mental health crisis”, but prosecutors allege Mr Watson was also on the call and texting his colleague instructions on what to say.
Mr Watson was also charged with identity theft for his role in the impersonation of several media executives.
Breon Peace, US attorney for the eastern district of New York, said: “As alleged, Carlos Watson is a con man whose business strategy was based on outright deceit and fraud. He ran Ozy as a criminal organisation rather than as a reputable media company.”
Lanny Breuer, Mr Watson’s lawyer, said he was “deeply disappointed by the arrest” and thought that “good faith and progressive dialogue” with the government were progressing. Ozy made bold claims about its success but behind the scenes, it racked up huge debts and relied on high-interest loans while aggressively courting investors. At one point, the company used a forged contract to help win a loan from a bank, the indictment alleges. Mr Watson is also accused of lying to an investor about a fake $600m takeover offer.
In a parallel case, the Securities and Exchange Commission also charged Mr Watson and the company with defrauding investors of about $50m through “repeated misrepresentations concerning the company’s basic financial condition, business relationships and fundraising efforts”.
Mr Rao pleaded guilty this week, while Suzee Han, Ozy’s former chief of staff, did so last week. Both were bailed to await sentencing. Ozy has been contacted for comment.