Yahoo News Ozy Media Shuts Down After Founder Carlos Watson Charged With Fraud, Identity Theft
Ozy Media has closed its doors after Carlos Watson, the digital media and entertainment company’s founder and CEO, was arrested and indicted on federal fraud charges.
”In light of its current operational and legal challenges, the Ozy board has determined that it’s in the best interests of its stakeholders to suspend operations immediately,” the company said on its Twitter account Wednesday. The company’s website, ozy.com, was unreachable as of Wednesday evening.
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Ozy Media CEO Carlos Watson Arrested, Charged With Securities Fraud
Ozy Media Is Not Shutting Down After All, CEO Carlos Watson Says
On Feb. 23, Watson was arrested in Manhattan and charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud in what the Justice Department alleged was a scheme to defraud Ozy’s investors and lenders. Watson was also charged with “aggravated identity theft” for his role in the impersonation of “multiple media company executives” in communications with Ozy’s lenders and prospective investors in furtherance of the fraud schemes, federal prosecutors said.
In a Twitter thread posted last Friday, Watson said he “will fight these charges with everything I have, and I look forward to my day in court.”
“I am deeply disappointed by the government’s actions yesterday,” he wrote in the Feb. 24 thread. “I am not now and never have been a ‘con man.’ I am and have been, a hard-working entrepreneur who has helped build a special company from scratch.” Watson continued, “I’m not saying I haven’t made mistakes — I have. But it’s fair to ask, why I’ve been singled out? Ozy is a real and valuable company that was built through an enormous amount of hard work and sacrifice.”
If convicted on the charges, Watson faces a mandatory minimum sentence of two years in prison and a maximum sentence of 37 years’ imprisonment, the U.S. Attorney’s Office said.
Former Ozy COO Samir Rao and ex-chief of staff Suzee Han previously pleaded guilty to charges relating to their roles in the alleged fraud scheme, the Justice Department said.
Among the allegations in the 42-page indictment against Watson (at this link), federal prosecutors charged that in December 2019 Watson tried to secure a loan by instructing Ozy’s then-CFO to send the bank a fake contract between Ozy and an unidentified cable network purporting to be for a second-season renewal of one of the company’s shows. When the CFO refused, Rao — with Watson’s approval — sent the fake contract with a forged signature, according to the DOJ.
In addition, from about November 2020 through February 2021, Watson and his co-conspirators attempted to secure $45 million in funding for Ozy by misrepresenting the company’s finances, the feds alleged. According to prosecutors, Watson told the potential investor that a “well-known online video service” — which was apparently YouTube — had paid Ozy nearly $6 million in licensing revenue for his talk show, “The Carlos Watson Show.” That was a lie, according to prosecutors. In February 2021, Rao held a call with employees of the financial institution “during which he impersonated a media executive from the online video service using a voice alteration application that he downloaded onto his cellular telephone to mask his voice during the call,” the Justice Department said. During that call, Watson was in the same room as Rao and texted Rao instructions about what to say and what not to say on the call, prosecutors alleged. When staffers at the financial institution later confronted Watson about the deception, he falsely claimed that Rao “had acted alone” had impersonated the media executive as “a result of a mental breakdown,” according to the indictment.
In September 2021, the New York Times reported that Ozy falsified audience metrics and that Rao had impersonated a YouTube executive on a call with prospective investor Goldman Sachs. In the wake of the Times story, Ozy chairman Marc Lasry, owner of the Milwaukee Bucks and head of a hedge fund that raised $35 million in funding for Ozy in 2019, resigned from the company. In addition, A&E dropped a production it had in the works with Ozy Media
Watson co-founded Ozy Media in 2013, described as “a multiplatform media company that aims to help curious people see a broader and bolder world.” He previously had stints as a political commentator and host at CNN and MSNBC.
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