Fraud Scheme Involving Ozy Media CEO Carlos Watson Results in Guilty Verdict
Introduction:
On July 16, a New York jury found Carlos Watson, the CEO of Ozy Media Inc., guilty of three counts of fraud in a multi-million dollar fraud scheme. The U.S. Department of Justice (DOJ) for the Eastern District of New York made the announcement, detailing the charges brought against Watson. The DOJ accused him of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and aggravated identity theft. These charges were part of a broader scheme orchestrated by Watson and his associates to defraud investors and lenders. The case shed light on the false and misleading information presented about Ozy Media’s financial status and business operations.
Background and Charges:
Carlos Watson, the founder and CEO of Ozy Media, was arrested by federal agents in February of last year at a Manhattan hotel after pleading not guilty to the charges. The DOJ had unsealed the charges earlier that month, revealing the involvement of two top executives, including Ozy’s former chief operating officer Samir Rao. Rao had impersonated a YouTube executive during a pitch to Goldman Sachs, a potential investor. The Securities and Exchange Commission (SEC) also filed charges against Watson, Rao, and another executive, accusing them of defrauding investors of approximately $50 million through misrepresentations about the company’s financial condition.
Impersonation and Fraudulent Activities:
The DOJ’s investigation revealed that between 2018 and 2021, Watson and his co-conspirators engaged in a series of fraudulent activities. They falsely inflated Ozy Media’s financial performance, audience size, and business partnerships to attract investors and secure loans. To deceive potential investors and lenders, Watson and Rao impersonated executives from well-known media companies during negotiations. One instance involved sending a fake signed contract to a bank in order to secure a loan by falsely claiming it represented revenue from a second season of an Ozy television show. When the CFO of Ozy refused to participate in this fraud and resigned, Rao, with Watson’s approval, sent the forged contract himself. Another fraudulent attempt involved Watson and Rao impersonating a media executive from a major online video service to secure a $45 million investment.
Discovery and Arrest:
The fraudulent activities came to light when discrepancies were discovered during due diligence processes. These inconsistencies led to Watson’s arrest and the subsequent unsealing of the indictment. The DOJ’s statement emphasized the extent of the deception, which involved creating fake contracts, fabricating financial documents, and lying about the company’s debt levels and revenue projections.
Consequences and Future of Ozy Media:
As a result of the guilty verdict, Carlos Watson faces a mandatory minimum sentence of two years and a maximum of 37 years in prison, according to the Justice Department. Ozy Media, which was founded in 2012, faced financial struggles starting around 2015 when its digital business faltered. In an effort to survive, the company shifted its focus to television content and organized a live festival called “Ozy Fest” in Central Park, featuring prominent figures like then-Vice President Joe Biden and RuPaul. However, the company accumulated large amounts of debt in 2018, ultimately leading to the fraudulent activities.
Conclusion:
The case involving Ozy Media CEO Carlos Watson highlights the importance of transparency and integrity in business operations. The fraudulent scheme orchestrated by Watson and his associates not only defrauded investors and lenders out of tens of millions of dollars but also damaged the reputation of the media company. This case serves as a reminder for investors and financial institutions to conduct thorough due diligence processes to uncover any discrepancies or fraudulent activities. The guilty verdict against Watson sends a strong message that illegal practices will be met with severe consequences.
