Ozy CEO Carlos Watson arrested and charged with fraud

“As claimed, Carlos Watson is a fraudster whose business strategy was based on open deception and fraud – he ran Ozy as a criminal organization rather than a reputable media outlet,” US Attorney Breon Peace said in a statement.

Watson publicly presented himself as a well-connected, charismatic CEO, but that all fell apart two years ago, according to a report in the New York Times Former Chief Operating Officer Samir Rao posed as a YouTube executive during a conference call with Goldman Sachs, which was considering investing $40 million in the company.

That led to an investigation by federal officials. And within five days of this story’s publication, Watson shut down Ozy entirely, with reporters’ interview notes disappearing in Google Drive along with emails, Slack messages, and more. wealth previously reported. Three days later, the story was to take an even stranger turn when Watson showed up Today’s showAnnouncing plans to relaunch Ozy and asking staff to come back.

Watson’s arrest on Thursday follows a guilty plea Tuesday from Rao, who admitted fraud and identity theft and said he made misleading statements to investors and inflated the company’s financial performance between 2018 and 2021. He entered the plea, using the alias John Doe, to obtain the court’s permission as the Brooklyn US Attorney’s Office continued the investigation into Ozy diary reported.

Another former Ozy executive pleaded guilty to fraud and conspiracy charges on Feb. 14.

A questionable story

Ozy’s downfall was quick, and the company seemingly played it fast and loose well before it shut down.

For example, in July 2019, Watson announced on CNBC that his friends Ozzy and Sharon Osborne had invested in his media startup. They happened to be far from friends and had never invested. In fact, they had recently sued Watson over the name of a festival the company hosted in Central Park.

“This guy is the biggest shyster I’ve ever seen in my life,” Sharon Osbourne said at the time. “He’s crazy.”

Watson later clarified that the Osbournes were offered shares in Ozy Media as part of the settlement of the legal dispute.

A former employee tells wealth in 2021 that Watson “was a master at maneuvering questions and not providing a precise answer”.

Newsletters from the Ozy were sent to people who had never subscribed. And former Ozy Deputy Editor-in-Chief Kate Crane shared it wealth about a 2015 conversation with Ozy’s then-head of the audience, in which she found that traffic data given to investors and employees “didn’t match company data.”

Still, the digital outlet has been a Silicon Valley favorite, with investments from Axel Springer, Lauren Powell Jobs’ Emerson Collective, SuRo Capital and former Ozy chairman and billionaire venture capitalist Marc Lasry. As of April 2020, according to PitchBook Data (cited by the Wall Street Journal.)

In 2020, Watson told Axios the company had $50 million in sales and achieved profitability — and reportedly boasted it would be worth $5 billion by 2025.

Staff were skeptical of Ozy at the time but said they had no idea how deep the problems were.

“I knew there were swabs and more bites than they could chew and they had shoddy business practices. But did I know they spoke up about everything? No,” said Joshua Eferighe, a former writer at Ozy who has left wealth in 2021.

The company had reportedly been talking about bringing back its Ozy Fest series of events for the past few weeks. The status following Watson’s arrest is unclear.

“We’re really disappointed,” said Lanny Breuer, Watson’s attorney WSJ when asked about his client’s arrest. “We have acted in good faith and believe we have had a constructive dialogue with the government and are shocked by the actions taken this morning.”

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