Ozy Media founder Carlos Watson convicted in New York fraud trial
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[July 17, 2024]
By Jack Queen
NEW YORK (Reuters) -Ozy Media and founder Carlos Watson were convicted
of fraud by a Brooklyn federal jury on Tuesday, in a case accusing them
of lying to investors about the now-defunct startup's finances and sham
deals with Google and Oprah Winfrey.
Watson, a former cable news anchor and investment banker, and Ozy were
each convicted of securities fraud conspiracy and wire fraud conspiracy,
while Watson was also convicted of identity theft. Both had pleaded not
guilty.
Federal prosecutors said Watson and his California-based news and
entertainment company falsified information about Ozy’s finances and
audience size, fabricated contracts and inflated earnings projections to
court investors.
Founded in 2013, Ozy imploded in 2021 after news reports questioned its
audience numbers and revealed that a top executive had impersonated a
YouTube executive during a call with Goldman Sachs bankers in which he
claimed the streaming site agreed to pay for exclusive rights to an Ozy
show.
Prosecutors said Watson could face about 24 to 29 years in prison under
recommended federal sentencing guidelines, including a mandatory two
years for identity theft. His sentencing is set for Nov. 18.
“Ozy Media ultimately collapsed under the weight of Watson’s dishonest
schemes and with today’s verdict, Watson himself has been held
accountable for his brazen crimes," Brooklyn U.S. Attorney Breon Peace
said in a statement.
Lawyers for Watson and Ozy did not immediately respond to requests for
comment.
Watson's lawyer had told jurors that Watson was betrayed by deputies who
acted on their own and kept him in the dark about their wrongdoing.
The verdict follows a six-week trial that featured testimony by two
former Watson deputies, who pleaded guilty to fraud.
They told jurors they conspired with Watson to hide Ozy's crippling
debt, meager cash reserves and slow growth.
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Carlos Watson, CEO of Ozy Media, departs U.S. Federal Court in
Brooklyn after being arrested and charged with fraud in New York
City, New York, U.S., February 23, 2023. REUTERS/David Dee
Delgado/File Photo
Ozy folded shortly after the New York Times reported on former chief
operating officer Samir Rao's impersonation of the YouTube
executive.
Watson denied involvement in the incident, though prosecutors said
contemporaneous chat logs show he coached Rao on what to say.
The YouTube executive Alex Piper and Google CEO Sundar Pichai
testified for the government, saying they never had deals with Ozy
or considered buying it at any price, contrary to Watson’s claims to
investors.
Prosecutors said Watson also assured investors that Ozy was thriving
even as its cash reserves sank to $19,000 in 2018 and it struggled
to pay rent, wages and other basic expenses.
Watson testified for several days in his own defense. He said
prosecutors' view of Ozy's finances was simplistic and failed to
appreciate the nuances of media industry dealmaking. He also blamed
negative press coverage for Ozy's demise.
During cross-examination, Watson was at times evasive about the
inconsistent revenue figures Ozy provided to investors.
He also declined a prosecutor's request to break down Ozy's annual
revenue in cash rather than future potential earnings.
"That's not the way I've thought about it before and that's not the
way our investors thought about it," he said.
(Reporting by Jack Queen in New York; Additional reporting by
Jonathan Stempel; Editing by Noeleen Walder, Daniel Wallis and
Matthew Lewis)
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