Ozzy Media CEO Carlos Watson leaves the U.S. Federal Court in Brooklyn after being arrested and indicted on fraud charges in New York City, New York, United States, on February 23, 2023.
David D. Delgado | Reuters
Ozzi Media and its founder, Carlos Watson, were convicted of fraud by a Brooklyn federal jury on Tuesday in a case that accused them of lying to investors about the now-disbanded startup’s financial health and making false deals with Google and Oprah Winfrey. Watson, a former cable news anchor and investment banker, and Ozzi were charged with securities fraud and wire fraud conspiracy.
Federal prosecutors said Watson and a California-based news and entertainment company falsified information about Ozzy’s financials and viewership, fabricated contracts and inflated revenue projections to attract investors.
Founded in 2013, Ozzy collapsed in 2021 after questions were raised about its viewership figures and it was reported that he had impersonated a YouTube executive on a conference call with Goldman Sachs bankers, claiming that the streaming site had agreed to pay for exclusivity for Ozzy’s shows.
Watson had maintained his innocence. His lawyers told jurors he acted independently and was betrayed by marshals who failed to inform him of the wrongdoings. The verdict came after a six-week trial that featured testimony from two of Watson’s former marshals, who pleaded guilty to fraud. They told jurors they conspired with Watson to conceal Ozzie’s massive debts, tiny cash reserves and stagnant growth.
Ozzy went bankrupt shortly after The New York Times reported that former chief operating officer Samir Rao had impersonated a YouTube executive. Watson denied any involvement in the incident, but prosecutors said contemporaneous chat logs showed Watson coached Rao on what to say. YouTube executive Alex Piper and Google CEO Sundar Pichai said in government testimony that, contrary to Watson’s claims to investors, they had never done business with Ozzy or considered buying it at any price.
Prosecutors said Watson assured investors that the company was thriving even as Ozzie struggled to pay rent, wages and other basic expenses and its cash reserves dwindled to $19,000 in 2018.
Ozzy Media CEO Carlos Watson is on trial in Brooklyn Court in New York, US, on February 23, 2023, after he and his company were charged with conspiring to defraud investors of tens of millions of dollars by falsifying debt, financial performance and viewership figures. In this courtroom sketch,
Jane Rosenberg | Reuters
Watson testified in his own defense over several days, saying the prosecution’s version of Ozzie’s finances was simplistic and failed to understand the nuances of media business dealings, and blamed Ozzie’s downfall on negative media coverage.
During cross-examination, Watson was at times equivocal about inconsistencies in the revenue figures Ozzie provided to investors.
He also rejected prosecutors’ requests to provide a breakdown of Ozzy’s annual income in cash, rather than his potential future earnings.
“I haven’t thought of it that way before, and our investors haven’t thought of it that way either,” he said.
