Ozy Media co-founder Carlos Watson found guilty | Media News

Former TV personality Carlos Watson has been convicted in a federal financial conspiracy case over Ozy Media, an ambitious startup that failed after another executive impersonated a YouTube executive to publicize the company’s success.

Watson, 53, was free on bail but was taken into custody to await sentencing after the verdict was announced on Tuesday.

Brooklyn-based U.S. Attorney Breon Peace said the verdict held Watson accountable for “brazen crimes” that were intended to keep the cash-strapped Ozy afloat but ended up sinking him.

“The jury concluded that Watson was a conman who told lie after lie to trick investors into buying shares in his company,” Peace said in a statement, adding that the company “collapsed under the weight of his dishonest schemes. of Watson.”

Peace’s office said a jury found Watson guilty of all charges against him: conspiracy to commit securities fraud, conspiracy to commit wire fraud and aggravated identity theft. Ozy Media was also convicted of the same conspiracy crimes, the only charges the company faced.

Watson and Ozy pleaded not guilty and denied the charges. He testified that Ozy’s cash constraints were standard hurdles for startups and that material provided to investors noted that the information was unaudited and could change — “like ‘buyer beware,'” he said.

The defense attributed any misrepresentation to Ozy co-founder and chief operating officer Samir Rao, who pleaded guilty.

Watson and Ozy plan to appeal, attorneys Ronald Sullivan, Janine Gilbert and Shannon Frison said in a statement.

Watson could face decades in prison, although sentencing guidelines for individual defendants vary. The now-defunct Ozy faces possible financial penalties.

Web of lies

Watson, a cable news host who worked on Wall Street and sold his own education-related startup, conceived Ozy in 2012. The Mountain View, Calif.-based company produced shows and gave out “Ozy Genius” prizes to college students. . He interviewed former President Bill Clinton, won an Emmy Award and produced an annual festival of music and ideas that President Joe Biden participated in in 2017 as a former vice president.

But prosecutors said that beneath Ozy’s hip public profile, the company was reeling financially as of 2018. It routinely ran out of money to pay suppliers, rent and even employees, and took out expensive loans against future revenue to cover its accounts, former vice president of finance Janeen Poutre testified.

The prosecution and its key witnesses said that Ozy, with Watson’s blessing, began issuing increasingly bold lies to try to get a lifeline from investors.

“Survival within the bounds of decency, justice and truth has turned into survival at all costs and by any means necessary,” Rao told jurors, saying Watson sanctioned all of his falsehoods.

Ozy provided much higher revenue figures to its would-be financiers than to its accountants, with the discrepancy growing to $53 million from $11.2 million in 2020, according to testimony and documents presented at trial.

Prosecutors said the company claimed deals and offers it hadn’t actually secured — for example, that Watson told a potential investor that Google was willing to buy Ozy for hundreds of millions of dollars. Ozy’s lawyer said Watson never made that claim.

Google CEO Sundar Pichai testified that there was no such offer, although he considered hiring Watson and providing $25 million to help Ozy move forward if he accepted the Google job.

To attract potential corporate suitors and creditors, Rao forged some contract terms with a network for one of Ozy’s TV shows. So when a bank wanted to check with the network, Rao created a fake email account for a real executive at the network and sent a message offering information. The bank loan did not happen.

Rao began posing as a YouTube executive in a phone call with investment bankers, in a bizarre effort to support a false claim Rao had made about YouTube paying for another Ozy show. The bankers became suspicious, their potential investment evaporated, and the real YouTube executive soon discovered the ruse.

Watson’s lawyers pressed Rao’s admissions about his own conduct to try to portray him as a liar trying to avoid prison by pleasing prosecutors. Rao is awaiting sentencing.

Watson, who has hosted several Ozy shows and podcasts, told the judges that he focused more on the company’s content, team, vision and partnerships than on “making sure every decimal is in the right place.” He said he traveled about four days a week and left finances and operations mainly to Rao and others.

“I couldn’t be as hands-on as I probably would have liked,” he testified.

Ozy quickly disbanded after The New York Times revealed Rao’s fake call in a September 2021 column that also questioned the start-up’s claims about the size of its audience.