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Ozy Media Founder Carlos Watson Charged With Fraud

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The problematic and scandal-ridden Ozy Media has been in and out of headlines over the past year and a half over shocking allegations that the company was involved in a series of fraudulent schemes (among other allegations regarding the behavior of its executive board), probing an investigation by the U.S. Department of Justice and the Securities and Exchange Commission.

The investigation took a startling turn when Ozy co-founder Samir Rao pleaded guilty to fraud charges earlier this week, leading to the arrest of co-founder and chief executive Carlos Watson on Thursday afternoon at a hotel in New York City.

Court documents state that Watson actively “engaged in a scheme to defraud Ozy’s investors, potential investors, potential acquirers, lenders and potential lenders” and did so by lying about Ozy’s financial standings, potential earnings and acquisitions, and more.

Related: ‘Ignore Your Schedule’: The Bad Advice that Ozy Media’s Carlos Watson Gave to Entrepreneur

According to the Wall Street Journal, Watson was attempting to lock down “tens of millions of dollars” from investors in order to pay off the company’s debt. He was officially charged with conspiring to commit securities fraud and wire fraud and faces a maximum sentence of 37 years in prison.

The probe into Rao and Watson began after a bombshell New York Times article was released in 202, which alleged that Rao pretended to be a YouTube executive while on a call with Goldman Sachs in an attempt to secure funds. Watson later blamed Rao’s behavior on a “very personal mental health issue” in a letter to employees and called the Times article a “hitjob.”

“I am deeply disappointed by the events of today,” Watson’s attorney, Lanny Breuer, wrote in a statement to CNN. “We were engaged in a good faith and constructive dialogue with the Government. Given the Department’s claims of promoting such dialogue, I do not understand the dramatic decision to arrest Carlos today.”

Just earlier this month, Watson pitched investors on the rebirth of the media company at the MAGNA Equity Upfronts in Manhattan.

The pending investigation and past allegations were not mentioned during the 30-minute presentation.

Ozy launched in September 2013 under the ownership and guise of Watson and Rao. Ozy produced a series of in-house TV shows, newsletters and podcasts in partnership with major networks like The History Channel and BBC.

It officially stopped producing new content in October 2021 following the NYT report.

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