Carlos Watson, the founder and former Chief Executive Officer of Ozy Media Inc. (Ozy), was convicted Tuesday by a federal jury in Brooklyn of conspiracy to commit securities fraud, conspiracy to commit wire fraud and aggravated identity theft in connection with a years-long scheme to defraud investors in and lenders to Ozy of tens of millions of dollars.
Ozy was also convicted on both counts of the indictment.
The verdict followed eight weeks of trial before United States District Judge Eric R. Komitee. When sentenced, Watson faces a minimum sentence of two years and a maximum sentence of 37 years. The company also faces financial penalties. Watson was remanded pending sentencing.
Breon Peace, United States Attorney for the Eastern District of New York and Christie M. Curtis, Acting Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the verdict.
“The jury found that Watson was a con man who told lie upon lie upon lie to deceive investors into buying stock in his company. Watson invented phoney financial figures and caused others to forge fake contracts and impersonate a media executive,” stated United States Attorney Peace. “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.”
“The conviction of Carlos Watson underscores the profound damage caused by corporate fraud schemes. Watson’s deceitful actions in defrauding investors of their funds and an attempt to defraud a financial institution of tens of millions of dollars illustrated the vulnerability of investors to false information,” stated FBI Acting Assistant Director in Charge Curtis.
Ozy was a media and entertainment company with businesses that included digital newsletters, television production, podcasts and live events, the most prominent of which was a live festival known as “Ozy Fest.” Watson founded Ozy in 2012 and served as the company’s Chief Executive Officer. The company is now defunct.
As proven at trial, between 2018 and 2021, Watson and his co-conspirators, including then-Chief Operating Officer Samir Rao and then-Chief of Staff Suzee Han, orchestrated a scheme to defraud investors out of tens of millions of dollars through fraudulent misrepresentations and omissions about Ozy’s financial performance, including revenue, cash on hand and profit, ongoing business relationships with celebrities, acquisition prospects from high- profile technology and media corporations, contract negotiations and other corporate metrics.
For example, Watson and his co-conspirators lied to prospective investors about who else might be investing in Ozy, the existence and size of acquisition offers received by Ozy, the existence and timing of “Series C” and “Series D” financing rounds by Ozy, and the existence and terms of Ozy’s business contracts — going so far as to direct Ozy employees to create fake contracts with forged signatures to provide in due diligence.
On multiple occasions, when faced with questions from lenders or potential investors, Watson and his co-conspirators assumed the identities of and impersonated actual media company executives to cover up their prior fraudulent misrepresentations.
In December 2019, Watson and his co-conspirators attempted to induce a bank to lend Ozy money based on misrepresentations and omissions about Ozy’s business. Watson and his co-conspirators sought to secure the loan with anticipated revenues from a second season of an Ozy television show. However, the contract between Ozy and the show’s cable network for the show’s second season was still being negotiated. To induce the bank to make the loan sooner, Watson directed Ozy’s then-chief financial officer, Tripti Thakur, to send the bank a fake signed contract between Ozy and the cable network purporting to be for the second season.
When Thakur refused, with Watson’s approval, Rao sent the fake contract to the bank, copying the then-CFO. Later that day, Thakur emailed Watson and Rao to say that she was resigning effective immediately.
She explained, “This. . . is illegal. This is fraud. This is forging someone’s signature with the intent of getting an advance from a publicly traded bank.” She continued, “To be crystal clear, what you see as a measured risk — I see as a felony.”
In subsequent months, Watson and his co-conspirators continued to attempt to induce the bank to lend Ozy several million dollars based on misrepresentations and omissions, including regarding the expected revenue from the second season of the Ozy television show.
During these discussions, the bank requested to speak to a representative of the cable network. To conceal the lies about Ozy’s relationship with the cable network and the status and terms of their agreement, Rao, with Watson’s approval, created a fake email address in the name of an actual executive of the cable network, which Rao used to impersonate the executive and communicate with the bank about the potential loan.
From approximately November 2020 through February 2021, Watson and his co-conspirators attempted to induce Goldman Sachs to invest up to $45 million in Ozy by means of material misrepresentations and omissions regarding Ozy’s historical and projected financial results, debts, and business relationships. Had the full $45 million investment occurred as intended, $6 million of the $45 million would have been paid to Watson personally.
As part of its due diligence process, Goldman Sachs executives asked Watson and Rao to arrange a meeting with someone from YouTube. Watson and his co-conspirators claimed the online video service had paid Ozy nearly $6 million in licensing revenue for ‘The Carlos Watson Show’. This was another misrepresentation — Ozy was never paid by YouTube for Ozy content.
Because Ozy did not, in fact, have any business relationship with YouTube, Watson and Rao agreed that Rao would impersonate a media executive at YouTube in communications with Goldman Sachs. On January 28, 2021, with Watson’s agreement, Rao created a fake email address in the name of the media executive, which he used to correspond with representatives of Goldman Sachs.
On February 2, 2021, Rao had a phone call with employees of Goldman Sachs, during which he impersonated a media executive from YouTube using a voice alteration application that he downloaded onto his cellular telephone to mask his voice during the call. During the call, Watson was in the same room as Rao and texted Rao instructions about what to say and what not to say on the call.
Shortly after the call, one of the employees of the financial institution contacted the actual media executive of YouTube, who confirmed that he had not been on the call and that the online video service had no role in the production of The Carlos Watson Show. When members of Goldman Sachs later spoke with Watson, he falsely claimed that Rao had acted alone and as a result of a mental breakdown.
Rao and Han previously pleaded guilty to charges relating to their roles in the scheme and are awaiting sentencing.
