Ozy Media Founder Gets Almost 10 Years

UPDATE Dec 16, 2024 5:05 PM CST

Former talk show host Carlos Watson was sentenced Monday to nearly 10 years in prison in a federal financial conspiracy case that cast his once-buzzy Ozy Media as an extreme of fake-it-till-you-make-it startup culture. Prosecutors said it was so extreme that another Ozy executive impersonated a YouTube executive to hype Ozy to investment bankers—while Watson coached him. Watson, 55, and the now-defunct company were found guilty last summer of charges including wire fraud conspiracy. He has denied the allegations. Watson, who has been free on $3 million bond, faced a mandatory minimum sentence of two years in prison and potentially as much as 37 years, the AP reports.

Jul 16, 2024 5:26 PM CDT

Former TV personality Carlos Watson was convicted Tuesday in a federal financial conspiracy case about Ozy Media, an ambitious startup that collapsed after another executive impersonated a YouTube executive to hype the company's success. Watson, 53, had been free on bail but was taken into custody to await sentencing, the AP reports.

• Brooklyn-based US Attorney Breon Peace said the verdict held Watson accountable for "brazen crimes" that were meant to keep cash-strapped Ozy afloat but ultimately sank it. "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," Peace said in a statement, adding that the company "collapsed under the weight of Watson's dishonest schemes."

• Peace's office said a jury found Watson guilty of all the charges against him: conspiracy to commit securities fraud, conspiracy to commit wire fraud, and aggravated identity theft. Ozy Media also was convicted of the same conspiracy offenses, the only charges the company faced.
• Watson and Ozy had pleaded not guilty and denied the allegations. The defense blamed any misrepresentations on Ozy co-founder and chief operating officer Samir Rao, who has pleaded guilty.
• Watson could face decades in prison, though sentencing guidelines for individual defendants vary. Now-defunct Ozy faces potential financial penalties.

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• Watson conceived of Ozy in 2012. The Mountain View, California-based company produced shows and gave "Ozy Genius" awards to college students. But prosecutors said that underneath Ozy's hip public profile, the company was tottering financially from 2018 on. It routinely ran short of money to pay vendors, rent, and even employees and took out expensive loans against future receipts to cover its bills, former finance Vice President Janeen Poutre testified.
• The prosecution and its key witnesses said Ozy, with Watson's blessing, began floating increasingly audacious lies to try to snag a lifeline from investors. "Survival within the bounds of decency, fairness, truth, it morphed into survival at all costs and by any means necessary," Rao told jurors, saying that Watson had sanctioned all his falsehoods.
• Prosecutors said that the company claimed deals and offers it hadn't really secured. To woo potential corporate suitors and lenders, Rao forged some terms of contracts with a network for one of Ozy's TV shows. Then, when a bank wanted to check with the network, Rao set up a fake email account for an actual network executive and sent a message offering information. The bank loan didn't happen.
• Rao went on to pose as a YouTube executive on a phone call with investment bankers, in a bizarre effort to back up a false claim that Rao had made about YouTube paying for another Ozy show.

(More Ozy Media stories.)