Ozy Media founder Carlos Watson arrested for fraud

Yesterday, Ozy Media founder and CEO Carlos Watson – aka the Wizard of Ozy – was arrested and charged with federal securities fraud and wire fraud. Prosecutors allege he schemed to defraud investors out of ~$50 million by misrepresenting the company's debts, financial performance, and audience size.

🗣📰 Background: This isn’t the first time the digitally-forward news brand, which bills itself as covering “the New and the Next,” was the news instead of reporting it. In September 2021, a NY Times report revealed that Ozy co-founder Samir Rao had impersonated a YouTube exec on a conference call with Goldman Sachs earlier that year – voice modulator and all – in an attempt to secure a $40 million investment from the bank.

And here’s where it comes full circle: yesterday’s arrest of Watson comes in the same week that Rao pled guilty to fraud charges, prosecutors say in court documents – and like a jilted lover confronting a soon-to-be ex, they brought all the receipts.

Some other alleged details included in the docs (which cite emails and text messages as evidence):

• That Watson, who had previously denied knowledge of Rao’s impersonation actions with Goldman, actually knew about it all along – and even texted Rao what to say while on the call.
• In a bid to secure funding (and with Watson’s knowledge), Rao sent an email to a venture capital lender saying Ozy was on track to make $52 million in revenue in 2020. In reality, the company was projected to make $8.3 million.
• Watson and Rao allegedly forged a contract and impersonated a cable network exec to secure a bank loan in 2019.

🤔 The question: Ozy, which to-date has raised $70.3 million from investors including Axel Springer and Laurene Powell Jobs, closed up shop in October 2021 following the NY Times report – only to reverse course three days later.

What happens to the company this time?