Federal authorities have arrested the founder of the scandal-plagued US startup Ozy Media on fraud charges.
The arrest of Carlos Watson occurred days after former company executive Samir Rao pled guilty to fraud charges. Carlos Watson is an American journalist, entrepreneur, and television personality. Founder and CEO of the media company OZY and has worked as a journalist and commentator for various media outlets
Mr. Rao attempted to deceive investors by impersonating a YouTube executive, according to a New York Times investigation that led to the shutdown of Ozy Media in 2021.
Mr. Watson allegedly "directed a scheme to defraud investors" of millions of dollars, according to federal prosecutors.
Additionally, the United States Department of Justice and the Securities and Exchange Commission have launched investigations into the company.
In 2013, Mr. Watson, a former Goldman Sachs banker and MSNBC host, founded Ozy Media in California. The company produced podcasts, television series, events, and profiles of rising stars and emerging trends with a left-leaning bias.
In 2020, it was valued at $159m (£132m).
According to court documents filed this week, Mr. Watson was aware that Ozy Media was "swimming in debt," but he lied to investors about the company's revenue and falsely claimed celebrities and high-profile companies had invested.
Sharon Osborne, the wife of rock star Ozzy Osbourne, accused Mr. Watson of making false claims that the couple had invested in the business, telling sources in 2021 that Mr. Watson was the biggest con artist she had ever seen.
Mr. Watson was arrested on Thursday and is expected to be charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud in federal court in Brooklyn, New York, according to the sources.
Mr. Watson's attorney mentioned that he was deeply disappointed by the events.
Attorney Lanny Breuer stated that they engaged in a constructive dialogue with the government in good faith.
Given the department's claims that it encourages dialogue, he did not understand Carlos's arrest today.
Rao impersonated a YouTube executive during a call with Goldman Sachs, touting YouTube's successful relationship with Goldman Sachs, according to a New York Times report that precipitated the demise of Ozy Media.
Mr. Watson attributed Rao's deceitfulness to his mental health issues. He added that no harm was caused by Goldman Sachs's final decision not to invest.
Prosecutors allege in court documents filed this week that Mr. Watson was present during the call and that he was texting Rao instructions on what to say, despite previously denying to the media that he was there.
Prosecutors allege that Mr. Watson and Mr. Rao impersonated media company executives "on numerous occasions" to conceal false statements made to investors.
Mr. Rao pleaded guilty to securities fraud conspiracy, wire fraud conspiracy, and identity theft on Tuesday, admitting that he misled investors and inflated the company's finances.
According to federal court documents, the former chief of staff of the company, Suzee Han, has also pled guilty to securities fraud conspiracy and wire fraud conspiracy.