NEW YORK – The founder of the troubled digital start-up Ozy Media was arrested on fraud charges on Thursday as part of a plan to save the struggling company. Ozy Media lost millions of dollars before it shut down after it was found that some of its business practices may have been dishonest.
Carlos Watson was arrested at a Manhattan hotel after two of the company’s top executives pleaded guilty to fraud charges this month. One of them, Samir Rao, the company’s then-chief operating officer, is accused of pretending to be a YouTube executive during a pitch to Goldman Sachs, a possible investor.
The Wall Street Journal was the first to report the guilty pleas.
In the indictment, Watson is charged with working with others to commit securities fraud, wire fraud, and identity theft. This is because he helped fake the identities of several media executives.
Watson’s lawyer, Lanny Breuer, told the Journal after the arrest, “We are very upset.” “We acted in good faith and thought we were having a good conversation with the government. We are shocked by what happened this morning.”
In October 2021, the New York Times reported that an Ozy employee had posed as a YouTube executive to try to get Goldman Sachs to put money into the struggling business. This made people look at the company even more closely.
Soon after that, Ozy said it was closing.
The U.S. Attorney for the Eastern District of New York, based in Brooklyn, said that Carlos Watson was a con man whose business plan was based on outright lies and fraud. “He ran Ozy like a criminal group instead of a trustworthy media company.”
Assistant Director-in-Charge of the FBI’s New York Field Office Michael J. Driscoll said that Watson “repeatedly tried to get investors and lenders to give him money through a series of deliberate lies and fabrications.”
Authorities say that between 2018 and 2021, Watson and his business partners tried to cheat investors and lenders out of “tens of millions of dollars” by lying about the company’s debts and other important financial information.
The U.S. attorney’s office said that Watson and his coworkers pretended to be other media executives more than once to cover up lies they had told earlier.