Ozy Media founder Carlos Watson was arrested and charged with fraud by federal investigators, according to multiple news reports.
Prosecutors said in a court document that Watson had “engaged in a scheme to defraud Ozy’s potential investors, potential acquirers, lenders and potential lenders” by inflating the site’s audience numbers and financials in a scandal that began to unfold last fall. Ozy shut down in October of 2021 after the New York Times reported that someone at the company had apparently impersonated a YouTube executive during a conference call with Goldman Sachs, which was considering an investment. The person – later named as Samir Rao, Ozy’s chief operating officer — praised the performance of Ozy’s videos on the giant platform and the two companies’ good working relationship.
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Reports said Watson’s arrest followed Rao’s pleading guilty earlier this week in Brooklyn federal court to fraud and identity theft charges.
Last fall, the SEC and the DOJ were said to have opened investigations. Ozy Media’s star journalist, former BBC anchor Katty Kay resigned last November, calling the allegations “serious and deeply troubling.” Watson at the time called the Rao episode a “mental health crisis” on the COO’s part but at the time denied any fraud scheme.
Yet the site, focused around youth-centric news on culture and politics, had since reopened for business.
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