Ozy Media founder Carlos Watson was arrested Thursday for allegedly defrauding investors out of “tens of millions of dollars,” authorities said.
Watson, a former CNN and MSNBC host, launched his troubled digital media and entertainment company in 2013. He touted Ozy as “a modern media company producing original TV series, podcasts, festivals and news for curious people.”
But federal prosecutors allege it was a big scam.
The U.S. Attorney’s Office for the Eastern District of New York said in a press release Watson was arrested Thursday morning for allegedly committing securities fraud and wire fraud, and identity theft “for his role in the impersonation of multiple media company executives in communications with Ozy’s lenders” and potential investors.
“Carlos Watson is a con man whose business strategy was based on outright deceit and fraud – he ran Ozy as a criminal organization rather than as a reputable media company,” U.S. Attorney Breon Peace said in a statement.
Watson’s attorney, Lanny Breuer, criticized the tactics used by federal prosecutors, saying he was “deeply disappointed by the arrest” of his client.
“Given the government’s claims of promoting such dialogue in general,” Breuer told the AP, “I simply do not understand the dramatic decision to arrest Carlos this morning.”
The Associated Press published pictures of Watson heading into federal court in Brooklyn, New York, and reported he pleaded not guilty.
Following his arraignment, the embattled media mogul posted $1 million bond and was released.
Related Story: Carlos Watson Insists Ozy Media Is Here to Stay
Watson’s co-conspirators — Ozy’s Chief Operating Officer Samir Rao and Suzee Han, Ozy’s Chief of Staff from June 2019 to October 2021, previously took deals and pleaded guilty after they were charged for their roles in the scheme.
When Ozy launched ten years ago, the company quickly branched out into television and signed production deals with A&E Networks, OWN, Hulu, Amazon Prime and PBS.
But Ozy was hit with fraud claims when the New York Times published a bombshell exposé in October 2021, alleging the company defrauded investors and inflated its online traffic numbers.
The article also alleged COO Samir Rao impersonated a YouTube executive on a conference call with Goldman Sachs while attempting to raise $40 million from the investment bank. Watson issued a statement at the time calling the article a “ridiculous hitjob.”
According to published reports, Ozy raised more than $83 million in funding thanks to what was viewed as its massive digital success. Part of the company’s appeal was claims that it garnered 50 million monthly unique users on its website.
But in 2017, BuzzFeed News reported a lot of that traffic was “fraudulent” and had been “purchased.”
After the NYT story published, Ozy shut down although Watson insisted the company would remain active. Dogged by negative headlines, he dropped out of hosting the News and Documentary Emmy Awards, and resigned from NPR’s board of directors.
There were reports as early as October 2021, that the FBI was looking into Ozy.
If convicted, Watson faces a mandatory minimum sentence of two years in federal prison and a maximum sentence of 37 years.