Former talk show host Carlos Watson was sentenced Monday to nearly 10 years in prison in a federal financial conspiracy case that cast his once-buzzy Ozy Media as an extreme case of fake-it-’til-you-make-it startup culture.
In one example, another executive impersonated a YouTube official to hype Ozy to investment bankers, while Watson coached him, prosecutors said.
Watson, 55, was found guilty last summer of charges including conspiracy to commit wire fraud. He has denied the allegations and said he plans to appeal.
“I loved what we built with Ozy,” he said in court Monday, initially addressing supporters in the audience before the judge suggested he turn around. Watson told the judge he was a target of “selective prosecution” as a Black entrepreneur in Silicon Valley, where Black executives have been disproportionately few, and called the case “a modern lynching.”
“His incessant and deliberate lies demonstrated not only a brazen disregard for the rule of law, but also a contempt for the values of honesty and fairness that should underlie American entrepreneurship,” Brooklyn-based U.S. Attorney Breon Peace said in a statement Monday. His office prosecuted the case.
During the trial, Watson’s defense blamed any misrepresentation on others; particularly, Ozy co-founder Samir Rao and former chief of staff Suzee Han. Rao and Han pleaded guilty and are awaiting sentencing; they testified against Watson.
Watson portrayed himself Monday as a founder who put everything he had into his company, saying he took an average salary of around $51,000 from Ozy in its final years, has triple-mortgaged his home, and drives a 15-year-old car.
After court, he questioned why Brooklyn-based federal prosecutors had gone after a California-based company and founder. Prosecutors declined to comment; the indictment alleged that scheming took place in the Brooklyn-based jurisdiction and elsewhere.
“I do think this is an attack on Black excellence,” Watson said after noting that his sentence wasn’t far from the 11-year term meted out to Elizabeth Holmes, the white former Silicon Valley CEO convicted of duping investors in the Theranos blood-testing hoax.
There’s no parallel between faking blood tests and Ozy’s roster of real programs and events, Watson said.
Now defunct, Ozy was founded in 2012 as a hub of news and culture for millennials with a global outlook.
Watson boasts an impressive résumé: degrees from Harvard University and Stanford Law School, a stint on Wall Street, on-air gigs at CNN and MSNBC, and entrepreneurial chops. Ozy Media was his second startup, coming a decade after he sold a test-prep company he had founded while in his 20s.
Mountain View, California-based Ozy produced TV shows, newsletters, podcasts, and a music-and-ideas festival. Watson hosted several of the TV programs, including the Emmy-winning “Black Women OWN the Conversation,” which appeared on the Oprah Winfrey Network.
Ozy snagged big advertisers, clients, and grants. But beneath the signs of success was an overextended company that struggled to stay afloat after 2017, according to insiders’ testimony.
The company strained to make payroll, ran late on rent, and took out pricey cash advances to pay bills, a former finance vice president, Janeen Poutre, told jurors. Meanwhile, Ozy gave prospective investors much bigger revenue numbers than those it reported to accountants, according to testimony and documents.
On the witness stand in July, Watson said the company’s cash squeezes were a startup norm, and investors knew they were getting unaudited numbers that could change.
Only one of those investors spoke at the sentencing: Beverly Watson, who stands by her brother. She told the court Monday that her biggest loss was “this important platform that elevated people and ideas that weren’t being heard before.”
Ozy disintegrated in 2021 after a New York Times column disclosed the phone-call impersonation gambit and raised questions about the size of the startup’s audience.