Carlos Watson, founder and CEO of a Bay Area media startup that raised millions in funding before shutting down in a cloud of misconduct allegations, has been arrested and charged with fraud.
An indictment unsealed on Thursday charged Watson, who founded and led Mountain View-based Ozy Media, with attempting to defraud the company's investors and lenders by misrepresenting financial and business assets.
The company abruptly shut down in 2021 after the New York Times reported that someone at the startup had impersonated a YouTube executive during a call with Goldman Sachs about a potential investment.
The indictment accuses Watson, a former journalist and news anchor, of conspiracy to commit wire fraud, conspiracy to commit securities fraud and aggravated identity theft for his alleged role in impersonating executives during communications with investors and lenders.
Watson and other executives lied about the company's financial condition and audience size in order to secure funding, and its onetime chief financial officer resigned after refusing to send a fake contract to a bank about a purported television deal, according to prosecutors.
Launched in 2013, Ozy Media raised more than $70 million from investors and became a new-media darling on a promise to publish news and multimedia about "rising stars, fresh trends and provocative ideas."
“As alleged, 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,” said Breon Peace, U.S. Attorney for the Eastern District of New York, in a statement.
Watson’s alleged co-conspirators, Ozy's former Chief Operating Officer Samir Rao and former Chief of Staff Suzee Han, previously pleaded guilty to charges related to the scheme.
Watson was arrested on Thursday morning and, if convicted, would face a minimum sentence of two years and maximum sentence of 37 years.