Carlos Watson, the chief executive officer of troubled digital media company Ozzie, was arrested Thursday on fraud charges, according to court documents obtained by NBC News.
Prosecutors allege Watson misled potential investors about everything from his revenue and business projections to the company’s viewership and the identity of its investors, court documents show.
This news was first reported by The Wall Street Journal.
The complaint alleges that Watson and other company executives misled investors in early 2018, falsely claiming that the company had doubled its revenue from 2016 to 2017. Instead, revenue barely increased from $6 million in 2016 to the following year, the complaint alleges.
Watson and other executives then promised investors that Ozzy would be able to achieve $22 million in revenue in 2018, “even after it became clear that Ozzy could not achieve that result,” according to the complaint.
In one case in August 2018, Watson learned that the company had generated approximately $8.1 million in revenue so far that year; Later that week, he reportedly told investors that the company had booked $14 million in revenue for the year.
In a statement, the US Attorney for the Eastern District of New York, Brion Peace, called Watson “a con man whose business strategy was based on outright deceit and fraud.”
If convicted, Watson faces a minimum of two years in prison and a maximum of 37 years, according to the US Attorney’s Office for the Eastern District of New York. He is to be produced on Thursday afternoon.
The US attorney’s office said Watson’s co-conspirators, OG COO Samir Rao and chief of staff Suzy Han, had previously pleaded guilty to charges related to their roles in the scheme.
Watson could not be immediately reached on Thursday. Two of the phone numbers listed for him had complete voicemails and several other numbers were no longer in service.
In a statement to NBC News, Watson’s attorney Lanny Breuer said she was “deeply disappointed by today’s events.”
“We engaged in good faith and constructive dialogue with the government,” Breuer said. “Given the department’s claims to promote such dialogue, I do not understand the dramatic decision to arrest Carlos today.”
An OG spokesperson did not immediately respond to a request for comment from NBC News.
Watson, a former MSNBC and CNN anchor, co-founded Ozy in 2013 with Sameer Rao (both MSNBC and NBC News are owned by NBCUniversal).
Like many other digital-first media companies at the time, Ozzie was able to raise hundreds of millions of dollars in funding, establishing itself as an online magazine focused on “the new and the next”. The company was primarily known for its Ozzie Fest events which often attracted politicians and celebrities.
The company continued to raise funds when the New York Times published an article in September 2021 detailing a fundraising call with Goldman Sachs that would lead to Watson’s arrest. On the call, Rao, the co-founder of Ozzie, allegedly impersonated a YouTube executive.
The company’s board of directors announced that Ozzie was shutting down in October 2021 – before Watson claimed the startup was “open for business” just days later.
Former employees told CNBC at the time that Watson was a charismatic and temperamental leader who presided over a demanding work environment in which some reporters were expected to produce four feature-length stories a week. According to CNBC, many of those journalists quit from burnout.
Read the complaint here:
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