Ozy Media’s CEO gets almost 10 years for defrauding investors

Ozy Media Chief Executive Officer Carlos Watson was sentenced to almost 10 years in prison for defrauding investors, repeatedly misrepresenting the company’s revenue to get funding. The sentence came after Watson, 55, and his defunct media company were convicted in July, in a case made famous after he directed his co-founder to impersonate a YouTube executive on a call with Goldman Sachs Group Inc. bankers. Prosecutors had urged the judge to impose a prison term of 17 years, saying he engaged in “a years-long brazen and audacious” scheme, with victims including former New York Yankees star Alex Rodriguez and an investment firm founded by Laurene Powell Jobs. Watson’s lawyers had asked for a community service sentence. The judge more or less split the difference, sentencing Watson to 116 months Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Ozy, a once-lauded startup backed by billionaire investor Marc Lasry, collapsed shortly after the New York Times reported on the impersonation in 2021. Prosecutors said he told one investor that Google Chief Executive Officer Sundar Pichai had offered to buy Ozy for hundreds of millions of dollars. Pichai testified that he never discussed a purchase. Seeking leniency ahead of the sentence, Watson’s lawyer Andrew Frisch told U.S. District Judge Eric Komitee that his client was working toward a “vision” for a successful company to benefit his community. Unlike many other fraud defendants, Frisch said, Watson didn’t accept large pay packages, instead personally investing in Ozy alongside his family members. He wasn’t out to “line his own pockets, to buy bling,” Frisch told the judge. “The proof is in the podcasts, the TV shows, the festivals,” the lawyer said. “Ozy was real.” Watson’s fraud “cynically exploited” the trust investors place in start-ups, the government said. “He was able to get away with his fraud for years because no one imagined that another human being would lie to the extent he did.” Watson testified in his defense and blamed Co-Founder Samir Rao for the fraud. He also argued that the judge was biased against him and that he didn’t get a fair trial. The six-week trial featured testimony about Watson’s efforts to get Goldman to invest in Ozy. After he falsely claimed Ozy had booked $39 million in revenue in 2021, including $5.75 million from a YouTube show featuring him, Goldman asked to meet with him and YouTube. Rao, who pleaded guilty and testified against Watson, told the jury that he and Watson agreed he would pretend to be the YouTube executive on the call and that he used a voice-altering app while Watson coached him on what to say. The jurors saw text messages Rao said Watson sent him during the call. Former Goldman banker Allison Berardo testified that it “did not sound like a human voice” and that her mind was “blown” when she realized it was fake. The deal collapsed after Goldman reached out to the real executive, Alex Piper, who then phoned Rao and demanded an explanation. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Ozy Media’s CEO gets almost 10 years for defrauding investors

Featured Stories