OG Media CEO Carlos Watson arrested on charges of securities fraud

Carlos Watson, CEO of digital media and entertainment company OG Media, was arrested in New York on Thursday on federal securities fraud and wire fraud charges.

The Justice Department indictment charges Ozzie Media and Watson with conspiracy to commit securities fraud and wire fraud with a scheme to defraud Ozzie’s investors and creditors “by making material misrepresentations about Ozzie’s financial and business assets,” according to the U.S. Attorney’s Office for the Eastern District of New York. said in a statement. Watson is also charged with “aggravated identity theft” for her role in impersonating executives at multiple media companies in furthering fraudulent schemes with Ozzie’s creditors and potential investors, prosecutors said.

The feds allege that Watson and his co-conspirators — including Ozy’s former chief operating officer Sameer Rao and former chief of staff Suzy Han — “conceived a scheme to defraud Ozy of millions of dollars from investors and creditors through fraudulent misrepresentations, and to defraud Ozy’s finances.” Exclusions about key aspects of Ozy’s business, including revenue, debt and audience size

Watson is scheduled to be arraigned later Thursday before Magistrate Judge Cheryl Pollack of the U.S. District Court for the Eastern District of New York in Brooklyn. If convicted, Watson faces a mandatory minimum of two years in prison and a maximum of 37 years in prison, the U.S. Attorney’s Office said.

Watson’s attorney, Lanny Brewer, said in a statement diversity, said, “I am deeply disappointed by today’s incident. We have been engaged in a good faith and constructive dialogue with the Government. to give [Justice] I don’t understand the department’s dramatic decision to arrest Carlos today, claiming to promote such dialogue.

The Wall Street Journal first reported the media exec’s arrest. Ozy Media did not respond to requests for comment. The company’s business includes digital newsletters, TV productions, podcasts and live events, most prominently the OG Fest festival.

In September 2021, the New York Times reported that Ozy Media falsified audience metrics and that COO Sameer Rao impersonated a YouTube executive in a call with potential investor Goldman Sachs. The revelations led to other revelations, including allegations of a toxic workplace culture at the company, based in Mountain View, Calif.

“As charged, Carlos Watson is a con man whose business strategy was based entirely on deception and fraud — he ran OG as a criminal enterprise rather than a reputable media company,” Breon Peace, U.S. Attorney for the Eastern District of New York, said in announcing Watson’s arrest and indictment. Dr. “Investment fraud undermines our nation’s markets and investor confidence and makes it difficult for honest businesses to compete. Our office and the Department of Justice have made it clear that prosecuting corporations and their corrupt officials who flagrantly violate the law is a top priority.”

The Justice Department said former OG executives Rao and Han had earlier pleaded guilty to charges related to their role in the scheme. The Securities and Exchange Commission is taking “concurrent enforcement action” in the case, prosecutors said.

According to the federal indictment, in December 2019, Watson tried to induce a bank to lend money to Ozzy Media by instructing Ozy’s then-CFO to send the bank a fake contract between Ozy and a cable network that might be renewed for a second season. One of the shows of the media company. When the CFO refused, Rao, with Watson’s approval, sent a forged contract with a forged signature — containing terms favorable to Ozzie — to the bank, copying the then-CFO, according to prosecutors. Later that day, the CFO informed Watson and Rao that he was resigning immediately, saying what they had done was “illegal” and represented fraud, according to the complaint.

“To cover up lies about Ozzie’s relationship with the cable network and the terms and conditions of their contract, Rao, with Watson’s approval, created a fake email address in the name of a real executive at the cable network, which Rao used to impersonate the executive and potential debt. Contact the bank,” according to the Justice Department. The cable network and bank in question were not identified.

Meanwhile, from approximately November 2020 to February 2021, Watson and his co-conspirators attempted to induce an unidentified financial institution to invest up to $45 million in Ozy by “materially misrepresenting and omitting Ozy’s historical and projected financial results, debt and business. through relationship,” according to prosecutors. If the $45 million investment had occurred as intended, $6 million of that would have been paid to Watson personally, the Justice Department alleged.

Watson told the financial institution that a “well-known online video service” — apparently YouTube — paid Ozzy about $6 million in licensing revenue for his talk show, “The Carlos Watson Show.” It was a lie, according to prosecutors; Because Ozzy actually had no business relationship with the online video service, Watson and Rao “agreed that Rao would impersonate a media executive at the online video service in communicating with the financial institution.” On or about February 2, 2021, Rao made a call with employees of the financial institution “during which he impersonated a media executive from an online video service using a voice modification application that he downloaded to his cellular telephone to mask his voice during the call. ,” the Justice Department said. During that call, Watson was in the same room as Rao and sent instructions to Rao about what to say and what not to say on the call, prosecutors allege. When employees of the financial institution later confronted Watson about the fraud, he falsely claimed that Rao had “acted alone and as a result of a mental breakdown”.

A 2021 report of alleged misconduct by Ozy Media led to the resignation of chairman Mark Lasseri, owner of the Milwaukee Bucks and head of a hedge fund that raised $35 million in 2019 for Ozy. Additionally, A&E dropped a production Ozzie Media worked with, and Katy Kay, a former BBC news anchor and correspondent, announced her departure from Ozzie after just three months.

Following the damaging revelations, Ozy’s board said on October 1, 2021 that the company was shutting down. Three days later, Watson announced that the OG board had changed its mind and that the company was “open for business”.

Watson co-founded OG Media in 2013, “a multiplatform media company that aims to help curious people see a wider and bolder world.” Investors in OG included Lauren Powell Jobs’ Emerson Collective; A representative for Emerson Collective did not respond to a request for comment.

Watson worked as a political commentator and host on CNN and MSNBC before founding Oz, named after Percy Bysshe Shelley’s famous poem “Ozymandeus.” The agency said “The Carlos Watson Show” “focuses on bold, impactful conversations with culture-defining celebrities, intellectual pioneers and changemakers, spotlighting the voices you need to hear to understand this pivotal period in American history.” After college, Watson worked at McKinsey & Co. before founding education firm Achiva College Prep Services, which he later sold to The Washington Post Co., according to his official bio.