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Carlos Watson, the founding father of the troubled digital start-up Ozy Media, was arrested on Thursday and charged with fraud by federal investigators, punctuating one of many extra precipitous falls within the annals of on-line journalism.
Prosecutors for the Jap District of New York stated in a courtroom doc dated Wednesday that Mr. Watson, 53, had “engaged in a scheme to defraud Ozy’s potential traders, potential acquirers, lenders and potential lenders” by misrepresenting the corporate’s viewers numbers and monetary outcomes.
Mr. Watson was arrested by the F.B.I. at a lodge in Midtown Manhattan early Thursday morning, an individual acquainted with the matter stated. He will probably be arraigned in federal courtroom in Brooklyn, N.Y., on Thursday afternoon.
His arrest got here the identical week that Samir Rao, Ozy’s former chief working officer, pleaded responsible to fraud expenses, based on courtroom paperwork.
Lanny A. Breuer, Mr. Watson’s legal professional, stated he was “deeply disillusioned with the occasions of immediately,” referring to his consumer’s arrest. Mr. Breuer added that “we had been trying to have an open and good religion dialogue with the federal government, and I simply don’t perceive why the choice was made to arrest Carlos this morning given what we thought was our constructive dialogue.”
Mr. Watson and Mr. Rao didn’t reply to requests for remark.
Ozy Media was backed by traders just like the Ford Basis and the Emerson Collective, the group based by Laurene Powell Jobs. It produced a web site, movies posted to YouTube and podcasts that had been geared toward younger audiences. The corporate generated a mixture of tales and movies that recognized up-and-coming leaders and necessary social causes.
In September 2021, The New York Instances reported that somebody at Ozy had apparently impersonated a YouTube government throughout a convention name with Goldman Sachs, which was contemplating an funding. On the decision, the impersonator stated that YouTube had an ideal working relationship with Ozy and that Ozy’s movies had been profitable on the platform.
The corporate got here below heavy scrutiny. Shortly after, Ozy stated that it was shutting down. Mr. Watson stated on the time that the impersonator was Mr. Rao,
Federal prosecutors with the Jap District of New York started analyzing Ozy. The Justice Division and the Securities and Alternate Fee additionally opened investigations into the corporate.
Mr. Watson and Mr. Rao misled potential traders, prosecutors stated in courtroom paperwork this week. The lads falsely claimed that Ozy was on monitor to generate $22 million in 2018, even after it turned clear that the corporate couldn’t obtain that outcome.
Ozy additionally mentioned promoting itself to a media firm for as much as $225 million in inventory based mostly on false monetary information and a deceptive description of its TV contracts, based on the grievance. As a part of that deal, which fell by way of, Mr. Watson pushed for a $35 million money fee for himself, Mr. Rao and others, the grievance stated.
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