Ozy Media and its founder Carlos Watson were convicted of fraud by a Brooklyn federal jury on Tuesday, in a case accusing them of lying to investors about the now-defunct startup's finances and sham deals with Google and Oprah Winfrey. Watson, a former cable news anchor and investment banker, and Ozy were each convicted of securities fraud conspiracy and wire fraud conspiracy, while Watson was also convicted of identity theft, Reuters reports. Prosecutors said Watson and his California-based news and entertainment company falsified information about Ozy's finances and audience size, fabricated contracts and inflated earnings projections to court investors. Founded in 2013, Ozy imploded in 2021 after news reports questioned its audience numbers and said that an executive impersonated a YouTube official during a call with Goldman Sachs bankers claiming that the streaming site agreed to pay for exclusive rights to an Ozy show.
Prosecutors said Watson could facemore than 24 years in prison at a sentencing set for Nov. 18. “Ozy Media ultimately collapsed under the weight of Watson’s dishonest schemes and with today’s verdict, Watson himself has been held accountable for his brazen crimes," said U.S. Attorney Breon Peace. Watson's lawyer had told jurors that Watson was betrayed by deputies who acted on their own and kept him in the dark about their wrongdoing. The six-week trial featured testimony by two former Watson deputies, who pleaded guilty to fraud. They told jurors they conspired with Watson to hide Ozy's crippling debt, meager cash reserves and slow growth. Ozy folded after the New York Times reported on former chief operating officer Samir Rao's impersonation of the YouTube executive. Watson denied involvement in the incident, though prosecutors said chat logs show he coached Rao on what to say. YouTube executive Alex Piper and Google CEO Sundar Pichai testified for the government, saying they never had deals with Ozy or considered buying it, contrary to Watson’s claims to investors.