Carlos Watson, a co-founder of the now-defunct digital media company Ozy Media, was sentenced on Monday to almost 10 years in prison for trying to defraud investors and lenders by lying about the company’s finances.
The sentence came five months after a federal jury convicted Mr. Watson and Ozy Media of conspiracy to commit securities and wire fraud. The jury also convicted Mr. Watson of identity theft, following a two-month trial during which witnesses detailed an impersonated phone call, fabricated contracts and misleading claims about Ozy’s earnings from 2018 to 2021.
Mr. Watson, who had pleaded not guilty and continued to assert his innocence up until his sentence, faced a maximum of 37 years in prison. Government prosecutors had requested a 17-year sentence and $65.6 million in forfeiture to the government.
“The fact that we’re here in this circumstance is tragic,” said Judge Eric Komitee of the U.S. District Court for the Eastern District of New York, who presided over the case and imposed the sentence. “But it’s a tragedy of Mr. Watson’s own making.”
Mr. Watson started Ozy in 2013, publishing news articles and newsletters before venturing into podcasts and television productions. The start-up secured commitments from prominent investors at a time when digital publishers, like BuzzFeed and Vice, attracted billions of dollars in investments that largely didn’t pan out.
Throughout the legal proceedings, Mr. Watson denied the fraud allegations. In court, his lawyers argued that his representations to investors had been based on good-faith assessments of Ozy’s finances, and they shifted the blame for any fraudulent activity onto other former Ozy employees. When he took the stand at his trial, Mr. Watson said that he did not intentionally inflate revenue estimates, but rather presented the types of service-based income typical of a “scrappy young company” in its early years.
Mr. Watson, at his sentencing hearing on Monday, reiterated his stance that the government selectively prosecuted him because he is a Black man.
“I’m very clearly and unequivocally saying I made mistakes,” Mr. Watson said, standing to address the courtroom, his hands in his suit pockets. “But I’m also saying I don’t feel good about what has happened here.”
Samir Rao, the other founder of Ozy, and Suzee Han, a former Ozy chief of staff, pleaded guilty last year to fraud charges and testified against Mr. Watson.
Ahead of his sentencing, Mr. Watson’s defense team made a last-ditch effort to throw out his convictions. In a motion filed in October, his lawyers argued that Judge Komitee had conflicts of interest because of hedge fund investments that were linked to some of the affected companies in the case, including Goldman Sachs, Alphabet, Live Nation Entertainment and JPMorgan Chase. Mr. Watson’s lawyers argued that he deserved a new trial with a different judge.
Judge Komitee rejected Mr. Watson’s request, calling the allegations of financial conflicts “frivolous.”
In August 2023, Mr. Watson also moved to dismiss the charges on the basis of discriminatory prosecution, a move a judge ultimately rejected. His lawyer argued that the government’s allegations involved the same “puffing and bluffing” practiced by the founders of BuzzFeed and Vice but that prosecutors had singled out Mr. Watson for punishment because he is a Black man.
At the heart of the case was a 2021 fund-raising call during which Mr. Rao misled Goldman Sachs employees by impersonating a YouTube executive, as first reported by The New York Times. Prosecutors contended that Mr. Watson had helped set up the call, citing text messages he sent to Mr. Rao that, they claimed, amounted to a script for what to say. Mr. Watson denied any responsibility.
Witnesses also testified that Mr. Watson had misrepresented Ozy’s finances to secure investments, inflating revenue figures and presenting misleading claims of commitments from Oprah Winfrey and Live Nation Entertainment.
“Ozy Media ultimately collapsed under the weight of Watson’s dishonest schemes,” Breon Peace, U.S. attorney for the Eastern District of New York, said after Mr. Watson’s conviction in July. “Watson himself has been held accountable for his brazen crimes.”
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