OZY Media

Background

OZY (sometimes styled Ozy or Ozy Media) was launched by former CNN and MSNBC news anchor Carlos Watson and former Goldman Sachs associate Samir Rao in September 2013 as a digital media publication with a daily newsletter. By December of that year, the company raised $5.3 million in funding from investors including Larry Sonsini, Dave Drummond, Dan Rosensweig, Ron Conway, and Laurene Powell Jobs. ¹

In the years following its launch, the company raised large amounts of money, often through the involvement of well-known investors and firms. For instance, in October 2014, the company announced that the publishing company Axel Springer had invested $20 million; in January 2017, that Michael Moe’s GSV Capital had been involved in a $10 million round; and in November 2019, that businessman and investor Marc Lasry had led $35 million in a round. ^{2 3 4}

In January 2021, Watson claimed that the company had become profitable, generating $50 million in revenue the year prior. However, shortly thereafter, news outlets published reports scrutinizing OZY’s disclosures and practices. Investors in the company sued, alleging that it had engaged in fraudulent activity. ^{5 6 7 8}

Controversies

Impersonating YouTube Executive

On September 26, 2021, the New York Times reported that OZY’s cofounder and COO Samir Rao had apparently impersonated a YouTube executive on a conference call with Goldman Sachs in an attempt to obtain a $40 million investment and that YouTube’s parent company, Google, referred the matter to federal law enforcement. ⁹

Following reporting on Rao’s alleged impersonation by the New York Times and other outlets, OZY’s board of directors asked Rao to take a leave of absence and announced that they had hired the law firm Paul, Weiss, Rifkind, Wharton & Garrison to undertake a review of the company’s business practices. ¹⁰

In October 2021, Variety reported that media-buying agencies were no longer interested in doing business with OZY given reports of its alleged behavior. Notably, WPP’s GroupM, which manages the media-buying decisions for a range of large multinational firms including Unilever and IBM, issued a press statement saying that it had at that time “suspended” all of its client’s media campaigns with OZY and terminated a standing agreement with the company. ¹¹

Near Closure and Relaunch

Around the same time, three weeks after becoming chairman of OZY’s board of directors, ¹² Marc Lasry (who had led the firm’s investment round in 2019) resigned from his position, citing a lack of expertise in “crisis management” and “investigations.” ¹²

On October 1, 2021, Carlos Watson, who had been re-elected to a second three-year term as corporate director of National Public Radio, resigned from that position just before a governance committee was planning to convene to consider his position with the organization due to previous controversies with OZY ¹³ That same day, OZY’s board announced the company’s closure, and a majority of the company’s staff were laid off. ¹⁴ Three days later, on October 4, 2021, Carlos Watson announced that the company would not be closing after all. ¹⁵

The next year, in February 2022, Watson tweeted a link to an article published on Tech Bullion under the byline “Hugh Grant,” which featured quotes by Watson and discussed OZY’s relaunch in positive terms, eschewing mention of controversy. However, according to reporting by Vice covering the tweet, the article’s author was depicted with a stock photograph and appeared to be a pseudonym. Notably, the article in question has since been deleted. ¹⁶

Investor Defrauding Scheme

On February 23, 2023, the U.S Attorney’s Office for the Eastern District of New York unsealed an indictment against OZY co-founder Carlos Watson charging him with conspiracy to commit securities and wire fraud. According to the unsealed indictment, Watson, along with OZY co-founder Samir Rao and former OZY Chief of Staff Suzee Han, conspired between 2018 and 2021 to, “defraud investors in and lenders to Ozy of tens of millions of dollars through fraudulent misrepresentations and omissions about key aspects of Ozy’s business, including Ozy’s financial results, debts, and audience size.” ¹⁷ In addition, the charges state that Watson and his co-conspirators regularly, “assumed the identities of and impersonated actual media company executives to cover up their prior fraudulent misrepresentations. ” ¹⁷ Watson was placed under arrest that same day, and both Rao and Han plead guilty to charges in the scheme. ¹⁷

United States Attorney for the Eastern District of New York Breon Peace stated in the press release, “As alleged, Carlos Watson is a con man whose business strategy was based on outright deceit and fraud – he ran Ozy as a criminal organization rather than as a reputable media company.” ¹⁷ Michael J. Driscoll, Assistant Director-in-Charge for the Federal Bureau of Investigation’s (FBI) New York Field Office stated within the press release, “As the indictment today alleges, Watson repeatedly attempted to entice both investors and lenders through a series of deliberate deceptions and fabrications.” ¹⁷