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A New York federal jury on Tuesday convicted former Ozy Media CEO Carlos Watson of fraud and identity theft. The charismatic startup founder was found guilty of lying to banks and investors to secure tens of millions of dollars in funding for the multimedia company.

Ozy Media Carlos Watson found guilty of fraud : Jury Deliberation and Verdict

After deliberating for three days, the jury found Watson and Ozy Media guilty of securities fraud conspiracy and wire fraud conspiracy. This decision concludes a weekslong trial overseen by U.S. District Judge Eric Komitee in Brooklyn.

Prosecutors' Allegations

Prosecutors alleged that Watson, along with Ozy co-founder Samir Rao, ex-Ozy Chief of Staff Suzee Han, and others, misled investors and lenders about Ozy's financial health, business relationships, and potential acquisition offers during multiple fundraising rounds from 2018 through 2021.

In addition to the fraud charges, Watson was also found guilty of aggravated identity theft. This charge stems from a 2021 incident where Rao impersonated a YouTube executive during a due diligence call with Goldman Sachs. Watson blamed this incident on a mental health crisis Rao was experiencing at the time.

Ozy Media Carlos Watson found guilty of fraud : Co-Defendants' Testimonies

Han and Rao pled guilty to their charges and testified against Watson and Ozy Media. Their testimonies were crucial for the prosecution's case.

Watson's Defense

Watson, a Stanford Law School graduate with a background at McKinsey & Co. and Goldman Sachs, defended himself by distancing his involvement from the financial operations of Ozy Media. He argued that, unlike Rao, he was not closely involved in the company’s financial details. Watson claimed that Ozy's records did not fully account for revenue from strategic partnerships and barter deals, such as a $20 million endorsement from Oprah Winfrey linked to Ozy's TV show "Black Women OWN the Conversation."

Ozy Media Carlos Watson found guilty of fraud: Legal Representation

The government was represented by Jonathan Siegel, Gillian Kassner, and Dylan Stern from the U.S. Attorney's Office for the Eastern District of New York. Carlos Watson was represented by Ronald Sullivan and Janine Gilbert of Ronald Sullivan Law PLLC. Ozy Media was represented by Shannon Frison of Frison Law Firm PC.

Conclusion

The conviction of Carlos Watson for fraud and identity theft marks a significant legal outcome in the media startup world. The case of Ozy Media and its leadership will undoubtedly serve as a cautionary tale for other startups and investors in the industry.