Ozzy Media and its founder, Carlos Watson, were convicted of fraud on Tuesday by a Brooklyn federal jury that accused them of making false representations to investors about the now-disbanded startup’s finances and making false deals with Google and Oprah Winfrey.
Watson and Ozzi, a former cable news anchor and investment banker, were convicted of securities fraud conspiracy and wire fraud conspiracy, respectively, and Watson was also convicted of identity theft. Both had pleaded not guilty.
Federal prosecutors said Watson and a California-based news and entertainment company falsified information about Ozzy’s financials and viewership, fabricated contracts and inflated revenue projections to attract investors.
Founded in 2013, Ozzy collapsed in 2021 after questions were raised about its viewership figures and it was reported that he had impersonated a YouTube executive on a conference call with Goldman Sachs bankers, claiming that the streaming site had agreed to pay for exclusivity for Ozzy’s shows.
Prosecutors said Watson faces approximately 24 to 29 years in prison, including two years on the identity theft charge, under recommended federal sentencing guidelines.
Lawyers for Watson and Ozzie did not immediately respond to requests for comment.
His lawyers told jurors he acted independently and was betrayed by deputies who failed to inform him about the wrongdoing.
The sentence came after a six-week trial that featured testimony from two former Watson deputies, who pleaded guilty to fraud.
They told jurors that they conspired with Watson to conceal Ozzie’s massive debts, tiny cash reserves and slow growth.
Ozzy went bankrupt shortly after The New York Times reported that its former chief operating officer, Samir Rao, had impersonated a YouTube executive.
Watson denied any involvement in the incident, but prosecutors said chat logs from the same period showed he was coaching Rao on what to say.
YouTube executive Alex Piper and Google CEO Sundar Pichai, in testimony for the government, said that contrary to what Watson represented to investors, they never had a deal with Ozzy or considered buying him at any price.
Prosecutors said Watson assured investors that the company was thriving even as Ozzie struggled to pay rent, wages and other basic expenses and its cash reserves dwindled to $19,000 in 2018.
Watson testified in his own defense over several days, saying the prosecution’s version of Ozzie’s finances was simplistic and failed to understand the nuances of media business dealings, and blamed Ozzie’s downfall on negative media coverage.
During cross-examination, Watson was at times equivocal about inconsistencies in the revenue figures Ozzie provided to investors.
He also rejected prosecutors’ requests to provide a breakdown of Ozzy’s annual income in cash, rather than his potential future earnings.
“I haven’t thought of it that way before, and our investors haven’t thought of it that way either,” he said.
