Former talk show host Carlos Watson received a nearly ten-year prison sentence on Monday due to his involvement in a federal financial conspiracy, which highlighted the pitfalls of the “fake-it-’til-you-make-it” startup culture embodied by Ozy Media.
One notable instance highlighted during the trial involved an Ozy executive pretending to be a YouTube executive to attract attention from investment bankers, a plan which Watson allegedly orchestrated. Watson, age 55, along with his now-defunct company, was found guilty last summer of several charges, including conspiracy to commit wire fraud. Although he denies the accusations, he intends to appeal the court’s decision.
In a courtroom appearance, Watson expressed his fondness for what he built with Ozy. However, the judge prompted him to face the court rather than his supporters. He claimed to be a victim of “selective prosecution” due to his race, highlighting the scarcity of Black executives in Silicon Valley, and referred to his case as akin to “a modern lynching.” Watson admitted to making mistakes and expressed regret for the harm caused, but maintained that he was being treated unfairly.
Facing a mandatory minimum sentence of two years and the possibility of a term as long as 37 years, Watson is presently free on a $3 million bond. He is required to report to prison by March 28, with restitution details to be decided in February. U.S. District Judge Eric Komitee remarked on the extraordinary dishonesty exhibited in the case, stating, “Your internal apparatus for separating truth from fiction became badly miscalibrated.”
Prosecutors argued that Watson played a central role in misleading Ozy’s investors and lenders by exaggerating revenue figures, promoting nonexistent deals, and showcasing false evidence of the company’s success. Images of Watson providing real-time advice and encouragement via text to his co-founder, who was impersonating a YouTube executive on calls with potential investors, were presented as evidence during the trial.
According to U.S. Attorney Breon Peace, Watson’s repeated and intentional falsehoods revealed a blatant disregard for legal standards and disrespected the principles of honesty vital to American entrepreneurship. During the trial, Watson’s defense team sought to shift blame onto others, particularly his co-founder Samir Rao and former chief of staff Suzee Han, both of whom pleaded guilty and testified against him.
In his statement to the court, Watson portrayed himself as an invested founder of Ozy, noting that he drew a modest salary and had even triple-mortgaged his house to support the company, while also driving an old car. After the session, he questioned the decision of federal prosecutors based in Brooklyn to target a California-based company and founder. The prosecutors opted not to comment at that time, although the indictment suggested that the alleged fraud occurred both in Brooklyn and other locations.
Watson expressed his belief that his case represented an assault on Black excellence, pointing out the similarity between his sentence and the 11-year term given to Elizabeth Holmes, the former CEO of Theranos, who has also appealed her conviction related to investor fraud. He argued that there was no valid comparison between Ozy’s endeavors and the unreliable medical technology offered by Theranos.
Ozy Media, established in 2012, aimed to be a news and cultural platform targeting millennials globally. Watson’s impressive credentials included degrees from Harvard and Stanford, a history on Wall Street, and prior roles with CNN and MSNBC, making this startup his second venture following a previous successful test-prep company.
Ozy produced various media, including TV shows, newsletters, podcasts, and even a festival dedicated to music and ideas. Watson hosted notable programs, such as the Emmy-winning “Black Women OWN the Conversation” on the Oprah Winfrey Network. The company was able to attract significant advertisers and clients, yet insiders revealed that Ozy was struggling financially after 2017, leading to attempts to obscure its financial state.
Testimony from former finance VP Janeen Poutre indicated that Ozy faced difficulties meeting payroll, was often late with rent, and sought costly cash advances, all while inflating revenue numbers for potential investors compared to what was reported to accountants. Watson defended the company during his testimony, insisting the financial challenges were typical of startups, asserting that investors were aware that the revenue figures provided were subject to change.
The only supporter who addressed the court during sentencing was his sister, Beverly Watson, who emphasized the loss of a platform she believed significantly uplifted unheard voices and ideas. Ozy Media ultimately collapsed in 2021 after a New York Times article exposed the impersonation tactic and cast doubt on the company’s claimed audience size.
