The DOJ alleges that Watson and his former CFO, Samir Rao, engaged in a scheme to defraud investors and lenders by providing false information about Ozy’s financial performance and metrics. The charges include wire fraud, bank fraud, and securities fraud.
Watson and Rao allegedly fabricated website traffic and engagement metrics to attract investors and advertisers, and misrepresented Ozy’s revenue and expenses in financial statements. The DOJ also claims that they created fake email accounts and used pseudonyms to pose as potential investors in order to inflate Ozy’s valuation.
In a statement, Acting U.S. Attorney Stephanie Hinds said, “The defendants’ alleged conduct misled investors, lenders, and the media about the financial performance of Ozy Media, a multi-million dollar media company. The charges announced today demonstrate that those who seek to deceive investors and harm the integrity of our financial markets will be held accountable.”
Watson, who stepped down as CEO of Ozy in September 2021, has denied the charges. His lawyer, Benjamin Brafman, said in a statement that “Mr. Watson vigorously denies the allegations and looks forward to clearing his name in court.”
Ozy Media, which was valued at $200 million in a funding round earlier this year, has faced scrutiny in recent months over its metrics and financial performance. In October 2021, the New York Times reported that Ozy had inflated traffic and engagement numbers, prompting several high-profile partners to cut ties with the company.
The DOJ’s investigation into Ozy and its executives is ongoing. If convicted, Watson and Rao could face substantial fines and prison sentences.