Former talk show host Carlos Watson was sentenced Monday to nearly 10 years in prison in a federal financial conspiracy case that branded his once-boozy media outlet Ozy as an extreme of fake startup culture.
So extreme that another Ozy executive impersonated a YouTube executive to give Ozy rides to investment bankers — while Watson coached him, prosecutors said.
Watson, 55, and the now-defunct company pleaded guilty last summer to charges including wire fraud conspiracy. He has denied the charges.
Watson, who has been free on $3 million bond, faced a mandatory minimum sentence of two years in prison and potentially up to 37 years.
Prosecutors accused the former commentator and cable news host of playing a leading role in a scheme to defraud Ozy’s investors and lenders by inflating revenue numbers, touting deals and offers that didn’t exist or weren’t finalized and sparking other false indicators of Ozy’s success.
Watson even listened in and texted talking points while his co-founder posed as a YouTube executive to praise Ozy on a call with potential investors, prosecutors said.
“The degree of dishonesty in this case is extraordinary,” said US District Judge Eric Komitee, later telling Watson: “Your internal apparatus for separating truth from fiction was badly miscalibrated.”
Watson blamed others for any misrepresentation, and he said he was a target of “selective prosecution” as a black entrepreneur in Silicon Valley, where African-American executives have been disproportionately few.
“I loved what we built with Ozy,” he said in court Monday, first addressing supporters in the audience before the judge suggested he return. He portrayed himself as a founder who put everything he had into his company, saying he took an average salary of about $51,000 from Ozy in its final years, tripled his mortgage on his house and drives a 15- year.
Co-founder Samir Rao and Ozy’s former chief of staff Suzee Han pleaded guilty and are awaiting sentencing. Both testified against Watson.
Ozy, founded in 2012, was styled as a news and culture hub for millennials with a global outlook.
Watson boasted an impressive resume: degrees from Harvard University and Stanford Law School, a stint on Wall Street, on-air gigs at CNN and MSNBC and entrepreneurial chops. Ozy Media was his second startup, coming a decade after he sold a test prep company he founded in his 20s.
Mountain View, Calif.-based Ozy produced TV shows, newspapers, podcasts and a music and ideas festival. Watson hosted several television programs, including the Emmy-winning Black Women OWN the Conversation, which aired on the Oprah Winfrey Network.
Ozy nabbed advertisers, clients and major grants. But beneath the outward signs of success was an overstretched company that struggled — and fell apart — to stay afloat after 2017, according to insider testimony.
The company struggled to make payroll, fell behind on rent and took expensive cash advances to pay bills, former vice president of finance Janeen Poutre told jurors. Meanwhile, Ozy gave potential investors much higher revenue figures than what he reported to accountants, according to testimony and documents.
On the witness stand in July, Watson said the company’s cash squeezes were just a baseline and its investors knew they were getting unaudited numbers that could change.
Ozy disbanded in 2021 after a New York Times column exposed the phone call impersonation gambit and raised questions about the true size of the startup’s audience.
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