\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/07\/AP24198672273226-e1721170580656.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Former TV personality Carlos Watson was convicted Tuesday in\u00a0a federal financial conspiracy case<\/a>\u00a0about Ozy Media, an ambitious startup that collapsed after another executive impersonated a YouTube<\/a> executive to hype the company\u2019s success.<\/p>\n Watson, 53, had been free on bail but was taken into custody to await sentencing.<\/p>\n Brooklyn-based U.S. Attorney Breon Peace said the verdict held Watson accountable for \u201cbrazen crimes\u201d that were meant to keep cash-strapped Ozy afloat but ultimately sank it.<\/p>\n \u201cThe jury found that Watson was a con man who told lie upon lie upon lie to deceive investors into buying stock in his company,\u201d Peace said in a statement, adding that the company \u201ccollapsed under the weight of Watson\u2019s dishonest schemes.\u201d<\/p>\n Peace\u2019s office said a jury found Watson guilty of all the charges against him: conspiracy to commit securities fraud, conspiracy to commit wire fraud and aggravated identity theft. Ozy Media also was convicted of the same conspiracy offenses, the only charges the company faced.<\/p>\n Watson and Ozy had pleaded not guilty and denied the allegations.\u00a0He testified<\/a>\u00a0that Ozy\u2019s cash squeezes were standard startup speed bumps and that materials given to investors noted that the information wasn\u2019t audited and could change \u2014 \u201clike \u2018buyer beware,\u2019\u201d he said.<\/p>\n The defense blamed any misrepresentations on Ozy co-founder and chief operating officer Samir Rao, who has pleaded guilty.<\/p>\n Watson and Ozy plan to appeal, lawyers Ronald Sullivan, Janine Gilbert and Shannon Frison said in a statement.<\/p>\n Watson\u2019s relatives and supporters left court without commenting, but wearing black shirts emblazoned with, \u201cWhose son is next?\u201d<\/p>\n Watson could face decades in prison, though sentencing guidelines for individual defendants vary. Now-defunct Ozy faces potential financial penalties.<\/p>\n Watson, a cable news host who\u2019d worked on Wall Street and sold his own education-related startup, conceived of Ozy in 2012. The Mountain View, California-based company produced shows and gave \u201cOzy Genius\u201d awards to college students. It interviewed former President Bill Clinton, won an Emmy Award and produced an annual music-and-ideas festival that President Joe Biden\u00a0attended in 2017<\/a>, when he was a former VP.<\/p>\n But prosecutors said that underneath Ozy\u2019s hip public profile, the company was tottering financially from 2018 on. It routinely ran short of money to pay vendors, rent and even employees and took out expensive loans against future receipts to cover its bills, former finance Vice President Janeen Poutre testified.<\/p>\n The prosecution and its key witnesses said Ozy, with Watson\u2019s blessing, began floating increasingly audacious lies to try to snag a lifeline from investors.<\/p>\n \u201cSurvival within the bounds of decency, fairness, truth, it morphed into survival at all costs and by any means necessary,\u201d Rao told jurors, saying that Watson had sanctioned all his falsehoods.<\/p>\n Ozy gave much bigger revenue numbers to its prospective backers than to its accountants, with the discrepancy widening to $53 million versus $11.2 million for 2020, according to testimony and documents shown at trial.<\/p>\n Prosecutors said that the company claimed deals and offers it hadn\u2019t really secured \u2014 for example, that Watson told a prospective investor that Google<\/a> was willing to buy Ozy for hundreds of millions of dollars. Ozy\u2019s lawyer said Watson never made that claim.<\/p>\n Google CEO Sundar Pichai testified<\/a>\u00a0there was no such offer, though he did contemplate hiring Watson and providing $25 million to help Ozy move on if he took the Google job.<\/p>\n To woo potential corporate suitors and lenders, Rao forged some terms of contracts with a network for one of Ozy\u2019s TV shows. Then, when a bank wanted to check with the network, Rao set up a fake email account for an actual network executive and sent a message offering information. The bank loan didn\u2019t happen.<\/p>\n Rao went on to pose as a YouTube executive on a phone call with investment bankers, in a bizarre effort to back up a false claim that Rao had made about YouTube paying for another Ozy show. The bankers got suspicious, their potential investment evaporated and the real YouTube exec soon learned of the ruse.<\/p>\n Watson\u2019s lawyers hammered on Rao\u2019s admissions about his own conduct to try to portray him as a liar trying to avoid prison by pleasing prosecutors. Rao is awaiting sentencing.<\/p>\n Watson, who hosted multiple Ozy shows and podcasts, told jurors he concentrated on the company\u2019s content, staff, vision and partnerships more than on \u201cmaking sure that every decimal is in the right place.\u201d He said he traveled about four days a week and left finance and operations largely to Rao and others.<\/p>\n \u201cI couldn\u2019t be as hands-on as I probably wanted to be,\u201d he testified.<\/p>\n Ozy rapidly unraveled after\u00a0The New York Times<\/a>\u00a0revealed Rao\u2019s faux call in a September 2021 column that also questioned the start-up\u2019s claims about its audience size.<\/p>\n<\/div>\n\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n