Ozy Media Founder Takes the Stand to Deny Fraud Allegations

Ozy Media Founder Takes the Stand to Deny Fraud Allegations - The New York Times

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Ozy Media Founder Takes the Stand to Deny Fraud Allegations

Carlos Watson was questioned after Ozy investors, former employees and bankers testified for the prosecution in his trial.

Carlos Watson, a co-founder of the digital media start-up Ozy Media, testified on Monday at his fraud trial that he had not conspired to trick investors.

Instead, he said, his young media company employed strategies to build partnerships, secure advertising revenue and draw in investors.

“We really thought we had a chance to do something special that could be around a long time,” Mr. Watson told the jury.

Mr. Watson’s testimony is the center of his defense against charges that he misrepresented his company’s financial results, fund-raising and audience data to investors and lenders from 2018 to 2021. The prosecution has called a variety of witnesses, including prospective investors who testified that Mr. Watson had misled them about the company in an attempt to secure funding.

Mr. Watson, who has pleaded not guilty to all the charges against him, could face up to 37 years in prison if convicted.

Speaking before a jury in federal court in Brooklyn, he denied purposely misleading anyone.

Mr. Watson, who is also a former MSNBC anchor, stressed his personal commitment to the media start-up, which he said had included financial investments and salary cuts to demonstrate he was “all in.”

“It is a challenge when you’re trying to build something different to attract support,” Mr. Watson said, adding that the challenge was even greater for a Black entrepreneur like him.

Mr. Watson launched Ozy with Samir Rao in 2013. The start-up published news articles and newsletters before venturing into podcast and television productions. It secured commitments from prominent investors at a time when digital publishers, like BuzzFeed and Vice, attracted billions of dollars in investments that largely didn’t pan out.

At the heart of the federal criminal trial is an incident in 2021 when Mr. Rao, who was Mr. Watson’s deputy, misled Goldman Sachs employees during a fund-raising call by impersonating a YouTube executive. The disclosure of the call, first reported by The New York Times, precipitated the collapse of Ozy.

Lawyers for Mr. Watson and Ozy have blamed Mr. Rao for the impersonation and for misrepresenting Ozy’s financials to prospective investors. Shannon Frison, a lawyer for Ozy, said in her opening statement in May that Mr. Rao was “incompetent for the role that he was serving.”

Mr. Watson portrayed himself on Monday as an attentive leader, but someone removed from many of his company’s day-to-day operations. He “couldn’t get into the weeds” when dealing with broader strategic planning, while Mr. Rao and other employees often handled the start-up’s finances and technology, Mr. Watson testified.

Mr. Rao and Suzee Han, a former Ozy chief of staff, pleaded guilty last year to fraud charges.

Several of the prosecution’s witnesses also testified that Mr. Watson had misrepresented his company’s financials to secure investments.

The highest-profile witness, Sundar Pichai, the chief executive of Google, testified that he had never discussed a possible $600 million takeover of Ozy. Prosecutors said Mr. Watson had told a prospective investor that Mr. Pichai made that offer.

Mr. Watson is expected to continue his testimony on Tuesday, including a cross-examination from the prosecution.

Danielle Kaye is a business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers. More about Danielle Kaye

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