Ozy Media on Wednesday said it was suspending operations, days after founder Carlos Watson was indicted on federal fraud charges. The company announced in a tweet that it was shutting down after a determination by its board of directors.
“In light of its current operational and legal challenges, the OZY board has determined that it’s in the best interests of its stakeholders to suspend operations immediately,” the company said.
The federal indictment against Watson reveals how the media mogul and his partners forged documents, faked financials and impersonated media executives to enrich themselves while keeping the struggling company afloat.
Watson was arrested and indicted by federal authorities last week on charges of securities and wire fraud. Watson faces a minimum sentence of two years and a maximum of 37 years in prison if convicted.
According to the charging document, Watson told potential investors that Ozy had doubled its revenues from 2016 to 2017, from approximately $6 million in 2016 to approximately $12 million in 2017. In reality, Ozy’s revenue had been almost flat in 2017 and totaled less than $7 million.
Watson further allegedly represented to investors and potential investors that the company would approximately double its revenue again in 2018 and achieve revenue of $22 million. At the end of 2018 and in early 2019, Watson and others allegedly sent numerous emails falsely representing that Ozy hit that target.
But Watson knew from internal revenue emails he received in December 2018 that Ozy’s final revenue for 2018 was less than $11 million.
Ozy officially launched in 2013, raising about $35 million from a group of private investors and venture capital. But by 2016, the company’s fortunes changed as it began rapidly spending.
Watson, a former CNN host and MSNBC contributor, used his previous broadcast career to gain investors. But Watson and his Ozy associates used other means of deception – including impersonating a YouTube executive – to obtain loans and stop the bleeding of cash, much of which was laid bare in a New York Times expose.