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The founder of the troubled digital start-up Ozy Media was arrested Thursday on federal fraud charges as part of what prosecutors say was a scheme to prop up the financially struggling company, which hemorrhaged millions of dollars before it shut down amid revelations of possibly deceptive business practices.
Federal agents arrested Carlos Watson at a Manhattan hotel after two of the company’s top executives pleaded guilty this month to fraud charges, including Ozy’s then-chief operating officer, Samir Rao, who allegedly impersonated a YouTube executive during a pitch to Goldman Sachs, a potential investor.
The indictment unsealed Thursday in U.S. District Court in Brooklyn accuses Watson of conspiring to commit securities fraud and wire fraud, as well as identity theft for his role in the impersonation of several media executives.
Ozy advertised itself as a progressive digital platform for “the New and the Next,” saying on its website that it sought to create a “space for fresh perspectives, introduces you to rising stars and breakthrough trends, and offers new takes on everything from news and culture to technology, business, learning and entertainment.” But it imploded under insurmountable debt, forcing it to rely on high-interest loans and to more aggressively court investors.
In a parallel civil case, the Securities and Exchange Commission also charged Watson and the company with defrauding investors of about $50 million “through repeated misrepresentations concerning the company’s basic financial condition, business relationships, and fundraising efforts.”
The SEC said Rao and Ozy’s former chief of staff, Suzee Han, have “agreed to resolve the charges against them,“ as they did separately with U.
