Former TV host Carlos Watson given nearly 10 years in prison in Ozy Media case

Former talk show host Carlos Watson was sentenced on Monday to nearly 10 years in prison in a federal financial conspiracy case that cast his Ozy Media as an extreme of fake-it-’til-you-make-it start-up culture.

In one example, another Ozy executive impersonated a YouTube executive to hype Ozy to investment bankers, while Watson coached him, prosecutors said.

Watson, 55, and the now-defunct company were found guilty last summer of charges including wire fraud conspiracy. He has denied the allegations and plans to appeal.

“I loved what we built with Ozy,” he said in court on Monday, initially addressing supporters in the audience before the judge suggested he turn around.

Watson told the judge he was a target of “selective prosecution” as a black entrepreneur in Silicon Valley, where African American executives have been disproportionately few, and he called the case “a modern lynching”.

“I made mistakes. I’m very, very sorry that people are hurt, myself included,” he said, but “I don’t think it’s fair.”

Watson, who faced a mandatory minimum sentence of two years in prison and potentially as much as 37 years, remains free for now on three million dollars (£2.36 million) bond. He is to surrender to prison on March 28. Any restitution will be determined after a hearing in February.

“Your internal apparatus for separating truth from fiction became badly miscalibrated,” he told Watson in sentencing him.

Prosecutors accused the former cable news commentator and host of playing a leading role in a scheme to deceive Ozy investors and lenders by inflating revenue numbers, touting deals and offers that were non-existent or not finalised, and other false indications 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 phone call with potential investors, prosecutors said.

“His incessant and deliberate lies demonstrated not only a brazen disregard for the rule of law, but also a contempt for the values of honesty and fairness that should underlie American entrepreneurship,” Brooklyn-based US Attorney Breon Peace said in a statement on Monday. His office prosecuted the case.

During the trial, Watson’s defence blamed any misrepresentations on others, particularly co-founder Samir Rao and former Ozy chief of staff Suzee Han. She and Rao pleaded guilty, are awaiting sentencing and gave evidence against Watson.

Watson portrayed himself on Monday as a founder who put everything he had into his company, saying that he took an average salary of around 51,000 dollars (£41,000) from Ozy in its final years, has triple-mortgaged his home and drives a 15-year-old car.

After court, he questioned why Brooklyn-based federal prosecutors had gone after a California-based company and founder. Prosecutors declined to comment; the indictment alleged that scheming happened in the Brooklyn-based jurisdiction and elsewhere.

“I do think this is an attack on black excellence,” Watson said after noting that his sentence was not far from the 11-year term meted out to Elizabeth Holmes. She is the white former Silicon Valley chief executive convicted of duping investors in the Theranos blood-testing device hoax.

There is no parallel between faking blood test results and Ozy’s roster of real programmes and events, Watson said.

Ozy, founded in 2012, was styled as a hub of news and culture for millennials with a global outlook.

Watson boasted an impressive resume and Ozy Media was his second startup, coming a decade after he sold a test-prep company that he had founded while in his 20s.

California-based Ozy produced TV shows, newsletters, podcasts, and a music-and-ideas festival. Watson hosted several of the TV programmes, including the Emmy-winning Black Women OWN the Conversation, which appeared on the Oprah Winfrey Network.

But beneath the outward signs of success was an overextended company that struggled — and dissembled — to stay afloat after 2017, according to insiders’ testimony.

The company strained to pay wages, ran late on rent and took out pricey cash advances to pay bills, former finance vice president Janeen Poutre told jurors. Meanwhile, Ozy gave prospective investors much bigger revenue numbers than those it reported to accountants, according to testimony and documents.

On the witness stand in July, Watson said the company’s cash squeezes were just a start-up norm and its investors knew they were getting unaudited numbers that could change.

Only one of those investors spoke at the sentencing — Beverly Watson, who stands by her brother. She told the court on Monday that her biggest loss was “this important platform that elevated people and ideas that weren’t being heard before”.

Ozy disintegrated in 2021, after a New York Times column disclosed the phone-call impersonation gambit and raised questions about the true size of the startup’s audience.