Did You Hear About the Big Summer Fraud Trial? It Didn’t Involve Donald Trump

On the same day that a Manhattan jury returned a guilty verdict in former President Donald Trump’s bribery trial, another major case involving an alleged fraudster was getting underway in Brooklyn. It began with testimony from a key witness, a former Ozy Media executive who used a voice changer to impersonate a YouTube executive in a phone call to Goldman Sachs. While Manhattan prosecutors were questioning Sen. Bob Menendez of New Jersey on a slew of corruption charges, the Google CEO testified in Brooklyn, refuting the news startup’s claims that it bilked millions from major investors.

What the United States vs. Carlos Watson and Ozy Media criminal fraud case lacked in name recognition, the trial made up for with testimony about bogus contracts involving Oprah Winfrey, an OWN executive impersonation, and a series of over-the-top deals with celebrities like Jennifer Lopez, former Major League Baseball star Alex Rodriguez, Milwaukee Bucks owner Marc Lasry, and Apple heiress Laurene Powell Jobs. Did I mention Google CEO Sundar Pichai made an appearance? Well, I just did.

But it wasn’t the big names or the bizarre, Theranos-level, fake-it-till-you-make-it quality of the scheme, allegedly concocted by former Ozy CEO Watson and his associates, that made this trial so crazy. It was so crazy because, for Watson, it was just another chapter in his extended fraud.

I worked for Carlos Watson for almost a decade and learned the hard way that with a hardened con artist, the con never ends. I was employee number one at Ozy Media and witnessed Watson’s antics up close, constant and relentless, both big and small. Here’s the oddest and the smallest that I still find odd: Never I’ve seen Carlos standing in line for anything. We’ve flown together on a few business trips, and while I’d stand there and complain about the length of the security line, he’d just keep moving forward. He didn’t have a Clear membership, or even a TSA PreCheck membership. He just had this infinite nerve. I admired him, but it was a morbid admiration. And ultimately, that nerve was his downfall.

That’s why it was so surprising (and probably for Watson himself) that the trial ended with the creator of the myth being sent to prison. before verdict. It was a poetic ending for a man who named his company after a 19th-century sonnet about arrogance, hubris and pride being brought low.

Ozy, named after the Percy Shelley poem “Ozymandias,” is a Silicon Valley-based digital media startup founded by Watson and Samir Rao in 2012. Watson, a former Goldman Sachs executive and MSNBC news anchor, was a darling of the startup world, and Ozy was founded by Silicon Valley’s most powerful investors, many of whom were “friends” of Watson.

I remember telling myself that if Watson delivered, say, 60 percent of what he promised, we would be sitting on something absolutely historic. So, yes, I bit. Along with a lot of other suckers.

In just a few years, Watson had built a legend—a triple-threat enterprise that delivered cutting-edge news, bold television programming, and a massive annual festival. But the legend was all Ozy ever was.

In early 2023, federal prosecutors in the Eastern District of New York charged Watson and Ozy Media with securities conspiracy, wire fraud, and identity theft. Essentially, Watson was accused of defrauding his “friends” out of tens of millions of dollars by lying, exaggerating, and omitting the truth about Ozy’s unimpressive finances and performance.

Investors and lenders weren’t the only victims of this scheme. Ozy’s employees—top journalists, including the BBC’s Katty Kay, several Wall Street Journal reporters and editors, and, of course, me—were also ripped off by Watson. He sold us on the idea that Ozy could be “HBO news” for people of color by people of color, and then he manipulated and abused us, gaslighted us, and, in the case of his co-conspirators Samira Rao and Suzee Han, both more than a decade younger, trained them to be criminals.

Watson tried everything with me. I remember him putting his hand on my knee in his office, looking deep into my eyes and saying, “Nobody loves you, Or believes in your talent, and so do I.” That might work on someone with some safety issues or childhood trauma. But I felt like Quentin Tarantino in Pulp Fiction when he says he knows the coffee was great because he bought it. His flattery was pointless. But now I understand he was just keeping in shape, so to speak.

Especially considering what he was offering, which meant long hours, regular ripping off, and general internal chaos—all of which were necessary to keep some of the smartest journalists in the world from sniffing out the fraud. And it worked.

We suspected inflated viewership numbers. I once asked Rao specifically about the viewership for Ozy’s awful talk show, literally called “The Carlos Watson Show.” The numbers seemed crazy high to me, and Rao tried to calm me down by saying, “Well, that’s what the stats say!” Many other news outlets reported questionable numbers, to be fair. So the fraud was largely invisible to Ozy employees, at least until September 2021, when a New York Times column revealed the first whiff of something suspicious: a strange voice on the other end of the line during a phone call to Goldman Sachs.

The voice was Rao, who used digital technology to sound like someone else while assuring influential bankers of a cozy relationship between YouTube and Ozy—a relationship that didn’t exist. Watson blamed it on his COO suffering from a mental health episode. But when the trial came, Rao was no longer willing to lie for Watson.

Rao, who pleaded guilty to the same charges as Watson, testified on the first day. The atmosphere in the courtroom was tense. There was standing room only. Watson’s supporters jostled for seats, including a woman who angrily elbowed herself between two law students.

It was already strange, and it got stranger when the prosecutor asked Rao a routine question: Did he see anyone in the room with whom he committed these crimes? Before Rao could answer, Watson stood up, drawing gasps from the gallery. (One woman said, “I should have brought snacks.”)

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The eight-week ordeal was an unlikely courtroom drama, involving a bombastic, bow-tie-wearing defense attorney, government accusations that the defense’s evidence was phony, Watson whose bail was nearly revoked for repeatedly smuggling cellphones into the courthouse and lying to security officers, and a judge who imposed gag orders on the attorneys after Watson publicly accused prosecutors of racism. (He posted it on his new website, TooBlackForBusiness.org, formerly Ozy.com.)

The testimony was compelling. Potential investors, from both the United States and the Middle East, said they were charmed by the flashy names of the alleged investors: Oprah, A-Rod, J-Lo. They didn’t know it was all a lie. YouTube and OWN executives said they had no idea their identities had been stolen. In a more chilling moment, Han testified that Watson tried to convince her to let him monitor her therapy sessions. But the most compelling witness, to almost no one’s surprise, was Carlos Watson himself.

While Rao and Han admitted to fraud, pleading guilty and testifying on behalf of the government, Watson denied any wrongdoing. He offered a completely different definition of fraud and presented it to the jury himself. During his five days on the podium, Watson displayed his signature elegance and gift for the gab—and why not? It had worked for dozens of celebrities and major investors before.

Trying to explain what happened, Watson entertained the courtroom with “Leave It to Beaver”-style stories about his upbringing. He casually emphasized his success by glancing at the jury whenever he dropped names like Oprah or brands like Hulu. “You may have heard of them,” he said. As if his jury—whom he probably viewed as hapless rednecks—would surely agree that putting Oprah’s “personal friend” in jail was unthinkable.

He did that to me too, as if mentioning Oprah would impress people in real media. It didn’t work in court either.

Watson expanded into the financial sphere, attempting to redefine accounting rules in the hopes of convincing juries that it was perfectly normal to assign arbitrary amounts in the millions to transactions with zero monetary value. A key point of his defense was: This is a startup case, you wouldn’t understand it. Frankly, Donald Trump would appreciate it.

Watson accused prosecutors of altering evidence and repeatedly blamed a “jealous” competitor (media journalist Ben Smith, then at the New York Times and previously at BuzzFeed) for his company’s failure. Don’t believe any media reports, Watson declared from the podium. Don’t believe any government witnesses. Trust me. It’s worked before, too.

There were the lies he told privately before, about fake deals and fake revenue numbers. And there were the lies he told publicly, even in a fight with Ozzy and Sharon Osbourne after falsely claiming they were investors. Watson managed to avoid responsibility for all of it—even his COO posing as a YouTube executive—with a wave of his hand: It was just a mistake, a misunderstanding, an employee with unfortunate mental health issues.

But for the first time, Watson, who had successfully swindled celebrities and major investors (by parading them around the office, dog-and-pony style, while the female employees were nearing nervous breakdowns), met his match in a jury of 12 ordinary citizens. They found him guilty on all three counts of fraud and identity theft. His fatal flaw was, in fact, his charisma. Watson himself fell into the trap of perjury when the government caught him lying under oath about the details of a phone call to Goldman Sachs.

Watson still hasn’t admitted to anything, which — like all the other absurd nonsense in this story — doesn’t strike me as shocking. But I’m still waiting for some explanation of what was driving him or how he thought this could all end well. Carlos, if you’re reading this, call me anytime.

The hearing was reported by Heather Schroering.