BROOKLYN (CN) — CEO Carlos Watson misrepresented Ozy Media earnings by as much as four times the actual revenue numbers, federal prosecutors said during closing arguments of the media company’s fraud trial Wednesday.
Prosecutors laid out six weeks-worth of testimony and evidence in front of a Brooklyn jury Wednesday, claiming Watson directed Ozy executives to create fake contracts, fudge revenue numbers and impersonate other media executives to create a grossly overexaggerated air of success at the digital media start-up.
Watson faces charges for conspiracy to commit securities and wire fraud, in addition to aggravated identity theft. If convicted, he could face up to 37 years.
“Carlos Watson abandoned the truth a long time ago,” Assistant U.S. Attorney Gillian Kasner said Wednesday.
She added that this case is “about all the lies Carlos Watson told again, again, and again to get ahead.”
The government says Watson conspired with Samir Rao, Ozy’s former chief operating officer, and Suzee Han, the company’s onetime chief of staff. Both pleaded guilty to charges last year and are now cooperating with the government in the case against Ozy and Watson. The pair were also named alongside Watson in a separate lawsuit filed by the U.S. Securities and Exchange Commission.
“They both testified in no uncertain terms that they didn’t commit those crimes alone. They committed those crimes with Carlos Watson,” Kasner said.
Kasner said Watson repeatedly directly lied, or greenlighted lies, to investors, pointing to internal income statements that dramatically contradicted emails and pitch decks sent to investors.
For instance, she pointed to emails shown in court in which Watson told investors that Ozy’s revenue in 2017 was $12 million. But in Ozy’s internal income statements, the company only reported less than $7 million.
Similarly, Watson reported revenue numbers in 2020 that were four times higher than what was reported on Ozy’s income statement.
And these numbers varied depending on the investor, Kasner said.
To Google, Ozy claimed they had $42 million in revenue. To Goldman Sachs, that number was $46 million in revenue in 2020.
But Ozy only reported $11 million in revenue on its 2020 income statement, Kasner added.
“They told different lies to different people at the same time,” Kasner said.
Watson said during his own testimony that not all of Ozy’s revenue was counted in its general ledger, which is what is reflected in the income statements shown in court.
But Kasner refuted that claim during Wednesday’s closing arguments, pointing to previous testimony from Ozy’s former Vice President of Finance Janeen Poutre, who said that every dollar Ozy earned was accounted for in its general ledger.
Kasner also said that Watson lied to investors about its various fundraising rounds, claiming he told investors they would purchase Series C shares before he got board approval.
“And Watson knew that because he was the chair of the board of directors,” Kasner said.
And while promoting the Series D fundraising round, Kasner said, Watson launched a “campaign of lies” when he claimed that Oprah Winfrey and Live Nation agreed to lead the funding round.
“These conversations … they never happened. This is entirely made up,” Kasner said.
And, in 2019, when BuzzFeed expressed interest in purchasing the now-defunct media company, Kasner said Watson forged contracts with Hulu and the Oprah Winfrey Network for television deals.
She also pointed to previous testimony from Tripti Thakur, Ozy’s former chief financial officer for three months in 2019, who said Rao sent a fake contract with the Oprah Winfrey Network to a potential bank lender.
Watson “went around the world” telling people Ozy was a success, Kasner, who delivered closings on behalf of the government, said.
“We now know that none of that is true,” Kasner said. “At one point, Ozy couldn’t even pay its rent.”
The government concluded its closing arguments Wednesday. The defense will begin closing arguments Thursday morning.