Ozy Media’s Founder, Carlos Watson, Arrested on Fraud Charges

Carlos Watson, the founder of the troubled digital start-up Ozy Media, was arrested on Thursday and charged with multiple counts of fraud, punctuating one of the more precipitous falls in the annals of online journalism.

Mr. Watson, 53, “engaged in a scheme to defraud Ozy’s potential investors, potential acquirers, lenders and potential lenders” by misrepresenting the company’s audience numbers and financial results, prosecutors for the Eastern District of New York said in a court document dated Wednesday.

He was arrested by the F.B.I. at a hotel in Midtown Manhattan early Thursday morning and arraigned in federal court in Brooklyn on Thursday afternoon. In addition to the fraud charges, prosecutors also charged him with aggravated identity theft. He pleaded not guilty to all counts and was released after posting a $1 million bond.

Mr. Watson’s arrest came the same month as Samir Rao, 36, Ozy’s former chief operating officer, and Suzee Han, 29, Ozy’s former chief of staff, pleaded guilty to fraud charges, according to court documents.

Shortly after Mr. Watson’s arrest and the guilty pleas, the Securities and Exchange Commission charged Ozy Media, Mr. Watson, Mr. Rao and Ms. Han with defrauding investors of about $50 million. Mr. Rao and Ms. Han have settled the S.E.C. civil case against them.

Ozy and Mr. Watson have been under heavy scrutiny since September 2021, when The New York Times reported that someone at the start-up had apparently impersonated a YouTube executive during a conference call with Goldman Sachs, which was considering an investment. On the call, the impersonator said that YouTube had a great working relationship with Ozy and that Ozy’s videos were successful on the platform.