Ozy Media Inc. is a media and entertainment corporation led by CEO Carlos R. Watson, Jr., its former COO Samir Rao, and its former Chief of Staff Suzee Han were charged by the SEC with fraud today for allegedly swindling investors out of $50 million through lies about the company’s finances, business connections, and fundraising efforts.
Ozy Media and Its CEO Carlos charged by SEC
The charges against Rao and Han will be dropped; the two parties have agreed.
The Securities and Exchange Commission alleges that from at least January 2019 through September 2021, the defendants systematically and willfully misrepresented financial data to potential investors, overstating annual revenue at Ozy Media by at least 100 per cent. According to the complaint, Watson and Rao falsely assured potential investors that high-profile, high-net-worth individuals (HNWIs) would be contributing to Ozy Media.
Moreover, the SEC‘s complaint alleges that Watson and Rao orchestrated a conspiracy in which Rao impersonated a YouTube executive in order to support Ozy Media’s false claims to a prospective company misled its investors at the time by claiming it was getting money from YouTube for licensing when it was not. After the potential investor discovered the scam, Watson allegedly blamed Rao’s impersonation on a “mental health crisis” for him, as stated in the Securities and Exchange Commission’s complaint. He told the potential investor and the board of directors of Ozy Media that.
The SEC’s Director of Enforcement, Gurbir S. Grewal, has stated that the defendants “raised approximately $50 million from victim investors over the course of several years on the basis of fraudulent documents and repeated misrepresentations,” including, meeting with an investment bank while pretending to be a potential business partner has happened at least once. This case shows that even prominent figures in the media can be held legally responsible for misleading investors.
The SEC has filed a lawsuit against the defendants in the U.S. District Court for the Eastern District of New York, accusing them of breaking the anti-fraud provisions of the federal securities laws and related rules. The SEC is asking for disgorgement with prejudgment interest from Ozy Media and Watson, as well as injunctive relief and civil fines from all defendants.
Rao consents to the entry of a judgment prohibiting him from acting as an officer or director of a publicly traded corporation for a period of ten years and imposing civil monetary penalties that the court will determine at a later time. Han agrees that a judgment permanently enjoining her from violating the charged provisions may be entered with her assent, with the court determining any appropriate civil monetary penalties at a later date. The final judgments are pending judicial review.
Crimes have also been brought against Ozy Media, Watson, Rao, and Han by New York’s Eastern District Attorney’s Office.
Christine D. Ely, Karolina Klyuchnikova, Lisa Knoop, Lee A. Greenwood and Alison R. Levine of the SEC’s New York office are now conducting the investigation, which is being overseen by Sheldon L. Pollock. Ms Klyuchnikova and Ms Ely will be in charge of the litigation.
The SEC would like to express its gratitude to the Federal Bureau of Investigation and the United States Attorney’s Office for the Eastern District of New York for their help in this matter.
