BROOKLYN (CN) — Ozy Media founder Carlos Watson claimed Tuesday he had no idea that his higher-level employees made flippant misrepresentations of the now-shuttered digital media company’s finances to induce investors to donate funds.
In the second day of his testimony, Watson denied federal prosecutors’ accusations that he conspired with other Ozy executives to lie to investors and encouraged his co-founder Samir Rao to impersonate YouTube executive Alex Piper on an investor call with Goldman Sachs.
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 in prison.
Rao, former chief operating officer, and Suzee Han, the onetime chief of staff, each pleaded guilty to charges last year and are now cooperating with the government in the case against Watson. The pair were also named alongside Watson in a separate lawsuit filed by the U.S. Securities and Exchange Commission.
Rao previously testified that Watson directed him and Han to alter Ozy’s revenue in its general ledger that they sent in 2020 to the Connor Group — a professional services company that was helping the Ozy get its financial books in order — in connection with their efforts to secure an investment from Goldman Sachs.
In emails shown in court, the Connor Group repeatedly asked Rao to submit the general ledger unaltered after multiple attempts by Rao to beef up Ozy’s revenue numbers.
“It fell to Suzee and I to actually execute,” Rao said during his testimony.
But Watson said he never received the emails from the Connor Group asking to resubmit the general ledger without altering it beforehand, and added he had no knowledge of Rao and Han altering the financial record.
“They would have been fired,” Watson said Tuesday.
Watson was also asked about the Goldman Sachs call, which became infamous in media circles after it was reported by The New York Times in 2021.
The reason for the impersonation, Rao said in previous testimony, was that Watson and Rao had falsely told Goldman Sachs executives that YouTube was interested in buying the rights to Ozy’s flagship show “The Carlos Watson Show,” in which Watson interviewed politicians and pop culture celebrities including Joe Biden and John Legend.
When the bank wanted to verify the media company’s relationship with YouTube, Rao said the pair decided to impersonate an executive to continue negotiating the deal.
In testimony Tuesday, Watson offered a starkly different account of the call when compared to Rao, who said that the Ozy CEO had been at the room and coaching him throughout the meeting.
“It was a strange call. I think it probably took me a couple of minutes to put together what was happening,” Watson said. “But I believed he was pretending to be someone he wasn’t.”
Watson said when he figured out what was happening, he tried to motion to Rao to get off the call. When Rao didn’t comply, he said he started to text him to try and get off the call.
“I am a big fan of Carlos, Samir and the show,” one text shown in court from Watson said.
“I assumed at the time that I was watching someone melting down and I thought that, let me end this as quickly and gracefully as you can end something like this and get the people on the phone,” Watson said.
While Rao said Watson’s texts were a way for the CEO to coach him through the call, Watson offered a different explanation.
“He was not speaking well, it was kind of gibberish. It was clear to me he was talking about the company, in this case the Carlos Watson show, and I was just trying to get him to speak clearly and end it," Watson said Tuesday.
When Rao eventually got off the call, Watson said he was upset and screamed at him, before making calls to Ozy's board of directors and Goldman Sachs.
“What happened was a train wreck and I needed to let the board know. I needed to let Goldman know,” Watson said.
In a letter filed Tuesday morning, Watson said the court repeatedly mistreated the defense team throughout the duration of trial.
“A fair criminal trial is one in which the defendants have a full opportunity to challenge the government’s evidence and confront the witnesses against them. That cannot happen when the court objects primarily to the questions put forth by the defense,” Watson's attorney Ronald Sullivan Jr., says in the letter.
Sullivan also accuses U.S. District Judge Eric Komitee of degrading the defense team in front of the jury and of as acting as a “fourth” prosecutor by showing “actual bias” in favor of the prosecutors.
“It is almost as if the court is grooming the prosecutors and coddling them at every turn on every issue,” Sullivan says.
While Komitee said he will file a formal letter response to the defense’s claims, he addressed the letter briefly in court Tuesday.
“I have to say nothing could be further from the truth,” Komitee said in response to Sullivan’s claims he was acting as a “fourth” prosecutor.
Before bringing the jury back, Komitee also scolded Sullivan for repeatedly shouting at him in the courtroom.
“If that happens again, there will be consequences,” Komitee said.
“Give me a decibel level, and I’ll stay below it,” Sullivan responded.
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