Ozy Media Sued for Impersonation of Co-Founder’s Goldman Call

Ozy Media Inc. was sued by an investor for impersonating a YouTube executive by its co-founder during a conference call with executives at Goldman Sachs Group Inc. over a potential investment.

LifeLine Legacy Holdings said in a securities fraud lawsuit filed Monday night it invested about $ 2.25 million in Ozy in February and May, in part because co-founders Carlos Watson and Samir Rao claimed Goldman was on the point of investing money in the company.

“Watson and Rao specifically told LifeLine that Goldman Sachs is positioning itself to make a substantial investment in the business,” Beverly Hills-based LifeLine said in its lawsuit filed in federal court in San Jose.

The board of directors of Ozy, which touted itself as a “modern media company,” announced the shutdown of the company on Friday. The announcement came just days after the New York Times reported that Rao posed as a YouTube executive to tout Ozy’s success on the video-sharing site. According to the Times, Goldman did not invest and Google, YouTube’s parent company, referred the matter to the FBI.

Watson, Ozy’s chief executive, did not immediately respond to a request for comment. Neither the law firm Paul, Weiss, Rifkind, Wharton & Garrison, which Ozy’s board said last week it hired to conduct an internal investigation.

Ozy never disclosed that “Rao attempted to impersonate a YouTube executive in an attempt to secure a substantial investment from Goldman Sachs, or that, due to Rao’s fraudulent conduct, Goldman Sachs refused to ‘invest in Ozy Media and that Ozy Media was under investigation by government agencies,’ LifeLine said in its lawsuit.

The Times report also raised important questions about Ozy’s audience and newsletter subscription complaints. Another Times story suggested that Ozy misled the employees and guests of the “Carlos Watson Show” interviews into believing that the talk show was going to air on a major cable channel.

LifeLine said Watson and Rao approached him about an investment in late 2020, bragging about Ozy Media’s strong financial performance, seemingly impressive audience metrics and significant interest from institutional investors. The fund said it purchased approximately $ 2 million of Series C preferred shares in February and $ 250,000 of Series D preferred shares in May.

Although Ozy’s board of directors has announced the shutdown of the company, Watson has claimed in several interviews this week that Ozy will be back soon. He recognized to Axios that it might be difficult for Ozy to find partners given the perceptions that he and the company had been misleading.

“We will be creative, we have to be,” Watson said.


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