BROOKLYN (CN) — Federal prosecutors on rested their case against Ozy Media and founder Carlos Watson on Wednesday after damning testimony from an investor who claimed Watson made flippant misrepresentations about the company to scam his firm out of tens of millions of dollars.
Chetan Bansal, a partner at Antara Capital, rounded out prosecutors’ case when he testified that Watson continuously fed him misinformation about Ozy’s growth and revenue to procure more than $22 million from his investment firm.
At first, Bansal found Ozy’s finances “quite impressive,” he said, when Watson presented him with figures that showed the media company growing steadily, even during the Covid-19 pandemic in 2020. In the 42-page indictment, prosecutors state that Watson falsely told Bansal that Ozy had earned $46 million in revenue that year, turning a $4 million profit.
“Even with Covid, the company’s generating $4 million in cash,” Bansal recalled on the witness stand.
In fact, prosecutors say, Ozy had actually earned only around $11 million in revenue that year and hadn’t profited at all; it lost more than $8 million.
Those figures were a “night and day difference” from what Bansal was told, he said, and would have had a massive impact on how his firm invested in the company.
“The valuation would have been different, the structure of the capital would be different — and that’s assuming we would have made an investment at all,” he testified.
The lies didn’t stop there, Bansal told the court. Watson also falsely told him that Google was planning on investing $30 million into the company. Later, the witness added, Watson told him that Google CEO Sundar Pichai offered a $600 million takeover of Ozy.
Watson repeated this “more than once,” according to Bansal. But Pichai himself testified earlier this month and said he'd never discussed a possible takeover at all.
Bansal recalled Watson calling him before the release of the 2021 New York Times report that led to this federal probe, in which it was revealed that Ozy’s co-founder Samir Rao impersonated a YouTube executive during an investment meeting with Goldman Sachs.
“He told us … that it was a hit piece, that none of it was true,” Bansal said. “He also told me that Samir Rao had lied at certain investor meetings in the past and that he was taking medication, that that medication had changed and that it led to [the YouTube incident].”
Prosecutors hold that Watson was instructing Rao throughout the meeting, and that the pair were even in the same room.
When the Times story was published in September 2021, Bansal said he was “furious” to read the details, lamenting the lack of integrity from Ozy’s management team. Ozy shut down less than a week later.
Bansal recalled the last time he spoke to Watson after that: a tear-filled phone call with the Ozy CEO, who repeatedly apologized to Bansal and told him “I fucked up.”
“He was crying, I told him that I wished him great success but that we would never be able to speak again, that his actions made sure of that,” Bansal said. “I wished him well in life. He kept saying, ‘I effed up, I effed up.’ The call didn’t last long.”
Prosecutors rested after Bansal was excused from the witness stand Wednesday afternoon. The defense will start its case when court reconvenes on Thursday.
Watson is planning to testify in his defense, his lawyers told the court Wednesday.
The trial started last month, when prosecutors first outlined Watson’s supposed scheme to Brooklyn jurors. According to the government, stories like Bansal’s weren’t unusual when it came to Ozy’s fundraising. Prosecutors say impersonating other media executives, lying about business relationships and exaggerating growth were par for the course under Watson’s leadership.
Watson, a Harvard graduate with a law degree from Stanford, pins any wrongdoing on his co-founder Rao, who took a plea deal with federal prosecutors.
“This is a case about a crooked co-founder named Samir Rao who lied, who undermined and who betrayed Carlos Watson,” Watson’s attorney Ronald Sullivan said during opening arguments. “It really is a simple case.”
Both Watson and his defunct media company face charges of fraud and identity theft. If convicted, Watson could face up to 37 years in prison.
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