Did you hear about the big fraud trial this summer? Donald Trump was not involved in it

On the same day that a Manhattan jury returned a guilty verdict in former President Donald Trump’s hush money trial, another major case involving an alleged fraudster was just getting underway in Brooklyn. It began with the testimony of the star witness, a former Ozy Media executive who used a voice changer to pose as a YouTube executive on a phone call with Goldman Sachs. While prosecutors in Manhattan questioned New Jersey Senator Bob Menendez about a series of corruption allegations, the CEO of Google took the witness stand in Brooklyn and contradicted claims by a news startup that it was trying to defraud major investors out of millions.

What the fraud case United States v. Carlos Watson and Ozy Media lacked in notoriety, the trial made up for with testimony about fake contracts involving Oprah Winfrey, an impersonation of an OWN executive, and a series of over-the-top deals involving celebrities like Jennifer Lopez, former Major League Baseball star Alex Rodriguez, Milwaukee Bucks owner Marc Lasry, and Apple heiress Laurene Powell Jobs. Did I mention an appearance by Google CEO Sundar Pichai? Well, I just did.

But it wasn’t the high-profile names or the bizarre quality of the Theranos-level “fake it til you make it” scheme allegedly hatched by former Ozy CEO Watson and his co-conspirators that made this trial so wild. It was so wild because, for Watson, it was just the next chapter in his sprawling fraud.

I worked for Carlos Watson for nearly a decade and learned the hard way that with a hardcore crook, the scams never stop. I was Ozy Media’s #1 employee and witnessed Watson’s escapades up close, constantly and continuously, both big and small. Here’s the craziest and smallest one that I still find strange to this day: I never Carlos would stand in line for everything. We flew together on a few business trips, and while I stood there complaining about the length of the security line, he just walked to the front. He didn’t have a Clear membership, and he didn’t even have TSA PreCheck. He just had boundless audacity. I admired it, but it was a morbid admiration. And ultimately, that audacity led to his downfall.

That is why it was so surprising (and certainly also for Watson himself) that the trial ended with the myth creator being sent to prison. before Verdict. It was a poetic end for the man who named his company after a 19th-century sonnet about arrogance, hubris and suppressed pride.

Ozy, a reference to Percy Shelley’s poem “Ozymandias,” was a Silicon Valley-based digital media startup founded in 2012 by Watson and Samir Rao. Watson, a former Goldman Sachs employee and news anchor at MSNBC, was a darling of the startup world, and Ozy was made possible by Silicon Valley’s most powerful investors, many of whom were Watson’s “friends.”

I remember saying to myself that if Watson delivered, say, 60 percent of what he promised, we would have something absolutely historic on our hands. So, yes, I took the bait. Just like a lot of other morons.

Within a few years, Watson created a legend – a triple-impact company that boasted breaking news, exciting TV shows and a huge annual festival. But Ozy was never a legend.

In early 2023, federal prosecutors in the Eastern District of New York charged Watson and Ozy Media with conspiracy to commit securities fraud, wire fraud, and aggravated identity theft. Essentially, Watson was accused of defrauding his “friends” out of tens of millions of dollars by lying, exaggerating, and concealing the truth about Ozy’s unimpressive finances and performance.

The investors and lenders were not the only victims of the plot. Ozy’s associates – top journalists including Katty Kay of the BBC, several reporters and editors at the Wall Street Journal, and, of course, me – were also duped by Watson. He sold us the vision that Ozy could be “the HBO of news” for people of color, by people of color, and then he manipulated and abused us, misled us, and in the case of his co-conspirators Samir Rao and Suzee Han, both more than a decade his junior, turned them into criminals.

Watson tried everything with me. I remember him putting his hand on my knee in his office, looking deep into my eyes and saying: “Nobody loves you, or believes in your talent, like I do.” That might have worked for someone who had security issues or experienced trauma at a young age. But I felt like Quentin Tarantino in Pulp Fiction when he says he knows the coffee was great because he bought it. His flattery was pointless. But now I understand he just wanted to stay in shape, so to speak.

Especially given what he had to offer: long hours, regular squabbles, and general internal chaos – all of which were needed to keep some of the world’s smartest journalists from exposing the fraud. And it worked.

We had our suspicions about inflated viewership numbers. I once asked Rao specifically about the number of viewers of Ozy’s terrible talk show, which is literally called “The Carlos Watson Show.” Those numbers seemed insanely high to me, and Rao tried to reassure me by saying, “Well, that’s what the stats say!” Many other news sites reported dubious numbers, to be fair. So the fraud was largely invisible to Ozy’s staff, at least until September 2021, when a New York Times column revealed the first hint of something suspicious: a strange voice on the other end of the line during a call to Goldman Sachs.

That voice belonged to Rao, who used digital technology to sound like someone else while assuring senior bankers of a friendly relationship between YouTube and Ozy – a relationship that didn’t exist. Watson explained it by saying his COO was suffering from a mental illness. But when it came to trial, Rao was no longer willing to lie for Watson.

Rao, who pleaded guilty to the same charges as Watson, took the stand on the first day. The atmosphere in the courtroom was tense. There was standing room only. Watson’s supporters fought for seats, including a woman who angrily pushed herself between two law students.

Things were strange enough, and got even stranger when a prosecutor asked Rao a routine question: Did he see anyone in the room with whom he committed these crimes? Before Rao could answer, Watson stood up, causing an outcry in the gallery. (One woman said, “I should have brought snacks.”)

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The eight-week ordeal played out like an implausible courtroom drama, with a bombastic bow-tie-wearing defense attorney, government accusations that the defense’s evidence was fabricated, Watson’s bail nearly revoked because he repeatedly smuggled cellphones into the courtroom and lied to security guards, and the judge imposing a news gag order on the lawyers after Watson publicly accused prosecutors of racism. (This happened on his new website, TooBlackForBusiness.org, formerly Ozy.com.)

The testimony was compelling. Potential investors from the U.S. and the Middle East said they were lured by the flashy names of the alleged investors: Oprah, A-Rod, J-Lo. Little did they know it was all a lie. Executives from YouTube and OWN said they had no idea their identities had been stolen. In an even more horrifying moment, Han testified that Watson tried to convince them to let him monitor their therapy sessions. But the most compelling witness, to almost no one’s surprise, was Carlos Watson himself.

While Rao and Han admitted to fraud, pleaded guilty and testified for the government, Watson denied any wrongdoing. He offered a completely different definition of fraud and presented it to the jury in person. In his five days on the stand, Watson displayed his typical agility and flair for speaking – and why not? He had worked for dozens of celebrities and major investors before.

Watson tried to explain what had happened by regaling the courtroom with stories from his childhood, in the style of Growing Up. He casually underlined his success, glancing at the jury every time he dropped names like Oprah or brands like Hulu. “Maybe you’ve heard of it,” he said, as if his jury of peers — whom he probably thought were helpless rednecks — would surely agree that putting a “personal friend” of Oprah in prison was unthinkable.

He did that to me too, as if mentioning Oprah would impress people in the real media. It didn’t work in court either.

Watson even ventured into the financial realm, trying to redefine the rules of accounting in the hope that the jury would believe that it was perfectly normal to allocate arbitrary millions of dollars to deals that had no monetary value. The crux of his defense was essentially: This is a startup thing, you wouldn’t understand it. Frankly, Donald Trump would have appreciated that.

Watson accused prosecutors of fabricating the evidence and repeatedly blamed a “jealous” competitor (media reporter Ben Smith, then at the New York Times and previously at BuzzFeed) for his company’s failure. “Don’t believe any of the media reports,” Watson said on the witness stand. “Don’t believe any of the government witnesses. Trust me. This has worked before.”

There were lies he’d told privately before, about forged contracts and false revenue numbers. And there were lies he’d told publicly, even in feuds with Ozzy and Sharon Osbourne after he falsely claimed they were investors. Watson had gotten away with all of that – and even with his COO posing as a YouTube executive – with a wave of the magician’s hand: It was just a mistake, a misunderstanding, an employee with unfortunate mental health issues.

But for the first time, Watson, who had successfully defrauded celebrities and major investors (by leading them around the office like a dog while the hardworking workers were on the verge of a nervous breakdown), faced a match in a jury of twelve ordinary citizens. They found him guilty on all three counts of fraud and identity theft. His fatal flaw was indeed his charisma. Watson had lured himself into a perjury trap when the government caught him lying under oath about the details of the call to Goldman Sachs.

Watson still hasn’t admitted anything, which, like all the other ridiculous nonsense in this story, doesn’t shock me. But I’m still waiting for an explanation as to what drove him or how he thought this could all turn out well. Carlos, if you’re reading this, call me anytime.

Heather Schroering was responsible for court reporting.