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Ozy Media co-founder Carlos Watson accuses feds of racial bias, glosses over claims he ran company like ‘criminal organization’

Carlos Watson Today Show

Ozy Media CEO and co-founder Carlos Watson appeared on the Today Show after the New York Times broke a story about an impersonation scandal involving the chief operating officer. (Screenshot via Today Show)

Embattled Ozy Media co-founder Carlos Watson, whose enterprise spectacularly collapsed after an indictment charging him with defrauding investors out of “tens of millions” of dollars, accused federal prosecutors of “targeting” him out of racial bias.

Watson is being prosecuted out of the Eastern District of New York, which is led by U.S. Attorney Breon Peace.

A pathbreaking prosecutor, Peace became the first Black man to become a partner at the white shoe international firm, Cleary Gottlieb Steen & Hamilton LLP, in the mid-2000s. The son of a pastor, Peace went onto become the fourth Black person to lead his Brooklyn-based office, and he ascended to that post trailed by questions, blared in the New York Times, of whether he can repair trust in law enforcement in his jurisdiction.

Now, Watson — facing charges, including conspiracy to commit securities fraud and conspiracy to commit wire fraud, carrying a maximum 37-year sentence — is floating a defense aiming to throw a wrench in that challenge with accusations of systemic bias.

‘Con man whose business strategy was based on outright deceit’

Earlier this year, Peace announced the charges against Watson with blistering fanfare, labeling the Ozy co-founder a “con man whose business strategy was based on outright deceit and fraud.” Pulling no punches, Peace added that Watson ran his company like a “criminal organization rather than as a reputable media company.” Prosecutors allege that Watson directed his company’s then-chief financial officer to forge a cable TV contract for a second season of an Ozy show to obtain a bank loan, even though the show’s second season was under negotiation.

That then-CFO resigned, calling the instruction “illegal,” prosecutors say.

“This is fraud,” she said, according to prosecutors. “This is forging someone’s signature with the intent of getting an advance from a publicly traded bank.”

“To be crystal clear, what you see as a measured risk — I see as a felony,” she added, according to the indictment.

In September 2021, a groundbreaking New York Times exposé reported on a “strange” Zoom call, during which Ozy Media’s chief operating officer Samir Rao allegedly impersonated the voice of YouTube Originals executive Alex Piper. Four people briefed on the meeting anonymously told the Times that the voice appeared to have been “digitally altered.” An investigation soon followed. Watson reportedly blamed Rao’s mental health crisis for the incident, but prosecutors say that the two “agreed” that Rao would impersonate a media executive.

In a letter to Attorney General Merrick Garland, Watson’s attorney Ronald S. Sullivan Jr. rattled off statistics that he argued merit an investigation into charging practices inside the Eastern District.

“The numbers tell a disturbing story of racial bias, with Carlos Watson the latest target,” Sullivan wrote in a letter to Garland and Deputy Attorney General Lisa Monaco. “Carlos Watson and his company OZY Media are based in Northern California, yet these prosecutors targeted Watson while choosing to ignore the conduct of white entrepreneurs engaging in similar conduct and headquartered in New York City.”

EDNY prosecutors appear to claim jurisdiction through Watson’s flights to John F. Kennedy Airport, as well as the locations of Ozy investors, at least one of whom is described as a partner at a private equity company who resides in Brooklyn. The indictment said that “several lenders” were also from Kings County.

‘A troubling racial bias’

Sullivan’s letter largely glosses over the allegations of his client’s 41-page speaking indictment, and in an essay, Watson himself appears to acknowledge some of the “audacious conduct” alleged in it. Vaguely describing “most” of the allegations as “untrue,” Watson concedes in his essay that “the few things that are true are dumb things I now regret.” He’s pleaded not guilty.

Instead of answering the accusations in specific detail, Watson accuses law enforcement of double standards, citing New York Magazine’s description of Vice News as “A Company Built on a Bluff.” The letter to the Justice Department was posted on a website branding itself “Too Black for Business.”

Watson’s counteroffensive focuses on the alleged charging practices of the “three white prosecutors” assigned to his case: Assistant U.S. Attorneys Jon Siegel, Dylan Stern and Gillian Kassner. These assistants have been eight times more likely to prosecute people of color, Watson’s attorney says.

“The fact that these prosecutors charge people of color in 90 percent of their cases reveals a troubling racial bias against Blacks and other minorities,” said Sullivan, citing Bureau of Prisons data reviewed by Quest Research and Investigations, a private investigations firm.

The press release and letter do not mention Peace or his race.

Sullivan, a Harvard law professor, represented the family of Michael Brown, the unarmed, Black 18-year-old, whose fatal shooting in 2014 set off months of protests.

The U.S. Attorney’s office from the Eastern District of New York didn’t respond to a request for comment.

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Law&Crime's managing editor Adam Klasfeld has spent more than a decade on the legal beat. Previously a reporter for Courthouse News, he has appeared as a guest on NewsNation, NBC, MSNBC, CBS's "Inside Edition," BBC, NPR, PBS, Sky News, and other networks. His reporting on the trial of Ghislaine Maxwell was featured on the Starz and Channel 4 documentary "Who Is Ghislaine Maxwell?" He is the host of Law&Crime podcast "Objections: with Adam Klasfeld."