(CNN) Carlos Watson, the founder and CEO of embattled Ozy Media, was arrested this week and charged with fraud, according to federal court filings.
Watson was charged in a federal indictment with “participation in a scheme to defraud OZY’s investors, prospective investors, prospective acquirers, lenders and prospective lenders.”
The charges said Watson committed the fraud “through material misrepresentations and omissions” about Ozy Media, including the company’s finances, investors, business partners, contracts and potential acquisitions.
A spokesman for Ozy Media did not immediately respond to a request for comment Thursday morning. A Justice Department spokesman said Watson was released on $1 million bail. He is scheduled to appear in court again on March 8.
Watson’s attorney, Lanny Breuer, confirmed Watson’s arrest in an emailed statement to CNN.
“I am deeply disappointed by today’s events,” the statement said. “We have engaged in good faith and constructive dialogue with the government. Given the Ministry’s claims to encourage such dialogue, I do not understand the dramatic decision to arrest Carlos today.”
The news was first reported by the Wall Street Journal.
“As claimed, Carlos Watson is a fraud whose business strategy was based on open deception and fraud – he ran Ozy as a criminal organization and not as a respected media outlet,” said Breon Peace, the United States Attorney for the Eastern District of New York.
The defendant was arrested by the FBI this morning at the NH Collection hotel at 22 East 38th St. in Manhattan, a law enforcement source said. If convicted, Watson faces a mandatory minimum sentence of two years in prison and a maximum of 37 years in prison.
Ozy’s former chief operating officer, Samir Rao, and chief of staff, Suzee Han, previously pleaded guilty to charges related to their roles in the system, US prosecutors said.
The charges come after The New York Times published an exposé in 2021 in which it pulled back the curtain on some of the alleged fraudulent practices involving Ozy Media.
The Times article prompted additional scrutiny from other news organizations, and the cascade of stories ultimately jeopardized the burgeoning digital media company.
Semafor reported earlier this month that Ozy Media is attempting a comeback. Semfaor reported that Watson, who previously worked as a presenter and commentator at CNBC, CNN and MSNBC, urged potential advertisers and investors to support the company.
