Carlos Watson, Ozy Media Founder, Is Found Guilty of Fraud

A federal jury on Tuesday found Carlos Watson and Ozy Media, the digital media company he co-founded, guilty of trying to defraud investors and lenders to promote the start-up venture.

The jury deliberated for three days after an eight-week trial in which the prosecutors accused Mr. Watson of conspiracy to commit securities and wire fraud. Many of the government’s witnesses revealed new details about deception at the company, including an impersonated phone call, fabricated contracts and misleading claims about Ozy’s earnings.

“Watson knew the company was failing, but he was determined to turn Ozy and himself into the next big thing, and he wasn’t going to let the truth stand in his way,” Gillian Kassner, a prosecutor, said during the case’s closing arguments in the U.S. District Court in the Eastern District of New York.

Mr. Watson now faces up to 37 years in prison.

During the trial, Mr. Watson’s lawyers blamed other Ozy employees for any allegedly fraudulent activity, arguing that Mr. Watson’s representations to investors were based on good-faith assessments of Ozy’s finances. Mr. Watson made similar arguments from the stand, claiming that he did not intentionally inflate revenue estimates, but rather presented the types of service-based income typical for a “scrappy young company” in its early years.

Samir Rao, the co-founder of Ozy, and Suzee Han, a former Ozy chief of staff, pleaded guilty last year to fraud charges. They both cooperated with the government in its case against Mr. Watson, testifying against him.

Mr. Watson started Ozy in 2013, publishing news articles and newsletters before venturing into podcast and television productions. The start-up secured commitments from prominent investors at a time when digital publishers, like BuzzFeed and Vice, attracted billions of dollars in investments that largely didn’t pan out.