A client has hired me to investigate and report on the federal convictions of Carlos Watson, Samir Rao, Suzee Han, and Ozy Media Inc. My client is not a defendant or lawyer who defended them in the courtroom or in plea negotiations with the US Attorney for the Eastern District of NY. In the interest of transparency, my work will be part of an investigative documentary, which the producers say will premiere on a well-known streaming platform.
NY Times Column Reveals Rao in an Unseemgly Episode
Carlos Watson and Samir Rao founded Ozy Media in 2013. By 2021, Ozy appeared to be a rising star in the news and entertainment world with five digital newsletters, 12 TV shows, six podcasts, and annual festivals.
Then, on September 26, 2021, NY Times columnist Ben Smith wrote Goldman Sachs, Ozy Media and a $40 Million Conference Call Gone Wrong.
The story reported an incident in February 2021 – eight months earlier – when Ozy’s COO, Samir Rao, impersonated a YouTube executive. Ozy was trying to secure a $40 million investment from Goldman Sachs, and Rao had told the asset management division that YouTube paid Ozy $5.7 million in revenue for the Carlos Watson show.
Goldman Sachs wanted to confirm this, and a Zoom videoconference with Alex Piper, the head of unscripted programming for YouTube Originals, was arranged for February 2, 2021.
Smith for the Times wrote
Piper “was running late and apologized to the Goldman Sachs team, saying he’d had trouble logging onto Zoom, and he suggested that the meeting be moved to a conference call…
“Once everyone had made the switch to an old-fashioned conference call, the guest told the bankers what they had been wanting to hear: that Ozy was a great success on YouTube, racking up significant views and ad dollars, and that Mr. Watson was as good a leader as he seemed to be. As he spoke, however, the man’s voice began to sound strange to the Goldman Sachs team, as though it might have been digitally altered…
After the meeting, someone on the Goldman Sachs side reached out to Mr. Piper…
“A confused Mr. Piper told the Goldman Sachs investor that he had never spoken with her before. Someone else, it seemed, had been playing the part of Mr. Piper on the call with Ozy.
“When YouTube learned that someone had apparently impersonated one of their executives at a business meeting, its security team started an investigation… The inquiry didn’t get far before a name emerged: Within days, Mr. Watson had apologized profusely to Goldman Sachs, saying the voice on the call belonged to Samir Rao, the co-founder and chief operating officer of Ozy…
“Mr. Watson attributed the incident to a mental health crisis and shared what he said were details of Mr. Rao’s diagnosis.
“‘Samir is a valued colleague and a close friend,”‘ Mr. Watson said. ‘I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.’
“He added that Mr. Rao took time off from work after the call and is now (eight months after the incident) back at Ozy.
“Mr. Rao did not reply to requests for comment.”
The Times column suggested Ozy made inflated public claims about the audience size of its newsletters, TV shows, and podcasts, and may have crossed the “line drawn between fake-it-til-you-make-it hype (Tesla!) and possible fraud (Theranos!).”
Alex Piper was not on the phone. Samir Rao pretended he was Piper to persuade Goldman Sachs to invest. YouTube did not pay Ozy for the Watson. show, contrary to what Rao told Goldman Sachs both as himself and as Piper.
Samir Rao blamed himself… at first.
OZY Closes, Rao Blames Himself
Shortly after the column (and several additional columns Smith wrote in the Times), Ozy Media Inc. closed its business. A federal criminal investigation followed.
When the NY Times published the story about him impersonating YouTube’s Piper, Rao blamed it on a mental health issue, sleep deprivation, and that he was off his meds.
“In not thinking straight,” Rao wrote in a letter he considered publishing. “I inexplicably misrepresented myself on a reference call. It was sheer absurdity —a decision so boneheaded, ill-conceived and aberrant that any person in their right mind would know it couldn’t work. It didn’t. The parties involved were beyond upset, the investors lost confidence, the deal fell apart before any transaction could occur and we were only worse off as a company.”
Carlos Watson, CEO of Ozy Media
Rao praises Watson, who he wrote was “remarkably patient,” and says Watson “recognized it as a health issue and focused on helping me rehabilitate and get back to supporting the business.”
“I’ve grappled with mental health issues at least since college,” Rao wrote. “Then and in the years since, I wrote those issues off (like many people) as a lack of discipline and will-power….
“To my co-founder Carlos and close friend and colleague Suzee, who bore the brunt of the work on the deal that fell apart, I’m deeply sorry for what happened — and that I did not share more, sooner about my struggles. And I’m sorry that people may question all that we have built on the basis of this. I hope they will be able to see OZY’s progress stand for itself.”
Rao Changes Story
When the FBI first contacted Rao in December 2021, conducting a two-day interview, Rao said he alone committed fraud by impersonating people and falsifying contracts.
After several more meetings with the government, Rao reached a plea deal with the US Attorney for the Eastern District of NY in February 2023 and became a cooperating witness.
Rao pleaded guilty to a three count information dated February 21, 2023, charging him with Conspiracy to Commit Securities Fraud, Conspiracy to Commit Wire Fraud and Aggravated Identity Theft.
Rao agreed to testify Watson knew about the fraud and in fact had led the conspiracy.
In return for his cooperation (and provided they convicted Watson) the EDNY prosecutors agreed to file a motion in US federal court under Section 5K1.1 of the United States Sentencing Guidelines that would inform the judge that Rao had substantially assisted the government in prosecuting Watson and recommend a reduction in his sentence.
The US Attorney for the EDNY, Breon Peace, filed an indictment against Watson the following day.
Watson would go to trial more than a year later.
During the 2024 trial, one of the prosecutors told Judge Eric Komitee that Rao’s significance to the case was so valuable that he would forgo calling ten other witnesses, rather than losing any of the six days of Rao’s testimony.
On July 17, 2024, the jury returned a guilty verdict on all three counts – Conspiracy to Commit Securities Fraud, Conspiracy to Commit Wire Fraud and Aggravated Identity Theft.
At 54, Watson faces up to 37 years in prison when Judge Komitee sentences him on November 18. Prosecutors say the sentencing guidelines for Watson are between 24 and 29 years.
Unlike Watson, Rao will likely not face two or three decades in prison. The judge agreed to postpone Rao’s sentencing. While the decision is entirely up to the judge, Rao may get two years in prison because of mandatory sentencing for aggravated identity theft.
We know Rao has told two stories. One was that Watson had nothing to do with the fraud, and another was that Watson was the lead conspirator.
His second story, whether true or not, saved Rao possibly decades in prison.
To be continued….
