Did the feds get the right man?
Did the judge give the wrong jury instructions?
Did the judge exclude the defense’s right to challenge the star witness of the prosecution?
These are three of many questions looming in the case of Carlos Watson, former CEO of Ozy Media.
Was the real criminal not Watson, but his right-hand man, Samir Rao, formerly the COO of Ozy Media?
Prosecutors with the office of the US Attorney for the Eastern District of NY say no – Watson was the man.
They persuaded a jury that he masterminded a scheme that included two of his subordinates, Harvard graduate Samir Rao and his assistant, Suzee Han, to fabricate financial data, forge contracts, and create fake investor lists to fraudulently raise millions of dollars for Ozy Media.
Samir Rao blamed himself… at first. Then his story changed.
Ozy, founded by Watson in 2012 as a website and publisher of digital newsletters, expanded into television, podcasts, and live events. It went from $8 million in revenue in 2016 to $325 million and more than a thousand employees in 2020.
The NY Times Article and Ozy’s Downfall
Then the roof fell in with a NY Times story featuring Rao impersonating a YouTube executive trying to fool Godman Sachs into lending Ozy $40 million.
The October 2, 2021, Times story and subsequent ones in rapid fire by then-Times media columnist Ben Smith almost tanked the California company. Just as it was making its way out of a hole of bad publicity, the Brooklyn-based US Attorney’s Office, with the FBI, commenced an investigation, and it was over for Ozy.
Samir Rao, right, chose to impersonate YouTube exec Alex Piper, left. He didn’t get away with it.
In 2023, Rao and Han were arrested. They made deals, agreeing to cooperate. Watson was indicted in Feb 2023.
The prosecution alleged Ozy had been struggling since 2018, and that’s when Watson, Rao, and Han decided to lie about the company’s financial state to raise money. Watson said it was Rao and Han.
Han and Rao admit they did the lying, but say Watson led them in their lies.
Suzee Han
Was it Two Criminals or Three?
Watson was convicted of securities and wire fraud conspiracy and aggravated identity theft and faces up to 37 years.
According to reports, prosecutors said their calculation of sentencing guidelines – which is merely advisory for the judge – puts Watson in the 24-29-year prison sentencing category.
At 55, Watson faces what could be a life sentence.
Carlos Watson
Samir Rao, 38, and Suzee Han, 30, who participated in all the crimes, also face up to 37 and 35 years, but the cooperation agreements between them and the US Attorney should serve to see them sentenced far below their sentencing guidelines range of approximately 12 to 15 years.
The Power of the 5K Letter
Both made deals to testify against Watson, and if the US Attorney was satisfied with their performance, he agreed to issue a 5k letter or notification to a court to indicate that a defendant cooperated and provided “substantial assistance.”
A 5k letter has been called the most powerful sentencing reduction tool available in the federal system.
The decision to write the 5k letter is solely at the discretion of the U.S. Attorney’s Office, based on whether the prosecution determined that the witnesses, in this case, Rao and Han, fulfilled their obligations as cooperators.
The 5k letter usually results in a sentence so far below the otherwise applicable guidelines that cooperators are often handed sentences of probation.
Rao and Han were not guaranteed a reduced sentence, even with a 5K letter. The judge has the final say and could still impose a sentence of thirty or more years.
The Cooperation Conundrum: Incentive to Lie?
Han’s deal, for example, says she can’t even appeal the sentence if the judge hands her less than 14 years.
But if history is an example, Han will get nowhere near 14 years. She and Rao are cooperators.
Lauren Salzman and Keith Raniere were once lovers. She became a cooperator and spared herself prison. He has 98 years to serve.
Cooperator Lauren Salzman had 14-17 years for racketeering charges. She was at the top of the NXIVM organization. She testified against her former leader and lover, Keith Raniere. He got 120 years. She got probation.
Clare Bronfman, in the same case, who did not cooperate, had sentencing guidelines of only two years. She got almost 7 years in prison.
Ozy’s top executives, with Watson in the middle, Rao, second from left and Han far right.
Rao and Han were caught red handed. It was clear they committed the crimes – securities fraud, wire fraud, and, in Rao’s case, aggravated identity theft.
Both faced decades in prison. Both of them admitted they were criminals and liars. Both of them made cooperation deals.
It would be lunacy to suggest that a significantly reduced sentence did not create a clear incentive for them to lie if necessary – to trade years of their lives in prison in return for something the prosecutors wanted – the top man in Ozy.
Cooperators and the Pursuit of the ‘Top Man’
Prosecutors always want the top man, the leader.
To get their 5k letter, Rao and Han had to cooperate fully and testify in a manner that aligned with the prosecution’s goals – to get the top man.
It has been said cooperators are the heart of white-collar prosecutions. So, while the cooperation agreement states that cooperators must provide truthful testimony, truth is in the eyes of the prosecutor, and the best proof of truth is a conviction of the defendant, in this case, Watson.
And he was convicted.
It is so evident that cooperators will lie that the 8th Circuit decided that expert testimony on how substantial assistance provision might motivate government witnesses to lie has no place in a criminal trial.
The 8th Circuit said no expert witness is needed. It is common sense that certain witnesses would have an incentive to incriminate the defendant in exchange for a lower sentence. (U.S. v. French, 12 F.3d 114 (8th Cir. 1993).
The Incentive Dilemma: Conviction as the Key to ‘Substantial Assistance’
The likelihood of a reduced sentence tied to substantial assistance to the government creates an incentive to ensure their testimony supports the prosecution’s case.
Imagine it another way. How could a cooperator argue they provided substantial assistance if the defendant is acquitted?
If Watson was acquitted, it would mean Rao and Han did not provide substantial assistance.
If Watson had not been found guilty, it would have meant Rao and Han were guilty of all the crimes they had admitted. However, based on the jury’s acquittal decision, they only falsely added Watson to their conspiracy.
On the one hand, prosecutors will tell you that cooperators are necessary to the heart of white-collar prosecution, and on the other hand, every incentive a cooperator gets depends on the defendant being found guilty.
The Cooperators’ Fate: Will They Escape Prison?
Watson’s case depended on two cooperators; the prosecutors probably had no case without them.
Rao was the star witness. He testified for six days. Han was the second star witness.
One of the prosecutors told the judge that if time were a consideration, he would forgo ten witnesses for one more day of Rao.
They were the case against Watson.
They may get probation, while Watson goes to prison for decades.
They seem to be planning on no prison time at all.
According to testimony at trial, Rao became a cooperator, moved from California, and bought a $1.7 million condo in Brooklyn at the same time he chose to become a cooperator. Han lives in Texas, where she is evidently investing in the market and has more than half a million to work with.
Samir Rao might have gone to live here. But he chose to become a cooperator.
Samir Rao’s new Brooklyn condo appears more comfortable than the alternative housing he might have been provided had he not testified against Watson.
Rao’s Changing Testimony: Did Watson Know?
Both Rao and Han told the government they were guilty before trial. They both said Watson was the leader of their spree of lying to lenders and investors from 2018-2021.
But we know Rao at first said Watson did not know about the crimes he and Han committed.
Rao’s story changed with each retelling to the FBI – with Watson getting more involved in the criminality.
The only undisputed facts of the case were that Rao and Han committed many crimes. They are likely to go unpunished.
The question is – did Watson participate or even lead the conspiracy, or was he, as he says, the victim of a system that encourages cooperators to exaggerate, misrepresent, and lie?
A Trial Unfair? Sullivan’s Battle with the Judge
With Rao and Han, it is proven they will lie. They said so. Now the question is, did they lie again during the trial?
They admitted they lied to investors and lenders for money. Would they lie to a jury to save decades of their lives?
Watson was found guilty. We cannot dismiss the possibility of his guilt. But are federal trials anywhere near fair? Are they competent to discover the truth? Or have they become the prosecutors’s playground?
Watson’s attorney, Ronald Sullivan, Jr., a Harvard professor of law for decades – a man who perhaps lives in a world of ideals of what the law should be and not what it is – says it was an extraordinarily unfair trial, so unjust that during the trial Sullivan confronted the judge and told him it was unfair.
Ronald Sullivan
Harvard Professor vs. The Court
Let me be candid. He told the judge to his face in open court that he, Judge Eric Komittee, was the fourth prosecutor.
Sullivan complained that when he tried to expose the many lies of Rao, the judge shut him down and did not permit him to impeach the self-admitted liar Rao with his own inconsistent earlier written statements.
Sullivan said in every court of the land, but at this trial and this judge, he could impeach a witness. It turned the whole course of the case around and ensured a conviction – unfairly, Sullivan said.
Of course, Harvard Law School Professor Ronald Sullivan, the Director of the Harvard Criminal Justice Institute & Trial Advocacy Workshop, should not simply be ignored.
He has reportedly freed more wrongfully convicted people than any other attorney in history, with more than 6,000 releases.
Watson’s Guilt or the System’s Failure?
He says Watson is innocent and Rao and Han lied. The jury did not believe it, but Sullivan pointed out what was excluded from the trial – more so than what was included.
Sullivan said the prosecution built its case on its cooperators, and the judge deprived him of the right to prove Rao was the biggest liar in the game.
Who knows the truth?
Rao, Han, and Watson.
It is worthy of examination because the system is based – at least in this trial – on witnesses with the most powerful incentive to lie.
But the prosecution said Watson is the liar. And a jury believed them.
Let’s take a closer look and find out.
