The Securities and Exchange Commission has charged media and entertainment company Ozy Media Inc. and its executives with defrauding investors of approximately $50 million through misrepresentations regarding the company’s financial condition, business relationships, and fundraising efforts. The CEO of Ozy Media, Carlos R. Watson, Jr., the former COO Samir Rao, and the former Chief of Staff Suzee Han are among those charged.
Misrepresentations and False Financial Information
According to the SEC‘s complaint, from January 2019 through September 2021, the defendants repeatedly and purposely presented prospective investors with false financial information that grossly inflated Ozy Media’s annual revenue by at least 100 percent. Watson and Rao allegedly solicited investments by falsely claiming that well-known and sophisticated investors would be investing in Ozy Media.
Impersonation of an Executive from YouTube
The SEC’s complaint further alleges that Watson and Rao orchestrated a scheme in which Rao impersonated an executive from YouTube in an effort to support Ozy Media’s false claims to a prospective investor that the company was receiving licensing revenue from YouTube when it was not. When the prospective investor discovered the ruse, Watson falsely attributed Rao’s impersonation to a “mental health crisis” and made these claims to both the prospective investor and Ozy Media’s Board of Directors.
Charges and Penalties
The SEC’s complaint charges the defendants with violations of the anti-fraud provisions of the federal securities laws and related rules. The SEC seeks injunctive relief and civil penalties against all defendants, officer and director bars against Watson and Rao, and disgorgement with prejudgment interest against Ozy Media and Watson.
Rao has agreed to the entry of a judgment enjoining him from violating the charged provisions and from serving, for a period of ten years, as an officer or director of a publicly traded company, with civil monetary penalties to be determined by the court at a later date. Han has also consented to the entry of a judgment permanently enjoining her from violating the charged provisions, with civil monetary penalties to be determined by the court at a later date. The judgments are subject to court approval.
In addition to the SEC’s charges, the U.S. Attorney’s Office for the Eastern District of New York has announced criminal charges against Ozy Media, Watson, Rao, and Han.
Gurbir S. Grewal, the SEC’s Director of Enforcement, commented, “We allege that over the course of several years, the defendants raised approximately $50 million from victim investors on the basis of fraudulent documents and repeated misrepresentations, including, at least in one case, falsely impersonating a potential business partner during a meeting with an investment bank. This matter underscores that we will hold anyone accountable, even well-known media personalities, for misrepresentations that impact investors.”
The SEC’s charges serve as a reminder that investors must remain vigilant and conduct proper due diligence before investing. The SEC’s actions demonstrate its commitment to investor protection and holding accountable those who defraud investors.
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The attorneys at Sallah Astarita & Cox, LLC are former SEC Staff Attorneys and brokerage firm counsel, with over 100 years of collective experience. If you have received a subpoena from the SEC, a document request from FINRA, or have a dispute with a brokerage firm, call 212-509-6544 for a free consultation. The firm represents investors and financial professionals nationwide.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
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