Carlos Watson, co-founder of digital media startup Ozzy Media, testified at his fraud trial on Monday that he did not conspire to defraud investors.
Instead, he said, his young media company has adopted a strategy of building partnerships, securing advertising revenue and attracting investors.
“We really thought we had a chance to do something special that would have a lasting impact,” Watson told the jury.
Watson's testimony is central to the defense against charges that he misrepresented the company's financial performance, fundraising and audience data to investors and lenders between 2018 and 2021. Prosecutors have called a range of witnesses, including potential investors who testified that Watson misled them about the company in order to secure funding.
Watson has pleaded not guilty to all charges but faces up to 37 years in prison if convicted.
Testifying before a jury in federal court in Brooklyn, he denied knowingly misleading anyone.
Watson, a former MSNBC anchor, emphasized his personal involvement in the media startup, saying he invested money and took a pay cut to show he was “all in.”
“It's a challenge trying to create something different to garner support,” Watson said, adding that the challenge is even greater for Black entrepreneurs like him.
Watson launched Ozzy with Samir Rao in 2013. The startup published news articles and newsletters before branching out into podcasts and TV shows. At a time when digital publishers like BuzzFeed and Vice had raised billions of dollars in investment but most failed, Ozzy secured commitments from big-name investors.
At the heart of the federal criminal trial is allegations that Rao, who was an aide to Watson, posed as a YouTube executive and misled Goldman Sachs employees during a fundraising conference call in 2021. Revelations about that call, first reported by The New York Times, hastened Ozzy's collapse.
Lawyers for Watson and Ozzi have accused Rao of engaging in impersonation and misrepresenting Ozzi's financial situation to potential investors. Ozzi's lawyer, Shannon Frison, said in opening statements in May that Rao was “incompetent to carry out his duties.”
Watson on Monday portrayed himself as an attentive leader but one who was removed from much of the company's day-to-day operations. He testified that he “wasn't able to get into the details” when it came to broader strategic planning, while Rao and other employees often ran the startup's finances and technology.
Rao and Ozzi's former chief of staff, Susie Han, pleaded guilty to fraud charges last year.
Several prosecution witnesses also testified that Watson had misrepresented his company's financial situation to secure investment.
The most prominent witness, Google CEO Sundar Pichai, testified that he never discussed a potential $600 million acquisition of Ozzie, though prosecutors said Watson told potential investors that Pichai had made that proposal.
Watson is expected to continue his testimony on Tuesday, including being cross-examined by the prosecution.