The Feds Are Looking Into Ozy Media: Report

Ozy Media, the scandal-ridden media org that’s by some means, miraculously nonetheless alive, is now being investigated by federal authorities. The New York Times reported this week that each the Justice Department and the Securities and Exchange Commission (SEC) have opened investigations into the corporate.

According to a number of unnamed sources aware of the corporate’s circumstances, Federal prosecutors have been involved with “at least one company that had dealings with Ozy,” the Times reported. Meanwhile, SEC investigators have contacted two Ozy-affiliated corporations on their very own, particularly seeking to talk about these corporations’ funding ties to the media model.

While the Times report notes that “the precise focus of the investigations could not be determined,” there’s, uh, rather a lot for federal authorities to select from. In September, the Times revealed a blistering expose on Ozy that exposed (amongst different issues) how Ozy co-founder Samir Rao had pretended to be high YouTube government Alex Piper—who heads the corporate’s unscripted programming in North America—throughout a name with a staff of potential traders from Goldman Sachs. Instead of being wooed over and dropping their deliberate $40 million funding, nonetheless, the Goldman staff rightfully grew to become suspicious of Piper’s voice on the opposite finish, which sounded “strange,” and “digitally altered.”

After chasing down Piper’s staff and confirming that, no, Piper wasn’t on the decision, and YouTube had no thought what Goldman’s staffers have been speaking about, the financial institution did the sensible factor and dropped its deliberate funding. Another early investor, SV Angel, reportedly dropped its stake within the firm not lengthy after, and a minimum of two staffers left the corporate early final month. Ozy’s different co-founder and CEO, Carlos Watson, defended Rao by saying he was in the midst of a “very personal mental health issue.” Rao, in the meantime, has taken an indefinite leave of absence from Ozy.

A psychological well being disaster can excuse loads of issues, however securities fraud doesn’t appear to be one in all them. One Ozy investor, Lifeline Legacy Holdings, hit each the corporate and Rao with a securities suit final month alleging that it had been duped into dumping over $2 million into the media firm based mostly on false pretenses.

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One of the SEC’s main roles is protecting investors from these sorts of scams, which is presumably why it’s now probing some of Ozy’s business ties. As Bloomberg opinion columnist Matt Levine succinctly put it last month:

The guy impersonated a YouTube executive to trick someone into investing? You’re just not going to get an easier securities fraud case than that, and neither “it didn’t work” nor “he was having a tough time” nor “it only happened once” are typically defenses to fraud fees!

Watson, meanwhile, hinted at these probes in an email to investors last month, the Times reports, adding that the company had enlisted the law firm Zuckerman Spaeder to help Ozy “navigate” the ongoing investigations. Watson went on to note that the company is taking a very deliberate approach with the media going forward,” on the grounds that it’s best not to rile up crowds on social media “by responding to any and all inquiries designed to provoke additional rounds of coverage.”

Regardless, we’ve reached out to Ozy and its legislation agency for touch upon the Times story. We’ll replace this publish when we hear again.