SEC Obtains Judgments and Bar Against Former Ozy Media Executives Charged in $50 Million Dollar Fraud
Litigation Release No. 25670 / March 17, 2023
Securities and Exchange Commission v. Ozy Media, Inc. et al., No. 23-cv-01424 (E.D.N.Y. filed February 23, 2023)
On March 14, 2023, the U.S. District Court for the Eastern District of New York entered judgments by consent against the former COO of Ozy Media, Inc., Samir Rao, and its former Chief of Staff, Suzee Han, for their roles in defrauding investors of Ozy Media, a media and entertainment company founded by Carlos R. Watson, Jr., the company's CEO.
The SEC's complaint, filed on February 23, 2023, alleged that from approximately January 1, 2019 to September 30, 2021, Watson, Rao, and Han raised about $50 million from investors through repeated misrepresentations concerning Ozy Media's basic financial condition, business relationships, and fundraising efforts. The defendants allegedly routinely and purposely presented prospective investors with false financial information that grossly inflated Ozy Media's annual revenue by at least 100 percent. The SEC's complaint further alleged 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. According to the SEC's complaint, when the prospective investor discovered the ruse, Watson falsely attributed Rao's impersonation to Rao suffering from a "mental health crisis."
Rao and Han have consented to the entry of judgments enjoining each from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment entered against Rao additionally bars him from serving as an officer and director of a public company for ten years. Civil monetary penalties against Rao and Han are to be determined at a later date by the Court.
The SEC's ongoing litigation against Ozy Media and Watson is being led by Karolina Klyuchnikova and Christine D. Ely, and is being supervised by Alison R. Levine, Lee A. Greenwood, and Sheldon L. Pollock of the SEC's New York Regional Office.