OZY Media is the Theranos of Fyre Festivals.
If you don’t know the backstory, you can read all about it on site, as The Root’s senior reporter Michael Harriot did a fantastic job explaining how they set out to finesse potential investors. If you want to stick around and read my summation of matters, it goes like this: OZY Media was looking to get a large investment from Goldman Sachs. During a call with the multinational investment bank, someone thought it was wise to impersonate a YouTube executive to assure Goldman Sachs folks that OZY Media was all the rage online.
It was later learned—and by later learned, I mean that the New York Times exposed OZY Media’s ass–that the YouTube exec was none other than Samir Rao, the company’s chief operating officer. OZY initially claimed that they were going out of business, possibly from embarrassment, but once their cheeks stopped being flush, they assured the four people familiar with the site that they were going to fight on because nothing says “I refuse to read the room!” like a drunk with vomit all over his shirt.
Rao was reportedly let go, Carlos Watson, OZY’s chief executive, made the rounds and well, the Real Housewives of OZY Media has been quite the ride and now, the Justice Department would like to speak with their manager.
From the New York Times:
The Justice Department and the Securities and Exchange Commission have opened investigations into the embattled Silicon Valley company Ozy Media, according to people with knowledge of the matter.
Federal prosecutors with the Eastern District of New York have in recent weeks been in contact with at least one company that had dealings with Ozy, two people with knowledge of the matter said. In the parallel civil inquiry, S.E.C. investigators have contacted at least two companies that discussed investing in Ozy, two people with knowledge of the commission’s effort said.
The precise focus of the investigations could not be determined. A lawsuit filed last month accused Ozy of misleading potential investors. Companies’ statements to investors are often examined in S.E.C. investigations.
Watson, of course downplayed the whole thing claiming in an email that he’d “heard from” the S.E.C. and the Justice Department, noting that the company was working with law firm Zuckerman Spaeder “to help us navigate the investigations,” the Times reports.
The Times did note that the investigation was in the early stages and that it was unclear if charges would be brought.
But why would a media company with some $10 million in cash let a little thing like an S.E.C. investigation stop them? Since the whole fake YouTube exec thing, OZY has been busy sending out an emailed newsletter and ensuring investors that the plan is to make a full return next year.
More from the Times:
Mr. Watson and Mr. Rao founded OZY in 2013, with financial support from high-profile investors including Laurene Powell Jobs. They billed OZY as a new-wave media company focused on “the new and the next,” and it produced a general interest website, podcasts, talk shows, documentary videos and festivals.
Goldman Sachs walked away from its potential investment in OZY after it discovered that it had been misled during the conference call, which took place in February. Goldman Sachs alerted YouTube’s security team. Google, the owner of YouTube, contacted federal authorities, two people with knowledge of the matter said.
An investor in OZY, LifeLine Legacy Holdings, a fund management company in Beverly Hills, Calif., sued OZY last month, accusing it of “fraudulent conduct.” The suit said LifeLine had put $2.25 million into the company after OZY’s executives said Goldman Sachs and Google planned to invest. Neither company made an investment in Ozy. Goldman Sachs and Google declined to comment.
Mr. Watson said in his email to investors that OZY was “taking a very deliberate approach with the media going forward” in the belief that “it is best not to aggravate social media activity by responding to any and all inquiries designed to provoke additional rounds of coverage.”
Now if the manager of OZY could make himself available, the DOJ would live to have a word.