Media

Lawsuit accuses Ozy Media of ‘fraudulent conduct’

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A Beverly Hills investment fund filed a lawsuit against Ozy Media this week alleging fraudulent conduct that caused significant monetary harm, escalating a scandal that has pushed the media company to the brink of collapse. 

The suit was filed by LifeLine Legacy Holdings LLC in relation to a conference call in which an Ozy founder impersonated a YouTube executive in an effort to secure funding from Goldman Sachs. 

According to court documents filed on Monday, Ozy founders Carlos Watson and Samir Rao approached LifeLine in 2020 about being an investor, boasting of strong financial performance and “impressive viewership metrics.” 

LifeLine reportedly invested more than $2 million into Ozy in two separate rounds of funding. Its second round of investment took place shortly after Rao impersonated a top-ranking YouTube executive while speaking with Goldman Sachs, according to the documents.

In September, The New York Times published a report revealing how Rao had impersonated YouTube executive Alex Piper to hype Ozy’s supposedly excellent performance on the video platform. Goldman Sachs later reached out directly to Piper and discovered that he had never been part of the meeting.

Watson reportedly apologized to Goldman Sachs and attributed the incident to Rao going through a mental health crisis at the time.

“Such knowledge rendered the company’s representations in the Series C and Series D SPAs false and otherwise constituted material information since Ozy Media and Rao knew, or should have known, that such conduct could cause substantial, even lethal, harm to the company and the interests of its shareholders,” LifeLine’s lawsuit reads.

LifeLine stated that if it had known of Rao’s actions in impersonating a YouTube executive, it never would have invested in Ozy in the first place. It is demanding a return of its investments plus interest.

LifeLine was started by Ugandan immigrant Humble Lukanga and also manages money for a number of Black athletes and celebrities. 

After the Times report was published, several investors and staffers cut connections with Ozy. Board Chairman Marc Lasry resigned less than a week later. Ozy later announced that it would be shutting down, only for Watson to announce Monday that it would in fact continue to operate.

“We’re going to open for business, so we’re making news today,” Watson said during an appearance on NBC’s “Today.” “This is our Lazarus moment, if you will, this is our Tylenol moment. Last week was traumatic, it was difficult, heartbreaking in many ways.”

The Hill has reached out to Ozy for comment.

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