Carlos Watson, CEO of digital media company Ozy Media, was arrested Thursday pending his arraignment on charges of federal securities fraud and wire fraud, Variety has confirmed.

In a court filing, federal prosecutors alleged that Watson had “engaged in a scheme to defraud Ozy Media’s prospective investors, potential acquirers, lenders and potential lenders,” by misrepresenting the company’s audience numbers and financials, the New York Times reported.

Watson’s attorney, Lanny Breuer, said in a statement to the Wall Street Journal, which first reported the news, “We are really disappointed. We have been acting in good faith and believe we had a constructive dialogue with the government and are shocked by the actions this morning.”

In September 2021, the Times reported that Ozy Media falsified audience metrics and that its COO, Samir Rao, impersonated a YouTube executive on a call with prospective investor Goldman Sachs. The revelations led to an avalanche of other disclosures including allegations of a toxic workplace culture at the New York-based company.

Watson’s arrest and pending arraignment on federal criminal charges come after Rao pleaded guilty Tuesday in a Brooklyn federal court to fraud and identity theft charges, per the Journal’s report. Rao admitted that between 2018-21 he made misleading statements to investors and exaggerated the company’s financial performance. In addition, Rao said he falsely used the identity of another person between February 2020 and February 2021, per the WSJ.

The reports of Ozy Media’s alleged misconduct led to the resignation of chairman Marc Lasry, owner of the Milwaukee Bucks and head of a hedge fund that raised $35 million in funding for Ozy in 2019. In addition, A&E cut ties with a production it had in the works with Ozy Media. In addition, Katty Kay, a former BBC News anchor and correspondent, announced her exit from Ozy after just three months.

Watson co-founded Ozy Media, described as “a multiplatform media company that aims to help curious people see a broader and bolder world,” in 2013. Investors in Ozy included Laurene Powell Jobs’ Emerson Collective.

After college, Watson worked at McKinsey & Co. before founding education company Achieva College Prep Services, which he later sold to the Washington Post Co., according to his official bio. He had stints as a political commentator and host at CNN and MSNBC before founding Ozy, which was named after Percy Bysshe Shelley’s famous poem “Ozymandias.”

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