The New York Times broke the story of deception and lies which triggered an investigation by the Board of Directors and The New York State Attorney General. 

The New York Times and The Wall Street Journal extensively covered the story of Ozy Media which shares many similarities with Theranos. Theranos collapsed in a dramatic fashion. Theranos founder, Elizabeth Holmes, and Ramesh Balwani, President of the company, convicted of Securities Fraud. Elizabeth was sentenced to 11 years and Ramesh for 13 years, both are now sitting in a Federal Prison.

The Wall Street Journal Reported that the  Ozy Media Chief Executive Carlos Watson was arrested Thursday morning after a former executive with whom he founded the embattled startup pleaded guilty to fraud charges in a secretive federal court proceeding.

Mr. Watson was taken into custody and is expected to be arraigned in a Brooklyn, N.Y., federal court on charges of conspiring to commit securities fraud and conspiring to commit wire fraud, according to a law-enforcement official. Ozy came under federal scrutiny for its business practices after the New York Times reported in 2021 that its then-chief operating officer, Samir Rao, impersonated an executive of Alphabet Inc.’s YouTube during a fundraising call with Goldman Sachs Group Inc.

Mr. Rao pleaded guilty Tuesday in Brooklyn federal court to fraud and identity theft charges, under a court-approved John Doe pseudonym. He admitted to a U.S. magistrate judge that between 2018 and 2021 he made misleading statements to investors and inflated the company’s financial performance. He also said he falsely used the identity of another person without the authority to do so between February 2020 and February 2021. 

The New York Times reported in September 2021 that Mr. Rao impersonated the YouTube executive during a February 2021 call. Mr. Watson acknowledged the incident in a statement at the time of the article but said Mr. Rao’s behavior on the call was the result of a mental-health issue. Ozy took the matter seriously and no harm was caused to anyone except the company itself, Mr. Watson said, because Goldman ultimately didn’t invest. 

Another former Ozy official pleaded guilty on Feb. 14 to fraud conspiracy charges. Suzee Han, the company’s former chief of staff, told a magistrate judge that she falsified financial information about the company at the direction of two executives. She didn’t identify the executives. Ms. Han was also allowed to enter her plea as a Jane Doe.