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Ozy Media Sued over Nearly $1.3 Million Legal Bill from Firm That Helped Avoid ‘Fraud’ Lawsuit and Fielded Federal Probes

Carlos Watson Today Show

Ozy Media CEO and co-founder Carlos Watson appeared on the Today Show after the New York Times broke a story about an impersonation scandal involving the chief operating officer. (Screenshot via Today Show)

Ozy Media has been sued over a nearly $1.3 million legal bill its law firm claims to have racked up dealing with the fallout of a bombshell New York Times exposé about the company.

Co-founded by CEO Carlos Watson and chief operating officer Samir Rao in 2013, Ozy Media takes its name from poet Percy Bysshe Shelley’s Ozymandias, a sonnet about the fleeting nature of power and the powerful. Taking inspiration from that verse, Ozy started with ambitions of becoming one of the few media companies founded and run by people of color — and it quickly found high-profile backers, reportedly boosted by a seed round of funding from Laurene Powell Jobs. German media giant Axel Springer poured $20 million into the company the next year, and other major investors followed, including billionaire Marc Lasry and the Ford Foundation.

The company’s fortunes turned in October of 2021, when then-Times media columnist Ben Smith reported on a “strange” Zoom call Ozy Media held with another potential investor: Goldman Sachs. According to the article, COO Rao apparently impersonated the voice of YouTube Originals executive Alex Piper on the call. Four people briefed on the meeting anonymously told the Times that the voice appeared to have been “digitally altered.” CEO Watson reportedly blamed Rao’s mental health crisis for the incident.

The article also depicted the upstart digital media company’s reports of high traffic as suspect, either “hype” or worse.

After the article, Ozy Media briefly shut down and reopened, in what Watson described on the Today Show as the company’s “Lazarus moment.” The company also had to contend with litigation and multiple federal investigations, which the lawsuit notes were both criminal and civil.

On Dec. 22, 2022, its law firm Ford O’Brien Landy LLP (FOBL) filed a complaint in New York County Supreme Court claiming Ozy Media’s legal bills have been mounting throughout the year with no end in sight.

“When FOBL has raised Ozy Media’s arrears with Mr. Watson or company representatives in telephone calls or video-conferences, Mr. Watson and/or these representatives have repeatedly urged the firm to be patient until the company’s financial picture improved, at which point, they promised, the company would begin to work down and ultimately extinguish the large outstanding balances,” the 16-page complaint states. “But instead, Ozy Media’s debt to FOBL, far from being reduced, has mounted steadily each month in 2022 until the present.”

According to the lawsuit, the firm represented Ozy Media in the Eastern District of New York’s criminal investigation, the Securities and Exchange Commission’s civil probe, and a pair of lawsuits in the Northern District of California.

Providing few details about those investigations, the lawsuit discloses that they involved mountains of paperwork.

“The firm had multiple responsibilities, including strategy, communications with the government, interviews, and the review and production of more than 27,000 documents, consisting of over 160,000 pages, in response to several government documents subpoenas,” according to the complaint.

Ford O’Brien Landy LLP notes they had success fending off a lawsuit by one of Ozy Media’s investors, LifeLine Legacy Holdings LLC, which accused the company of “fraud.” Ozy’s attorneys secured the lawsuit’s partial dismissal in May, and LifeLine voluntarily withdrew the remaining claims — without prejudice — in November.

The firm says that both these developments left Ozy’s CEO exultant.

“In one instance, for example, when a partner at FOBL reported that the District Court in the LifeLine lawsuit had dismissed a portion of the investor’s lawsuit with prejudice, Carlos Watson responded in an email dated May 4, 2022: ‘BRAVO! Thank you. Outstanding job. Very grateful,'” the complaint says. “And when FOBL counsel reported at a later point that it was likely that the District Court would grant Ozy Media’s second motion to dismiss LifeLine’s second amended complaint, Carlos Watson responded in an email dated November 3, 2022: ‘thank you so much for the work and the update.'”

Days later, LifeLine voluntarily dismissed its remaining claims with leave to refile.

Ford O’Brien Landy wants the judge to award them $1,255,871.87 for services rendered, plus interest.

Ozy Media did not immediately respond to an email requesting comment.

Read the lawsuit here.

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Law&Crime's managing editor Adam Klasfeld has spent more than a decade on the legal beat. Previously a reporter for Courthouse News, he has appeared as a guest on NewsNation, NBC, MSNBC, CBS's "Inside Edition," BBC, NPR, PBS, Sky News, and other networks. His reporting on the trial of Ghislaine Maxwell was featured on the Starz and Channel 4 documentary "Who Is Ghislaine Maxwell?" He is the host of Law&Crime podcast "Objections: with Adam Klasfeld."