Ozy Media co-founder and chief executive Carlos Watson was arrested Feb. 23 on federal fraud charges.
The media and entertainment company's other co-founder, Samir Rao, had already pled guilty on Feb. 21 to other fraud charges.
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In 2021, an investigative report by The New York Times (NYT) discovered that Rao had impersonated an executive at YouTube, owned by Alphabet Inc. (GOOGL), in an effort to dupe investors.
"Federal prosecutors say Watson had 'directed a scheme to defraud investors,' of millions of dollars," according to the BBC.
Watson was a former host at MSNBC, owned by Comcast Corporation (CMCSA). He also had been a banker at Goldman Sachs (GS).
"Sharon Osborne, the wife of rock star Ozzy Osbourne, has accused Mr. Watson of falsely claiming the couple had invested in the business, telling CNBC in 2021, 'this guy is the biggest shyster I have ever seen in my life,'" the BBC reported.
Watson is likely to be charged with conspiracies to commit securities and wire fraud.
Ozy Media produced podcasts, television series and events, and rising stars profiles. In 2020 it was valued at $159 million, according to the BBC.
"According to federal court documents filed this week, however, Mr. Watson knew Ozy Media was 'drowning in debt' but lied to investors about the company's revenue and falsely claimed celebrities and high-profile companies had made investments," the report said.
Ozy Media began in 2013 as an online magazine and newsletter. Over time, it developed parternships with National Geographic, The New York Times and Wired.
"We are really disappointed," Watson’s lawyer Lanny Breuer said, according to the Wall Street Journal. "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."
