Britta Pedersen/picture alliance/Getty Images
Carlos Watson, founder of the US online magazine, talks in Berlin, Germany, 06 October 2014.
CNN  — 

Carlos Watson, the founder and chief executive of the embattled Ozy Media, was arrested and charged with fraud this week, according to federal court records.

Watson was accused in a federal indictment of having “engaged in a scheme to defraud OZY’s investors, potential investors, potential acquirers, lenders and potential lenders.”

The charges said that Watson committed the fraud “through material misrepresentations and omissions” about Ozy Media, including the company’s finances, investors, business partners, contracts, and potential acquisitions.

A spokesperson for Ozy Media did not immediately respond to a request for comment Thursday morning. A Department of Justice spokesperson indicated Watson was released on a $1 million bond. He is due back in court on March 8.

Watson’s attorney, Lanny Breuer, confirmed Watson’s arrest in an emailed statement to CNN.

“I am deeply disappointed by the events of today,” the statement said. “We were engaged in a good faith and constructive dialogue with the Government. Given the Department’s claims of promoting such dialogue, I do not understand the dramatic decision to arrest Carlos today.”

The news was first reported by The Wall Street Journal.

“As alleged, Carlos Watson is a con man whose business strategy was based on outright deceit and fraud – he ran Ozy as a criminal organization rather than as a reputable media company,” stated Breon Peace, the United States Attorney for the Eastern District of New York.

The defendant was arrested by the FBI this morning at the Hotel NH Collection at 22 East 38th St. in Manhattan, a law enforcement source said. If convicted, Watson faces a mandatory minimum sentence of two years’ imprisonment and a maximum sentence of 37 years’ imprisonment.

Ozy’s former chief operating officer Samir Rao and chief of staff Suzee Han previously pleaded guilty to charges relating to their roles in the scheme, the US attorney’s office said.

The charges come after The New York Times published an exposé in 2021 pulling back the curtain on some of the alleged deceptive practices Ozy Media engaged in.

The Times article led to additional scrutiny from other news organizations and the cascade of stories ultimately imperiled the upstart digital media outlet.

Semafor reported earlier this month that Ozy Media was attempting a comeback. Semfaor reported that Watson, who previously worked as a host and commentator at CNBC, CNN and MSNBC, was pitching potential advertisers and investors on backing the company.