The Department of Justice and the Securities and Exchange Commission have opened an investigation into the controversial Silicon Valley company Ozy Media, according to people with knowledge of the case.
Federal prosecutors with the Eastern District of New York have been in contact with at least one company in recent weeks who had to do with Ozy, said two people with knowledge of the case. In the parallel civil investigation, SEC investigators have contacted at least two companies that discussed investing in Ozy, said two people with knowledge of the commission’s efforts.
The exact focus of the surveys could not be determined. A lawsuit filed last month accused Ozy of misleading potential investors. Companies’ statements to investors are often examined in SEC surveys.
Carlos Watson, Ozy’s CEO, referred to the inquiries in an email to investors last month. In the e-mail, which was reviewed by The New York Times, Mr. Watson wrote that Ozy had “heard from” the SEC and the Department of Justice, adding that the company had recruited the law firm Zuckerman Spaeder “to help us navigate the investigations.” ”
Since that email, Ozy has recruited Andrew Levander, chairman of the law firm Dechert, said a person with knowledge of the case.
Mr. Watson and Mr. Levander did not respond to inquiries via email.
A spokesman for the Eastern District of New York said he could not confirm or deny the existence of an investigation. A spokeswoman for the SEC declined to comment. The investigation is at an early stage, and it is unclear whether they will lead to charges.
Ozy Media said on October 1 that it was shut down, shortly after The Times reported that someone in the company had apparently posed as a YouTube leader during a conference call with Goldman Sachs, which was considering an investment. In the conversation, the imitator said that YouTube had a good collaboration with Ozy, and that Ozy’s videos were successful on the platform.
Mr. Watson said at the time that the impersonator was Samir Rao, the company’s chief operating officer. He reiterated this in his email to investors last month, adding that Mr. Rao was no longer with the company. Mr. Rao has not responded to requests for comment.
Since announcing that it was closed, Ozy has taken steps towards a return, and sent out a newsletter by e-mail about today’s news to subscribers. In the email to investors, Mr. Watson said that Ozy had made a mistake, but that he hoped to get a full return next year. He added that the company had more than $ 10 million in cash.
Mr. Watson and Mr. Rao founded Ozy in 2013, with financial support from high-profile investors including Laurene Powell Jobs. They billed Ozy as a new-wave media company focused on “the new and the next”, and it produced a website of general interest, podcasts, talk shows, documentaries and festivals.
Goldman Sachs walked away from its potential investment in Ozy after discovering that it had been misled during the conference call, which took place in February. Goldman Sachs alerted YouTube’s security team. Google, the owner of YouTube, contacted federal authorities, said two people with knowledge of the case.
An investor in Ozy, LifeLine Legacy Holdings, a fund management company in Beverly Hills, California, sued Ozy last month, accusing it of “fraudulent conduct”. The case said LifeLine had invested $ 2.25 million in the company after Ozy’s executives said Goldman Sachs and Google were planning to invest. None of the companies invested in Ozy. Goldman Sachs and Google declined to comment.
Mr. Watson said in his email to investors that Ozy “takes a very conscious approach to the media going forward” in the belief that “it is best not to aggravate the activity on social media by responding to all inquiries designed to provoke forward several rounds. of coverage. “