ENCORE: Ozy Media: Pivot to Fraud | 206

We’ll be back in two weeks with brand new episodes. In the meantime, here’s one of our favorite episodes, about a wannabe media magnate whose big vision ran on even bigger lies. Carlos Watson is a Stanford Law School graduate with big Silicon Valley connections and even bigger dreams. When he pitches investors on his idea for a Millennial-focused news website called Ozy Media, it seems like a sure bet. It’s the early 2010s, and online media start-ups have generated tons of buzz – and more importantly, tons of clicks. But Carlos doesn't actually know what he’s doing. And when Ozy fails to attract the readers he’s promised his investors, he decides to ditch the business of truth-telling and go rogue. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Sarah Hagi?

  Audible subscribers can listen to all our episodes of Scamfluencers ad-free right now. Join Audible today by downloading the Audible app. We'll be back in two weeks with an all-new episode of Scamfluencers, but today we're revisiting the spectacular rise and even more spectacular fall of former political pundit and wannabe media scion, Carlos Watson. That's right, we're talking about Aussie Media, a scrappy media startup that was so desperate to succeed, they juiced their views and scammed their investors, business partners, and customers. Carlos was convicted in federal court and sentenced to nearly 10 years in prison for fraud. He was literally on his way to report to a federal

• 0:43Sarah Hagi?

  correctional institution in California last year when everything changed. Just hours before he was set to begin serving his sentence, Carlos was pardoned by President Trump. Some people get all the luck, you know? A presidential pardon? Why? Why? Anyway, good for him. Couldn't happen to a nicer guy, I think. In a statement, Carlos thanked the president for what he called correcting a, quote, "grave injustice." He also criticized the federal judge who sentenced him as, quote, "conflicted and unethical." And the clemency didn't just apply to Carlos personally. The president's actions also wiped out the penalties imposed on Aussie Media. It's like it never happened at all and

• 1:27Sarah Hagi?

  nobody was affected by it in any way. Yeah, it is like that. Well, it's a last-minute pivot worthy of the story itself. So with this stunning update in mind, we're revisiting our episode on Carlos Watson. The ambition, the unraveling, and the commutation that came just in time.

• 1:56Scaachi Koul?

  Sarah, we've both been laid off from digital media companies in recent history. Do you ever fantasize about quitting media and starting from scratch in a whole new career? Like, maybe we could become welders.

• 2:09Sarah Hagi?

  I don't actually fantasize about it because I have no other skills. So there's really nothing to fantasize about. Like, I can't learn how to do anything new, nor can I do anything else.

• 2:20Scaachi Koul?

  Right. Well, today's episode is a doozy. It's all about the unbelievable hubris of the 2010s media boom and a guy who decided that he had to be at the center of it. And no, I'm not talking about my former boss, or your former boss, or any of our bosses. I can't wait to take you through this episode. You're gonna get so mad.

• 2:44Scaachi Koul?

  It's a foggy morning in Los Angeles in February 2021. Alex Piper is working from home. He's a 40-something-year-old white guy with dark eyes and salt- pepper hair. And he's also the head of unscripted programming at YouTube. This morning, his assistant is on the phone, letting him know that someone at Goldman Sachs is on the line. They say they want to clarify some comments that Alex made about Aussie Media in a meeting earlier that day. Sarah, do you remember Aussie Media?

• 3:11Sarah Hagi?

  Yes. I don't know how you could be a writer online and not have heard of Aussie Media.

• 3:18Scaachi Koul?

  Yeah, well, we'll get into the whole thing in a second. But the Goldman rep says they're calling about Aussie Media's daily YouTube talk show. It's called The Carlos Watson Show, and it's named after the host and founder of Aussie. In a meeting earlier that day, Alex had supposedly told Goldman Sachs that the show was a big success, and that YouTube was considering making it its premium talk show. That would mean more money and more promotion. On the phone call, Alex even raved about Carlos Watson himself. Now, the rep is asking him to expand on these comments, but Alex has no idea what they're even talking about. Not only has he never spoken with this Goldman Sachs team before, he's never even worked with Aussie or The Carlos Watson Show. So Alex tells them-

• 4:04Scaachi Koul?

  Alex reports the incident to his bosses at YouTube and Google, and everyone he works with wants to know the same thing. If Alex wasn't on the call saying those things, then who was? And this question will ignite a firestorm that undermines Aussie media, its charismatic founder, and the entire industry of digital media.

• 4:30Speaker 02

  I'm Gemma Whelan, and in the new season of The Spy Who, we tell the story of the original femme fatale, the spy who was Mata Hari. A famous dancer turned World War I secret agent, accused of seducing Allied officers to uncover their plans. But was she a temptress or a scapegoat for French failures? Follow The Spy Who now, wherever you listen to podcasts. You can also listen to the full season of The Spy Who Was Mata Hari early and ad-free on Audible.

• 5:00Speaker 03

  I'm Lauren Malloy, the host of the podcast My Mom's Murder. For 30 years, I thought my mom died of natural causes. That's what everyone told me. That's what I believed. Until one day, I got a phone call that changed everything. A woman claiming to be my mom's best friend told me my mother was murdered and that no one had ever investigated it. So I did what the detectives wouldn't, pulled the threads, knocked on doors, and confronted the contradictions. And what I found, it's worse than I imagined. Something happened to my mom. Someone killed her. And I won't stop until I find out who.

• 5:42Speaker 03

  The system may have given up on my mom, but I never will. Listen to My Mom's Murder wherever you get your podcasts. Audible subscribers can binge all 10 episodes early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.

• 6:04Scaachi Koul?

  From Wondery, I'm Sachi Cole.

• 6:06Sarah Hagi?

  And I'm Sarah Haggy.

• 6:07Scaachi Koul?

  And this is Scamfluencers.

• 6:17Scaachi Koul?

  Aussie Media is an over-the-top version of the story of so many media startups in the 2010s. From my former employer, Buzzfeed News, to Sarah's former employers, Vice and Gawker, we have both been victims of the digital media boom and bust. Trust us when we tell you, a lot of this industry is just a scam. With Carlos Watson's startup, this con is unparalleled. I'm calling this one Aussie Media: Pivot to Fraud.

• 6:54Scaachi Koul?

  Our story starts in June 1995. It's a sunny day in Palo Alto, California. The quad outside Stanford Law School is bustling with smarty pants kids in black graduation robes. They're hugging their classmates and posing for photos with their families. And Carlos Watson is one of them. He's 26, black, handsome, with closely shaved hair and a broad, warm smile. And he has what the kids might call "riz." He's the kind of guy who would make you feel like you're the only person in the room. Graduating from Stanford Law seems like a natural progression for Carlos. He went to Harvard for undergrad and spent time working for the mayor in his hometown of Miami and for Florida Senator Bob Graham.

• 7:37Scaachi Koul?

  Growing up, he attended an elite private school, but he doesn't come from wealth. His family just really cares about education. Carlos's father is a Jamaican immigrant and sociology professor. His mother is a Mississippi-born Fulbright scholar with a PhD. This family collects degrees. They're also a bunch of news junkies. In an interview with Black Enterprise, Carlos credits his dad with inspiring his love of the news.

• 8:02Speaker 04

  As a kid, we would go to the Miami airport and he would tell me, "Run inside, buy him newspapers from around the world." And you know when someone's eyes light up, whether you're bringing them good food? That's how his eyes would light up, when you would bring him those newspapers. So, I grew up loving media.

• 8:17Sarah Hagi?

  I mean, I grew up loving media too, but it was more like The Simpsons. You know? Like, I couldn't imagine being a news lover.

• 8:27Scaachi Koul?

  That was me, I'm so sorry to say. Of course it was. I know, I know. Well, Carlos never loses his love for the news, but his first big jobs are all in politics. He gets hired as chief of staff and campaign manager for a state legislator from Florida, and he briefly works on Bill Clinton's presidential campaign. After Stanford, Carlos spends two years as a consultant for McKinsey. He's making pretty good money, but he wants to give back. He wants to help kids like him, smart, college-bound students who don't have a lot of money, at least compared to their peers. And like everyone else in Silicon Valley around this time, Carlos thinks he can save the world and get rich while doing it. So in 1997, he starts a company. It's a nonprofit called College Track,

• 9:12Scaachi Koul?

  which helps kids in underserved communities apply for college and find scholarships. He loops in a co-founder, Lorene Powell Jobs. Carlos met her while tutoring high school students in East Palo Alto. And Lorene just happens to be married to Steve Jobs. Yeah, that's Steve Jobs. So while Carlos is still just in his 20s, he already has friends in high places. And he's also internalized the Silicon Valley mindset. And now Carlos is ready to take the move-fast-and-break-things mentality to the industry he's loved since childhood.

• 9:50Scaachi Koul?

  By the early 2000s, Carlos has decided that what he really wants to do is host his own TV show. But when Carlos starts to pitch the show idea to networks, he gets rejected everywhere. He has literally no TV experience. But Carlos must have done something right in those pitch meetings, because he gets invited by Fox and Court TV to go on their shows and talk about business and politics. He does well, and he starts making the rounds as a pundit on various cable networks. And then, in 2003, Carlos gets his big break, guest hosting a slot on CNBC. He crushes it, and he gets invited back. Carlos is making a name for himself. He starts hosting specials on CNN, writes a column on their website,

• 10:34Scaachi Koul?

  and co-anchors their election night coverage in 2004. He also hosts an interview series on NBC. Wolf Blitzer tells Stanford Lawyer Magazine that Carlos is a natural. After a few more years, he lands the job he's been gunning for this whole time: his own show. It's called Live with Carlos Watson, and it launches on MSNBC in 2009. Carlos finally has his moment in the sun, except it only lasts three months. We don't exactly know why, but Carlos later says it just wasn't the right fit. But this role was a huge deal for Carlos. He has this insatiable thirst to be universally liked and respected as an authority figure.

• 11:18Scaachi Koul?

  From the time he started pitching his show, Carlos rather ominously compared himself to Charlie Rose. Being a primetime anchor on MSNBC made that dream come true, if only briefly. So after the show ends, Carlos is ready to do whatever it takes to get that power again, and he knows he can't do it alone. It's the early 2010s, and a banker named Samir Rao is on his way to lunch. Samir has dark hair, a soft face, and he is tired. For years, he's been working as an associate for Goldman Sachs in New York City, and he hasn't been sleeping much. But today, he's in California, and he turns to the place where so many dudes in their

• 12:00Scaachi Koul?

  20s have turned before him: Chipotle. As Samir walks through the Chipotle parking lot, he reportedly runs into a familiar face: Carlos Watson. Samir and Carlos briefly worked together in finance after Carlos left MSNBC, and they actually have a lot in common. They're both Harvard grads and were raised by immigrants. Samir's parents came to the US from India. He grew up in a suburb of Detroit before getting a math degree and landing a job at Goldman. And eventually, as this story goes, Samir and Carlos's conversation in the Chipotle parking lot lands on this question: How could we reimagine the news for a globally-minded, discerning, and diverse group?

• 12:42Scaachi Koul?

  Or at least, this is the origin story that Samir and Carlos later publish on their website.

• 12:48Sarah Hagi?

  This is truly one of the-- Dumbest things I've ever heard.

• 12:52Scaachi Koul?

  Uh huh.

• 12:53Sarah Hagi?

  Like reimagining the news for a globally minded, discerning and diverse group.

• 12:58Scaachi Koul?

  Yeah.

• 12:58Sarah Hagi?

  So you mean everyone?

• 13:00Scaachi Koul?

  Yeah. Well, Samir is impressed by Carlos. He's got a vision and he's super well-connected. Maybe Samir even sees his future self in Carlos, who's about 15 years older than him. Over the next few months, Carlos and Samir cook up a new digital media startup. They call it Aussie Media, after the poem "Ozzy Mandyus" by poet Percy Shelley. Yes, it is the one about the futility of human effort, including the line, "Look on my works, ye mighty, and despair."

• 13:30Sarah Hagi?

  I always wondered if Aussie was because of the poem, but I never, I never looked into it because I didn't want to know. And now that I do know, I mean, the writing was on the walls.

• 13:40Scaachi Koul?

  They said it the first time and we just didn't hear it.

• 13:44Scaachi Koul?

  Well, on the Aussie website, they say that they interpret the poem as a call to think big while remaining humble. Of course, this is on the same website where they self-pathologize with a story about a Chipotle parking lot, so do with that what you will. The website also includes whimsical biographies of the founders. It notes that Samir is a classically trained musician who composes jingles just for fun, and that Carlos has played pickup games of basketball in places like Iceland and Zimbabwe. Together, the two founders start plotting Aussie's path to the top. They have a vision for an expansive, captivating media company that meets millennials where they are: online. There's just one problem: everybody else has that exact same idea.

• 14:33Scaachi Koul?

  In 2013, Carlos and Samir go to one of Carlos's old pals for money, Lorene Powell Jobs. Lorene is running her own company, the Emerson Collective, which invests in everything from education to healthcare and, of course, media.

• 14:49Scaachi Koul?

  I picture Carlos and Samir sitting in Lorene's modern offices in downtown Palo Alto as Carlos explains that Ozzy will be the HBO of news. Not only will Ozzy uncover what's new and next, it'll be, quote, "What cool people read to be smart and smart people read to be cool." Sarah, what do you think that all actually means?

• 15:09Sarah Hagi?

  I don't think those words altogether really have meaning, but I think media companies are always trying to be cool without realizing that news isn't cool. It's fundamentally uncool.

• 15:22Scaachi Koul?

  Yeah.

• 15:22Sarah Hagi?

  So to me, this says it all because every company I've worked for basically has this mandate. For people who work hard and play hard.

• 15:32Scaachi Koul?

  Well, it's a big, bold, vague pitch, but media is going digital and venture capitalists want in. This is the era where everyone is taking BuzzFeed quizzes and watching Vice documentaries. Now Ozzy is pitching itself as a competitor. Plus, Lorene knows Carlos. Her company leads Ozzy's first round of fundraising, which ends up netting more than $5 million. Lorene even joins the Ozzy board. Carlos manages to get some other Silicon Valley backers involved as well. It doesn't hurt that Ozzy starts co-hosting an annual Christmas party with the Emerson Collective. These investors give them cash, sure, but more importantly, they give Ozzy an air of credibility, which leads to even more cash.

• 16:16Scaachi Koul?

  In 2014, Carlos gets $20 million from Berlin-based publishing giant Axel Springer. And that sounds like a lot of money until you hear what the other guys have. At this point, Vice has over half a billion dollars in funding. But there's just one thing standing in Carlos's way. He's never actually run a media company before, and getting clicks isn't as easy as it might seem. But Carlos will do whatever it takes to drive traffic, even if that means burning bridges, faking numbers, and wearing his newsroom down to the bone.

• 16:56Scaachi Koul?

  Eugene S. Robinson is really looking forward to his weekend off. It's 2012 and he's basically been living at Ozzy's sad beige office in Mountain View, California. Eugene was Ozy Media's first hire, and as the deputy editor, he's been working 18 hours a day, seven days a week, in preparation for the website's launch. Eugene is a tall, black man with a thin mustache and a gray streak in his hair. Like his boss, Carlos, Eugene went to Stanford and is the perfect blend of media meets Silicon Valley. He gets the whole move fast and break things attitude, but he's also skeptical of Carlos's vision. Later, in an op-ed for the New York Times, Eugene claims that he told Carlos, quote, "I think you might be a visionary."

• 17:40Scaachi Koul?

  That is, seeing things that are not there.

• 17:43Sarah Hagi?

  That is the worst thing you can say to a guy like Carlos. I love Eugene right now.

• 17:49Scaachi Koul?

  We love Eugene. Eugene's pulling up as a hero. But Carlos's ambition for Ozzy makes life hell for the upstart editorial team. Carlos wants to make sure Ozzy is telling stories that other outlets aren't reporting on. And that sounds reasonable, but in practice, it's nuts. Carlos says that journalists can't cover topics already reported on by major outlets, like the BBC, the New York Times, and the Wall Street Journal. So there's just not a lot left over. But Carlos and Samir expect the full-time staff of about four writers and two editors to produce 40 magazine-quality articles per week.

• 18:28Sarah Hagi?

  If he hired the best journalists alive, that is an impossible metric.

• 18:33Scaachi Koul?

  Yeah.

• 18:34Sarah Hagi?

  That's unreal.

• 18:35Scaachi Koul?

  Yeah.

• 18:36Sarah Hagi?

  Also, it just shows me fundamentally, these two have no idea how journalism works.

• 18:42Scaachi Koul?

  Yeah.

• 18:43Sarah Hagi?

  Like, not being able to cover anything that's been mentioned on the biggest sources of news in the English-speaking world? Like, that's crazy. Crazy.

• 18:51Scaachi Koul?

  As Eugene describes it, the launch prep is so intense that he's had to tell Carlos repeatedly that he's taking this particular weekend off. According to Eugene, Carlos is livid. He screams at him, fists pounding on the table and everything. Carlos is so enraged that he reportedly fires Eugene on the spot. And when Eugene later writes about this time at Ozzy for Alta Journal, he says that a representative for Watson disputed the events surrounding Eugene's initial exit from the company. He added that the representative did not answer any questions. After a few weeks, the board chair convinces Carlos to rehire Eugene, and then she convinces Eugene to come back.

• 19:32Scaachi Koul?

  But even with Eugene back at Ozzy, the writers on staff are drowning in work, and it doesn't slow down after the site launches. Ozzy staffers later recount regularly working from 7:30 a.m. to 1 a.m. each day, writing articles, producing video series, and making podcasts. As the site flounders, Carlos's expectations remain sky high, to the detriment of everyone around him. In an essay about Ozzy published years later, Eugene describes him as a, quote, "holy terror." Sarah, can you read this excerpt from Eugene's piece?

• 20:06Sarah Hagi?

  Yeah, he goes, "Texts and calls from him came whenever he was in the mood to send them. The work week was a seven-day-a-week death march, screaming, shrieking, threats of firing, and the actual docking of pay for unwritten infractions were normal. We were told that if a friend was getting married or had died, send flowers. Passion was a number-one qualifier since the thinking went. People who are passionate about something will work 24 hours a day." You know, of course, this is a very extreme example of this kind of mentality, but it's not uncommon when you work in digital media, especially if it's like, kind of startup-ish in that sense, where it's kind of like, you know, like, we believe in this, that we're

• 20:50Sarah Hagi?

  a family, this is everything, and it's like, those lies that kind of feed to you, and you're not getting any extra money out of it. They're the ones getting money from investors, but they expect you to... Care about it like you also gave birth to this platform.

• 21:04Scaachi Koul?

  But even after big fundraising rounds, Ozzy doesn't hire more people for its newsroom. Instead, they spend money on advertising, and it doesn't seem to pay off. Because after all this time and all this money, Ozzy has still failed to create an audience for its work. Sarah, as someone working in digital media at the time, did you ever organically come across Ozzy's stories online?

• 21:27Sarah Hagi?

  I honestly think there was maybe one or two that people were sharing, but I don't ever remember clicking through to Ozzy.com. And in fact, I think the joke was everyone was like, what the hell is Ozzy?

• 21:41Scaachi Koul?

  Yeah, they've barely even started publishing, and they've already spent $35 million. But like so many digital media startups at the time, the site isn't anywhere near profitable. And so now Carlos needs to figure out how to make money, and fast.

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• 23:24Sarah Hagi?

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• 24:09Scaachi Koul?

  For years, the Aussie website trudges along. And while it has occasional successes, it struggles to gain traction. It turns out, when reporters can only write about things no one's ever heard of, there aren't a ton of people interested. Companies usually charge for ads based on the number of people they think are going to see them. And online, the way to measure viewers is with clicks, like that Onion headline says, "We don't make any money if you don't click the link." Aussie isn't making any money, but neither is anyone else. The investors and founders behind the digital media boom made a bet that selling ads based on clicks would be a sustainable business model. But by the mid 2010s, it's become clear that the model just isn't profitable. Or at least, it's not profitable enough for investors.

• 24:55Scaachi Koul?

  And the industry is a mess. Carlos might think of himself as a unique visionary, but he tries the same strategies that so many other digital media companies do. First up, branded content. JP Morgan Chase, Amazon, and Visa give Aussie a bunch of money to run sponsored posts, all on the condition that they get a certain number of page views. And Aussie delivers, but not by making stuff that people actually read. Instead, they use a janky, third-party service to turn JP Morgan articles into glorified pop-up ads. They appear before readers get rerouted to the article they actually clicked on. Sneaking these ads in front of readers is basically juicing the stats. No one is actually reading the branded content that they've been selling.

• 25:40Scaachi Koul?

  Ozzy might not technically be lying to their advertisers, but they're definitely misleading them. And they're not the only startup media company doing it. Among others, Bustle Digital Group, Funny or Die, and PC Mag are doing the same pop-up scam. Eventually BuzzFeed News runs a story outing them all. It says that over a five-month period, Ozzy got the vast majority of views on its most-read articles fraudulently. The company gets some negative attention, but eventually the internet moves on. Even JP Morgan keeps investing with Ozzy. For now, Carlos is acting about as shady as everyone else in his position. But when Ozzy loses its most powerful ally, he'll get desperate. And that's where the real scam begins.

• 26:27Scaachi Koul?

  In addition to branded content, Ozzy also tries branching out into events as a way to make money and get attention. In July 2016, the company throws their first-ever Ozzy Fest. It has a sort of TED Talks vibe with flashier names, like Issa Rae, Cory Booker, and Malcolm Gladwell. But it's not the smash hit that Carlos envisioned. Only 2,000 people show up. The venue, Central Park's Rumsey Playfield, is mostly empty. And still, they throw Ozzy Fest again in 2017 and in 2018, somehow getting massive names like Hillary Clinton, RuPaul, and Talib Kweli. Sarah, I need you to read how Carlos describes the 2018 event to the New York Daily News.

• 27:12Sarah Hagi?

  Oh, god. He says, "The whole mission of the festival is to bring diverse voices to one stage and expose people to unexpected perspectives. In years past, people who purchased a ticket to see Jason Derulo have been totally wowed by Jeb Bush."

• 27:30Sarah Hagi?

  That went somewhere I was not expecting. I don't know what the average Jason Derulo fan is like, but something tells me they aren't like, "Whoa, this Jeb Bush guy." He's kind of like Jason. I'm wowed by him. I see the connection here. My eyes are open because I would have never been exposed to this man otherwise.

• 27:51Scaachi Koul?

  Yes.

• 27:51Sarah Hagi?

  Also, I do remember the randomness of Ozzy Fest.

• 27:55Scaachi Koul?

  Yeah.

• 27:55Sarah Hagi?

  Big time. Because I remember seeing the posters and being like, what the hell is this?

• 28:01Scaachi Koul?

  Well, Ozzy Fest isn't exactly beloved in the rest of the media landscape either. Rolling Stone calls it a neoliberal nightmare. And there's another issue for Carlos. In 2017, Sharon Osbourne sues Ozy Media for trademark infringement. She thinks Ozzy Fest sounds too much like Ozfest, the music festival she created with her husband, Ozzy Osbourne. They eventually settle, but the lawsuit is embarrassing. So Carlos works hard to smooth things over. And he even claims on CNBC.

• 28:33Speaker 04

  Fun fact, our friend Ozzy and Sharon sued us briefly.

• 28:37Scaachi Koul?

  Did they?

• 28:37Speaker 04

  And then we decided to be friends, and now they're investors in Ozzy.

• 28:41Scaachi Koul?

  There's just one problem with that. Sharon says this is a complete lie. She vehemently denies investing in Ozzy, and she says that she rejected company shares that Carlos offered as a part of a potential settlement. And then he gets dealt another major blow. The Emerson Collective knows that Ozzy isn't making money. They try to get Carlos to sell the company, or at least make new funding dependent on hitting performance targets. And it doesn't work. So around 2019, they bow out. Carlos's longtime friend, Lorene, leaves the board as well. And it gets personal. Remember the annual Christmas party that Ozzy hosted with Emerson? Well, they cut Ozzy out, and Carlos is replaced by celebrity chef, Jose Andres.

• 29:26Scaachi Koul?

  Well, this seems to be a breaking point for Carlos. He hasn't just lost a friend, he's also lost Ozzy's greatest source of legitimacy. With his biggest backer gone and a business model that's failing, Carlos finds the easiest way to keep Ozzy afloat is more lying. He spends most of 2019 traveling the world to woo investors. And instead of admitting that Ozzy isn't doing well, Carlos straight up lies about how much money the company has made in the last two years, exaggerating by several million dollars. He later tells an investor that a big tech company has offered to buy Ozzy for $600 million.

• 30:05Sarah Hagi?

  Okay, Carlos, like, $600 million?

• 30:09Sarah Hagi?

  For a website that barely exists. This man is crazy.

• 30:13Scaachi Koul?

  Yeah, I mean, it's all bullshit. But it makes Ozzy look like a more enticing investment, including to companies like BuzzFeed. At one point, they're reportedly in talks to acquire Ozzy. And who knows if any of it was real or if it was just a ploy to boost Ozzy's value. I, as a former BuzzFeed employee, have no comment. Either way, the deal doesn't go through, but it does help bolster the image that Carlos is trying to create. And it makes the company more attractive to potential backers. According to the SEC, all the hype helps Ozzy defraud investors out of $50 million. He uses that money to expand Ozzy Fest. He moves it to Central Park's Great Lawn, aiming to bring in 100,000 people.

• 30:58Scaachi Koul?

  They have a bigger lineup than ever, including Mark Cuban, Spike Lee, Trevor Noah, A-Rod, and Stacey Abrams. And here's a mini-scam for you. One former employee told Forbes that Ozzy would book big-name speakers by telling them other celebrities would also be there. They would later claim those people had dropped out, even though they never agreed to be in the festival in the first place. Carlos tells CNBC's Squawk Box that people describe Ozzy Fest as Ted meets Coachella. It turns out he's just quoting himself here, which is one of his go-to media strategies. He's literally doing the "many people are saying things" when in fact, the many people are just him. He is many people.

• 31:38Sarah Hagi?

  I mean, you gotta hand it to Carlos. He knows how celebrities work, which is...

• 31:43Scaachi Koul?

  He does.

• 31:44Sarah Hagi?

  Wait, this person's doing it? Well, I'm gonna do it too. Meanwhile, like, have you heard of Ozzy? Go on the website, look it up. It's not legitimate.

• 31:51Scaachi Koul?

  I mean, I don't want to go to any of those events, so that feels right to me. Ozzy also goes hard on advertising. They run an estimated $2 million worth of ads across New York City. In one ad, they use a photo of the crowd at Global Citizens Festival, implying it was taken at Ozzy Fest. An Ozzy spokesperson later apologizes, calling this "a mistake." In total, Ozzy is projected to spend at least $6 million on this event. That's way more than they're likely to make on it. But then Ozzy gets a miracle. There's a crazy heatwave in New York. Temperatures in the triple digits. Mayor Bill de Blasio cancels the event, and Ozzy gets to file an insurance claim.

• 32:34Scaachi Koul?

  They can blame their losses on the mayor and the weather rather than their own incompetence. Carlos is saved by an almost literal act of God. But he can't count on that to happen a second time. He's gonna have to make his own luck.

• 32:54Scaachi Koul?

  It's late December 2019, just a few months after the would-be catastrophic Ozzyfest. Ozy Media has a new CFO, Tripti Thakur, and she gets CC'd on an email from Samir to a major bank. This email includes documents related to Ozzy's loan application. So remember how Carlos has been lying about Ozzy's profits to get more investments? Well, he's made $50 million that way, but it's still not enough. Ozzy is burning through cash, which they seem to be mostly spending to boost Carlos's profile. Ozzy produces documentaries, podcasts, and movies with the Oprah Winfrey Network, PBS, BBC, and even Lifetime. But most of these are hosted by or centered on Carlos in some way.

• 33:39Scaachi Koul?

  They don't seem to be helping the business, and that's why Ozzy is going to the bank for a loan. When Tripti reads the email, she sees a contract with a major cable news network. It's for the second season of an Ozzy TV show, complete with an episode order, a production budget, and signatures from bigwig executives. The contract looks legit, and it implies that there's guaranteed money coming to Ozzy. But Tripti knows that Ozzy is still actively negotiating with the network. This contract is fully made up. Carlos has gone from artificially inflating page views to fudging revenue. So why not just manufacture a contract out of whole cloth? You know, it's very often in these stories that there's a

• 34:21Sarah Hagi?

  Woman who comes in for a job and she's like, reads something that's readily available and is the only person to be like, wait a second.

• 34:31Scaachi Koul?

  Yeah, man, it just takes one smart broad to figure these things out.

• 34:36Sarah Hagi?

  This is like a pattern in these stories.

• 34:39Scaachi Koul?

  I know. Tripty resigns effective immediately. Sarah, I want you to read her email to Carlos.

• 34:46Sarah Hagi?

  She writes, "This is fraud. This is forging someone's signature with the intent of getting in advance from a publicly traded bank. To be crystal clear, what you see as a measured risk, I see as a felony. Did either of you have any idea or did it even occur to you to care that I could go to jail for forgery and bank fraud? I mean, this is like the most polite way to be like, what the hell is going on here? Like, what mess did you get me into?

• 35:13Scaachi Koul?

  Yeah. Well, Carlos is used to steamrolling his younger employees, but one of them has finally pushed back. And yet, he ignores her warnings. Carlos has repeated his lies so many times that it's possible he actually believes them. But the illusion of Ozzy in his mind is about to collide with reality. And the rest of the world will look on his works and despair.

• 35:42Scaachi Koul?

  Despite Tripty's stern email, Carlos is desperate to keep Ozzy from ending up in the digital media graveyard. So the company makes another pivot, possibly to what Carlos wanted to be doing all along. In 2020, Ozzy launches The Carlos Watson Show. It's an interview series hosted by Carlos that runs exclusively on YouTube. To be clear, this show is not a YouTube original, meaning it's not produced by YouTube's in-house studio. It's just uploaded to YouTube. Carlos manages to get some powerful guests on the show, like Matthew McConaughey and Ava DuVernay. According to The New York Times, the show's booker tells them it will air on A and E. Many of the show's producers and writers are also told that,

• 36:26Scaachi Koul?

  but an A and E spokesperson says that the network never agreed to air the show. Ozzy plunges money into marketing the series, and the ads are riddled with misleading quotes. Remember what I said about Carlos doing the "many people are saying" thing? In a promo video for The Carlos Watson Show, Ozzy says that the LA Times describes it as, quote, "What true discussions look like." A New York bus ad calls Carlos "Anderson Cooper meets Oprah." But both of these quotes are from a piece of branded content that Ozzy paid for. It's just Ozzy quoting Ozzy. And here's another one. Ozzy also claims that Deadline called Carlos, quote, "The best interviewer on TV." But a critic never said that.

• 37:11Scaachi Koul?

  Samir did, in an interview with Deadline. And an Ozzy billboard in LA calls The Carlos Watson Show, quote, "Amazon Prime's first talk show." Ozzy uploaded the show to Amazon to get more views, like many YouTubers do. But Amazon played no role in producing, or promoting, or paying for the show.

• 37:30Sarah Hagi?

  That is so wild, because he said A and E bought the show.

• 37:35Scaachi Koul?

  I know.

• 37:36Sarah Hagi?

  At this point, you have to wonder what Carlos thinks about himself. Like, does he think, like, you know, just one more lie and people will flock to me in a natural and organic way? Like, buddy, you've been trying for this long, it hasn't happened.

• 37:52Scaachi Koul?

  Carlos calls his show "the fastest-growing talk show in YouTube history." But the numbers are bullshit. So you know how you get ads before YouTube videos? And some of them let you skip through after 15 seconds or whatever? Ozzy is paying for full episodes of The Carlos Watson Show to play automatically as ads. So even if people click out, the video could still get a view. One source told Axios that more than 95% of The Carlos Watson Show's viewers were paid for. Like many digital media companies, Ozzy is fresh out of ideas. They're just running the pop-up scam again. Carlos reeks of desperation. And he's about to go from shady to reckless.

• 38:42Speaker 03

  Journalist Tristan Redman goes where no son-in-law should ever go. Deep into his wife's family history, digging up the cold case of who murdered her great-grandmother. Because, I should mention, he thinks the murderer might actually be the beloved family patriarch. For the best binge-watch series like Ghost Story, listen to the Audible True Crime Podcast wherever you get your podcasts.

• 39:02Sarah Hagi?

  Hi, I'm Kenyon Perez.

• 39:03Speaker 04

  And I'm Malcolm Gladwell. We're back for season two of our Audible original podcast, The Unusual Suspects.

• 39:10Sarah Hagi?

  We'll sit down with extraordinary guests from the worlds of art, film, literature, comedy, and wellness to hear from their unexpected stories of success.

• 39:17Speaker 04

  And who do we have this season? Well, we'll talk with Grammy-winning artist Anderson Paak, athlete Rich Roll, portrait artist Amy Sherald, Oscar-winning director Ron Howard, legendary writer David Sedaris, and many more. These conversations are more intimate than last season, wouldn't you say?

• 39:33Sarah Hagi?

  I would. Listen to season one of The Unusual Suspects wherever you get your podcasts, and sign up for a free trial Audible to listen to season two in the Audible app, or by subscribing to Apple Podcasts.

• 39:59Scaachi Koul?

  It's February 2021, and Aussie media is still desperate for cash. Carlos thinks his previous scams didn't work because they didn't go big enough. So he decides to lie to yet another bank. And that's how we get to YouTube executive Alex Piper's call with Goldman Sachs. Remember that one, Sarah? I mean, how could I forget? But also, who made the call? Who was fake Alex? Well, the fake Alex was actually Samir. And he uses a voice distortion app to pretend to be Alex. Throughout the call, Samir gets texts from Carlos, who's hovering behind him, and he reads them back to the Goldman team. For example, quote, "I'm a big fan of Carlos, Samir, and the show."

• 40:43Scaachi Koul?

  At one point, Samir must have used the word "we" to refer to Aussie because court documents show that mid-conversation, he gets a frantic text from Carlos. And it just says, "Use the right pronouns. You are not Aussie." This is like something that happens in a cartoon.

• 40:58Sarah Hagi?

  Like the jumping around and the like, you're this person, not this person.

• 41:02Scaachi Koul?

  Yeah, it's like a modern I Love Lucy episode.

• 41:05Sarah Hagi?

  Oh, my God.

• 41:06Scaachi Koul?

  Well, when the call ends, the Goldman analysts are baffled. They call Alex to follow up and well, you know how that goes. Word of the incident quickly gets to the Aussie Board of Directors. It is not a good look for Carlos, but he manages to protect himself by telling the board that Samir had a mental health crisis.

• 41:26Sarah Hagi?

  Like, that's better? The guy who is also in charge is having a mental episode where he's pretending to be a person who exists in order to get more money from like, how is that better?

• 41:40Scaachi Koul?

  Yeah, nothing gets better here. But the board does seem to accept the story and the whole thing remains internal, at least for the time being. Needless to say, Goldman Sachs does not end up giving Carlos the $40 million. Aussie plows on, full steam ahead. They're cranking out more episodes of the Carlos Watson Show. They even have another Aussie Fest planned for October 2021, but it never takes place because The New York Times comes calling. They're about to publish a major story on Aussie. And would Carlos care to comment?

• 42:17Scaachi Koul?

  The story runs on September 26, 2021. It centers on the fake Goldman Sachs call, but also touches on Aussie media scams more broadly. Eugene, Aussie's first hire, is quoted as calling the company "at the Temkin Village", implying the entire thing was a facade designed to trick people in power. The article is written by Ben Smith, The New York Times' media columnist. Carlos comes back swinging on Twitter, labeling the piece a hit job and calling out what he alleges is a conflict of interest. Ben used to be the editor in chief of BuzzFeed News and was reportedly involved in the BuzzFeed-Aussie negotiation back in 2019. But The New York Times article opens up the floodgates. Everyone in media seemed to think

• 43:00Scaachi Koul?

  that Aussie was a total scam and now their gossip has been confirmed. Forbes, New York Magazine, The Daily Beast and many more published their own reporting covering every aspect of the Aussie scam. The fallout is swift. One of Ozzy's newest hires, a former BBC journalist, resigns. A and E cancels a second half of an Ozzy-produced documentary it was actually planning to air. CNBC even calls up Sharon Osbourne for comment. Sarah, can you read what she tells them about Carlos?

• 43:31Sarah Hagi?

  Yeah, she says, "This guy's the biggest shyster I've ever seen in my life."

• 43:36Scaachi Koul?

  Within a week, Carlos announces Ozzy is shutting down. But then, psych! Four days later, Carlos goes on The Today Show with an announcement.

• 43:44Speaker 04

  You know, we're gonna open for business, so we're making news today. This is our Lazarus moment, if you will. This is our Tylenol moment.

• 43:51Sarah Hagi?

  What the hell is a Tylenol moment?

• 43:53Scaachi Koul?

  I also don't really know what that means.

• 43:56Sarah Hagi?

  This guy has a whole world in his mind I never want to understand.

• 43:59Scaachi Koul?

  Yeah, we are not on this journey with him. And despite all this humiliation, Carlos somehow keeps a stripped-down, bare-bones version of the Ozzy website running. And despite all the fraud, Carlos stays a free man. But he's about to hit that final deadline.

• 44:21Scaachi Koul?

  On February 23rd, 2023, the FBI arrests Carlos at a hotel in Midtown Manhattan. He's charged with multiple counts of fraud and with aggravated identity theft. That's for ordering Samir to impersonate Alex Piper during the golden call. He faces up to 37 years in prison. In a statement, the US attorney says that Carlos, quote, "ran Ozzy as a criminal organization rather than as a reputable media company." Carlos posts a million-dollar bail after pleading not guilty. Samir, meanwhile, has pled guilty to fraud and identity theft. Some suspect he might testify against Carlos, whose trial has been set for May 2024. But Carlos is determined to fight his case.

• 45:04Scaachi Koul?

  He takes to Instagram to defend himself. Sarah, can you read this caption for me?

• 45:08Sarah Hagi?

  Yeah, he says, "I'm deeply disappointed by the government's actions yesterday. I'm not now and have never been a con man. I am and have been a hard-working entrepreneur who has helped build a special company from scratch." Okay, just because you built a company doesn't mean you're not a con man because the company legally exists.

• 45:30Scaachi Koul?

  Well, Sarah, it seems like Carlos might finally be cornered. His show's YouTube channel stops publishing new content and Ozzy.com finally shuts down in March 2023. Honestly, it's a better run than I would have expected. Sarah, did this upset you as much as I was hoping and praying it would?

• 45:52Sarah Hagi?

  Yeah, I mean, there's something so fascinating about this story because Carlos clearly idealized these websites that were started from the quote-unquote "ground up" by quote-unquote "regular people." And he wanted the same thing, you know? He wanted like the BuzzFeed experience, the Vice experience of being like, "We started off so small and then look what we became." You know, I think he just got really lost in this pursuit of creating a media company and the scam went too far into criminal territory in ways that others didn't.

• 46:29Scaachi Koul?

  It's so fascinating to think about it that way. He could have gotten away with this if he had just done like too fewer crazy things and if the website had been a little bit more successful.

• 46:41Sarah Hagi?

  Yes.

• 46:42Scaachi Koul?

  But a lot of the stuff Carlos was doing, a lot of the stuff that Ozzy was implementing, is still very present in digital media.

• 46:49Sarah Hagi?

  Also, it was really upsetting to see how these people kind of just do whatever they want and what happens to people like us like just doesn't matter at all. I'm remembering the pivot to video era of layoffs, which was, you know, almost 10 years ago now, where people were laying off writers in favor of video content, which they said was doing better because of Facebook. And then it came out that Facebook inflated these numbers of views for video. Like, you know, like, there's just so many things these companies do that doesn't really mean anything to them at the end of the day. They move on so quickly and the people who actually face the consequences are the people

• 47:32Sarah Hagi?

  creating the content, you know, the writers and the producers and the people who are slaving away for $40,000 a year, hoping that, you know, maybe they'll get a raise next year. That's why I wasn't surprised even that Eugene went back after everything he had seen because he needs money.

• 47:47Scaachi Koul?

  I think the real question is, what is Carlos going to start next? Either when he's acquitted, or when he pleads out, or when he gets out of jail? Because I don't feel like he's done with us.

• 48:01Sarah Hagi?

  Yeah, I would say so, too. I mean, it's easy to hear this and think like, there's no way someone can come back from this level of fraud and, you know, these lies and everything. But it really does happen every single day.

• 48:13Scaachi Koul?

  Sarah, I think I speak for both of us when I say we're really excited for the day that we get on boarded at Carlos's next venture.

• 48:22Sarah Hagi?

  If I was desperate enough, I can't say it wouldn't work for Carlos.

• 48:26Scaachi Koul?

  I'm sorry, Sarah, I wasn't being sarcastic. I'm being sincere. There's a decent chance that you and I end up working with or for some of the individuals we made fun of today.

• 48:37Sarah Hagi?

  I think the lesson here is that any website you're reading right now, they're doing something kind of like this, maybe.

• 48:46Scaachi Koul?

  But not us.

• 48:48Sarah Hagi?

  But not us.

• 48:53Scaachi Koul?

  Follow Scamfluencers on the Audible app or wherever you get your podcasts. You can listen to all episodes of Scamfluencers ad-free by joining Audible.

• 49:05Scaachi Koul?

  This is Aussie Media: Pivot to Fraud. I'm Sachi Cole.

• 49:09Sarah Hagi?

  And I'm Sarah Haggy. If you have a tip for us on a story that you think we should cover, please email us at [email protected]. We use many sources in our research. A few that were particularly helpful were Goldman Sachs, Aussie Media, and a $40 million conference call gone wrong by Ben Smith for The New York Times, how Aussie Fest was about to become the next Fire Fest by Jemima McAvoy and David Jeans for Forbes, and Aussie Onward by Eugene S. Robinson for Alta.

• 49:40Scaachi Koul?

  Grace Perry wrote this episode. Additional writing by us, Sachi Cole and Sarah Haggy. Our senior producer is Jen Swan. Our producer is John Reed. Our associate producers are Charlotte Miller and Lexi Peery. Our story editor and producer is Sarah Enni. Eric Thurm is our story editor. Sound design is by Sam Ada. Fact checking by Will Tavlin. Additional audio assistance provided by Adrian Tapia. Our music supervisor is Scott Velazquez for Freeze on Sync. Our coordinating producer is Desi Blaylock. Our managing producer is Matt Gant and our senior managing producer is Ryan Lor. Kate Young and Olivia Richard are our series producers. Our senior story editor is Rachel B. Doyle. Our senior producer is Ginny Bloom. Our executive producers are Janine Cornolo, Stephanie Jens, Jenny Lauer Beckman,

• 50:25Scaachi Koul?

  and Marshall Louis. The Wondery.

• 50:37Speaker 05

  You stepped out for your morning jog. Except it's not your usual morning jog. You started listening to an epic sci-fi book on Audible. Thirty chapters later, you've accidentally run a half marathon. You lost track of how far you've run, somewhere just past the city limits. You can't stop. You have to find out what happens next. Then it's over. The universe seems bigger. You feel different. You feel like you have no idea where you are. Audible, stories that speak to you.