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Ozy Media Is Hit With Its First Investor Lawsuit

Since the 'NYT' released a series of reports on the company
By Kate Seamons,  Newser Staff
Posted Oct 5, 2021 3:11 PM CDT
Ozy Media Is Hit With Its First Investor Lawsuit
This Monday, Oct. 4, 2021 image shows part of the OZY.com website. On Monday, Carlos Watson, the CEO of Ozy Media, said it had been “premature” to shut down and that he wants to keep operating, despite a scandal-ridden week that exposed Ozy as a media company without much of an audience.   (AP Photo)

(Newser) – Ozy Media says it's back in business, and if the beleaguered media company expected things might be rocky as it attempts to come back from a series of damning New York Times reports, it would be right. Deadline reports one of the media company's investors has sued, with LifeLine Legacy Holdings' Monday filing claiming Ozy "engaged in fraudulent, deceptive, and illegal conduct." The suit specifically cites the Feb. 2 phone call, reported on by the Times, in which Ozy COO Samir Rao reportedly impersonated a YouTube executive while on an investment-related call with Goldman Sachs. "Had LifeLine known the foregoing facts it would never have invested in Ozy Media," which it did subsequent to that call.

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The New York Times reports LifeLine Legacy Holdings is part of LifeLine Financial Group, which manages roughly $500 million on behalf of about 50 mostly Black clients. It invested $2 million in Ozy in February after Rao and CEO Carlos Watson told them Goldman Sachs intended to make "a substantial investment" in the company, per the suit. The company says Ozy was depicted as having "strong business performance, investments by high profile institutional investors, high viewer metrics, and competent and honest company management."

Another $250,000 investment was made in May after LifeLine says Rao told it either Alphabet or a related Google affiliate would be heading up a $30 million fundraising round. LifeLine wants a jury trial, and is seeking its original investment plus punitive damages. Axios reports Google Ventures would be the "most logical affiliate: to make such an investment, and a source says Google Ventures and Ozy did indeed have some initial talks. The source said no investment was offered. The Times says that in a Tuesday appearance on "The Breakfast Club" radio show, Watson claimed Google had put a $25 million investment offer in writing. (Read more Ozy Media stories.)

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