On Tuesday, November 19, 2024, Reuters reported that a federal judge denied a request from Ozy Media and its founder, Carlos Watson, to recuse himself from their ongoing legal case. The request aimed to overturn their securities fraud convictions, with Watson alleging that the judge’s financial interests posed a conflict of interest due to his investments in hedge funds.
U.S. District Judge Eric Komitee, presiding in Brooklyn, characterized the allegations as “frivolous” and lacking substantive evidence. He noted that Watson, a former cable news anchor and investment banker, had raised concerns only after the verdict had been reached in July 2024. Komitee pointed out that the investments in question had been publicly disclosed prior to the charges being filed in 2023, and Watson remained silent about these alleged conflicts until after the trial concluded.
In their motion for recusal, Watson and Ozy Media highlighted that Judge Komitee had invested between $6 million and $30 million in funds managed by Viking Global Investors, as outlined in his financial disclosure report from 2023. They also cited his previous role as general counsel for Viking before his appointment to the bench in 2019. Additionally, the motion referenced stakes worth between $10 million and $60 million in two other investment firms, which they argued warranted the judge’s disqualification.
Judge Komitee clarified that even if the recusal request had been timely, it would still be unjustified. He stated that he held no direct or indirect financial interest in any of the parties involved in the case. Furthermore, he highlighted that none of the four alleged victims of the fraud—Goldman Sachs, Alphabet Inc. (Google’s parent company), LiveNation Entertainment, and JPMorgan Chase—lost money or were entitled to any form of restitution.
Under federal law and the Code of Conduct for judges, recusal is required when a judge has a financial interest in a case. However, Komitee pointed out that his investments fell within a “safe harbor” provision that applies to mutual or common investment funds, which typically invest in a diversified array of stocks.
Andrew Frisch, Watson’s attorney, indicated plans to appeal the judge’s ruling to the 2nd U.S. Circuit Court of Appeals. Frisch emphasized the importance of the perceived impartiality of judges, stating, “The consequence of wealth in the judiciary is important to this case and to all of us.” He added that the appeal would focus on whether an objective observer, considering the recently disclosed facts, would have reasonable doubts about the judge’s impartiality.
Ozy Media, a California-based news and entertainment company, faced a significant crisis in 2021 when reports emerged questioning its audience metrics and revealed that a high-ranking executive had impersonated a YouTube executive during a call with Goldman Sachs. This call was reportedly about securing exclusive rights to an Ozy show, further raising concerns about the company’s credibility.
Federal prosecutors have accused Watson and Ozy Media of falsifying financial data, inflating audience size, fabricating contracts, and exaggerating earnings projections to attract investors. Following their convictions in July for conspiracy to commit securities fraud and wire fraud, both Watson and Ozy Media are scheduled for sentencing on December 13, 2024. Watson was also found guilty of identity theft in connection with these charges.
Source: Reuters
