Avalon Pernell
Fri, Jun 14, 2024
(Bloomberg) -- Alphabet Inc. Chief Executive Officer Sundar Pichai took the witness stand at the fraud trial of Ozy Media Inc. co-founder Carlos Watson, testifying that the search giant never intended to buy the startup for any amount of money.
Watson isaccused of defrauding investors of tens of millions of dollars by lying about Ozy’s business success, including boasting that Alphabet’s Google had offered to buy the company for “hundreds of millions of dollars.”
The once high-flying media startup collapsed after the New York Times reported in 2021 that Chief Operating Officer Samir Rao impersonated a senior executive at Google’s YouTube unit to praise Ozy on a February 2021 call with Goldman Sachs Group Inc. bankers. Rao, who’s pleaded guilty, testified earlier that it was part of his and Watson’s scheme to fool investors into thinking Ozy was profitable.
Pichai on Friday told the jury in Brooklyn, New York, federal court that an acquisition of Ozy was never discussed but that Google did consider hiring Watson as head of its news programming. A $25 million investment in Ozy would have been part of that deal.
No Offer
“Mr. Watson was a critical part of Ozy Media, and we were considering making an investment in the company to make the transition easier,” Pichai testified.
“Did you ever offer to purchase Ozy Media for $600 million?” prosecutor Dylan Stern asked.
“No,” Pichai said.
In his opening statement at the trial, Stern said Watson used the fake Google offer to attract another Ozy investor following the incident with Goldman.
“When the Goldman deal fell through, Watson found another victim and lured them into investing $20 million into Ozy by telling them that the CEO of Google himself had offered to purchase Ozy for hundreds of millions of dollars,” Stern said. “That was a lie. But Watson did not let the truth stand in his way.”
Though Watson allegedly claimed to have a far-reaching relationship with the Google boss, Pichai said they only spoke twice. The first was a conversation of “just a few minutes” at a conference, while the second was Watson’s job interview on Feb. 25, 2021, weeks after the Goldman call.
Watson didn’t get the job.
‘Most Disturbing’
Also testifying Friday was Hillel Moerman, one of two Goldman bankers who were on the Feb. 2, 2021, call when Rao impersonated YouTube executive Alex Piper. Moerman told jurors it was “one of the most disturbing calls I’ve been on in my career.”
Moerman described it as “a surreal experience. The person spoke in an unnaturally deep voice.”
Goldman was considering a $35 million investment in Ozy and had requested the call after Watson claimed YouTube was one of Ozy’s “most important” clients. Rao testified he’d used a voice-altering app to conceal his identity and that Watson, who was seated nearby as he spoke to the bankers, coached him on what to say.
Another Goldman banker, Allison Berardo, testified Thursday that what she and Moerman heard on the call “did not sound like a human voice.”
“We were both in a state of shock,” Moerman said. “Something was off.”
Shortly after the call, the bankers canceled plans for the investment in Ozy.
Jurors also heard Friday from Ozy’s chief of staff, Suzee Han, who has pleaded guilty and is cooperating with prosecutors.
“I lied about Ozy’s past performance and historical financials,” Han said. “We, and I mean Carlos, lied about how the company was doing at that time, so the company’s current performance. We lied about how the company was going to do.”
Bloomberg Businessweek
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