Carlos Watson records a television dispute for Take On America With OZY at The Bently Reserve on October 29, 2018 in San Francisco, California.
Kimberly White|Getty Images
Several previous workers of Ozy Media state there is no proof that the countless dollars the business got through a federal Covid relief program to safeguard incomes ever went to conserve tasks or enhance pay.
Ozy, which has actually come under examination after many reports detailing doubtful organization strategies, obtained 2 loans through a program called the Paycheck Protection Program, or PPP, according to the Small Business Administration’s site.
Ozy’s very first loan, for $3.75 million, was authorized in April 2020, a month after the U.S. federal government passed a $2 trillion coronavirus relief costs. The business was authorized for another $2 million in February 2021.
It is uncertain how Ozy utilized the PPP funds. Ozy Media’s co-founder and CEO, Carlos Watson, did not return numerous e-mails with particular concerns about how the business utilized the cash or who chose how the cash would be utilized. Nor did he respond to a concern about why Ozy obtained the 2nd loan. The business declared it had $50 million in income in2020 It laid off numerous staffers and cut incomes previously that year.
Ozy revealed it was shutting its doors recently after a series of reports called into question the business’s organization practices. The New York Times detailed an occasion from February– the exact same month Ozy got its 2nd PPP loan– where co-founder and Chief Operating Officer Samir Rao impersonated a You Tube executive on a teleconference with Goldman Sachs in hopes of protecting a $40 million financial investment.
During an interview on the syndicated radio program “The Breakfast Club” on Tuesday, Watson stated he has actually asked Rao to step down, regardless of declaring the event came from a “mental health issue.”
While it wasn’t unusual for media business to take part in the PPP, Ozy particularly allocated its loans for payroll. Full- time workers who worked for Ozy informed CNBC that they had no concept where the cash went which it didn’t go to restoring their incomes after they took pay cuts.
“No one to my knowledge, and I’m talking to at least 10 people. No one had anything returned to them by way of salary post them receiving these PPP loans,” according to a previous worker who left Ozy previously this year.
” I should’ve followed up with Samir [Rao] 4 to 6 times,” stated another with regard to renewing income. “It was disheartening. You work so hard and give your life to this company, to be dismissed and disrespected.”
The previous Ozy workers who spoke to CNBC operated in numerous departments throughout the business. They spoke on the condition of privacy to go over personal matters and in order to prevent retribution.
Watson informed Axios in January 2021– one month prior to taking the 2nd PPP loan– that his business paid for the very first time in 2020 after taking in $50 million in income. The Times initially reported Ozy has actually inflated its traffic numbers and has a history of overemphasizing its success. Watson informed CNBC previously today that Ozy overmarketed itself about 20% of the time.
“That’s on me, and I own that,” Watson stated Monday.
Axios initially reported Ozy laid off around 20% of its personnel in early2020 The news outlet likewise reported Ozy carried out pay cuts of around 19%. CNBC has actually because discovered some workers took even larger decreases, consisting of a single person whose income was cut by 35%, according to 2 individuals knowledgeable about the matter.
Watson revealed Monday that Ozy was preparing to keep its doors open, simply days after he informed workers the business would close. Also on Monday, LifeLine Legacy Holdings, which declares to have actually invested $2 million in Ozy Media, submitted a claim versus the business, declaring “fraudulent, deceptive and illegal conduct.”
Fortune reported Wednesday that Watson has actually connected to workers inquiring to go back to Ozy.
PPP loan status
PPP, started under then-President Donald Trump’s administration, created almost $800 billion in forgivable loans for small companies that were having a hard time as the coronavirus pandemic raged.
The SBA website says Ozy’s PPP loans, which were officially distributed by the Silicon Valley Bank, are ongoing and each has “not yet been fully repaid or forgiven.” For its first loan, Ozy identified its industry as “custom computer programming services,” according to the SBA site. For the second loan, Ozy’s industry is described as “internet publishing and broadcasting and web search portals.”
Ozy claimed that the vast majority of the loan money would be used for payroll, and that the money helped the company retain 143 jobs, according to the February 2021 loan document. Watson said in Tuesday’s interview with “The Breakfast Club” that Ozy had “75-plus” full-time employees before Friday’s shutdown.
Watson also said in that interview he hasn’t taken a salary since the start of the pandemic in order to keep more people at his company employed.
Representatives for Ozy and Watson did not return requests for comment. Representatives for the Silicon Valley Bank referred questions about the loans to Ozy and declined to comment further. National Public Radio’s David Folkenflik tweeted Wednesday that Watson’s brand-new spokesperson, Phil Singer, had actually given up after simply 4 days on the task.
Watson has actually spoken with numerous outlets, consisting of CNBC’s “Squawk Box,” because Ozy’s board informed workers the business would shut down, however he did not react to numerous demands to discuss this short article. CNBC likewise sent out a comprehensive list of concerns to Watson, who did not return an ask for remark prior to publication.
A spokesperson for the SBA would not discuss the loans to Ozy however did offer a description of how loans like these were supplied.
“The PPP is a delegated lending process, where participating lenders act as an agent of the government to approve and disburse loans,” Shannon Giles, a spokesperson for the SBA, informed CNBC in an e-mailTuesday “A participating lender submits a PPP loan application, which it has already approved, to the SBA for the federal guarantee. The SBA does not have details on PPP loan disbursements. That is a third-party transaction between lender and borrower. Each PPP-participating lender is to implement the program to its borrowers within its Congressionally granted rules and program guidelines.”
Ozy Fest expenses
The 2020 loan came a year after Ozy Media was set to host its yearly Ozy Fest in New York on Central Park’s GreatLawn Although it became canceled due to the heat that summer season, The Times reported that leading tickets for the occasion were costing $400 The celebration was set to include music by John Legend, food by star chefs consisting of Rachael Ray and funny by “Daily Show” host Trevor Noah.
CNBC’s Andrew Ross Sorkin straight asked Watson in 2019 just how much the business needed to pay the city of New York to host the extravaganza.
“You just say I’m with Andrew Ross Sorkin and everything works out, so it’s easy that way,” Watson responded. “One of the things that we’re really appreciative of is the city’s embraced it,” Watson included. He likewise stated because exact same interview they were anticipating 100,000 individuals to go to the 2019 occasion.
In truth, Ozy paid the city a minimum of approximately $2 million for making use of Central Park’s Great Lawn, according to an individual informed on the matter. The business spent a comparable quantity on marketing the celebration. It’s uncertain what took place to that cash after the occasion was canceled.
Former baseball super star Alex Rodriguez, who appeared with Watson in the interview, recommended at the time that a minimum of some festivalgoers would be privy to some sort of “swag.” When inquired about that year’s “swag bag,” Watson stated it consisted of “uncommon VR [virtual reality] headsets.”
Press agents for Rodriguez have yet to react to CNBC’s ask for remark.
Ozy Fest was likewise at the center of a legal headache for Watson that raised more concerns about his business’s organization design long after the matter was settled. Music market legends Sharon and Ozzy Osbourne taken legal action against in 2017 over the name Ozy Fest, stating it was too near to the name of their music celebration,Ozzfest The sides ultimately reached a settlement.
Then, in 2019, Watson declared live on CNBC that Sharon and Ozzy Osbourne were pals and financiers in his business after yearlong legal fight. Sharon Osbourne just recently informed CNBC they have actually never ever been pals with Watson or financiers in OzyMedia In an interview broadcast Monday on CNBC, Watson stated that there was an arrangement that the Osbournes would navigate 50,000 Ozy shares as part of a settlement. Sharon Osbourne likewise called Watson a “shyster.”
Watson on Monday likewise challenged that he called Sharon Osbourne a buddy.
“I didn’t say she was a friend. You know what? Play the tape, then. Please go ahead and play the tape. You know what, cue up the tape,” Watson stated Monday.
The tape exposes that Watson did undoubtedly explain the Osbournes as pals throughout the 2019 interview: “Fun fact: our friend Ozzy and Sharon sued us briefly, and then we decided to be friends and now they’re investors in Ozy.”
SEE: Ozy Media CEO Carlos Watson calls the Osbournes “friends” throughout 2019 interview.