The Black founder of Ozy Media, under federal indictment for fraud, filed a $2 billion civil suit last month against a former New York Times media columnist, accusing the journalist of smearing and destroying his company while hiding his multi-million dollar stake in a competing firm.
The lawsuit filed by attorneys for Carlos Watson, 54, claims that Ben Smith, the former editor-in-chief of BuzzFeed News, downplayed his financial interests in the online media firm along with the upside of Ozy’s failure to his bottom line while writing articles for the New York Times calling into question Ozy Media’s business practices.
The suit, naming the former Buzz Feed editor, his current company Semafor and BuzzFeed as defendants, also alleges Smith violated non-disclosure agreements signed as part of BuzzFeed’s bid to acquire Ozy and built his Semafor business model using trade secrets lifted from Ozy.
The latest legal maneuver comes several months before Watson, a Harvard College and Stanford Law grad once heralded as the leader of a new generation of Black media execs, is expected to go on trial in Brooklyn Federal Court for allegedly defrauding investors by falsifying revenue reports and lying about online subscribers.
Facing a total of three charges and 37 years in federal prison, Watson and his attorney, noted Harvard Law Professor Ronald S. Sullivan Jr., have denied criminal wrongdoing and accused the prosecutors of racial bias, pointing to a disproportionate record of targeting Black defendants.
Watson’s defense in the criminal case and his charges in the civil action paint a pattern of Black entrepreneurs facing greater scrutiny and receiving less support than whites, especially as aspiring moguls of color reach the upper levels of commerce to challenge white-led legacy companies.
While acknowledging mistakes in Ozy Media’s pursuit of success over the company’s 10-year history, Watson’s team argues that white practitioners of the Wall Street and Silicon Valley “fake-it-till-you-make-it” business ethos are given a pass, while Blacks face prison time.
The civil suit was filed on Watson’s behalf by media-law specialist Dustin Pusch, one of the leading counsels in the recently settled $787 million action by Dominion Voting Systems against Fox News over falsely portraying the Virginia-based company as complicit in election fraud in the 2020 presidential race.
U.S. Justice Department lawyers have denied Watson’s accusations of prosecutorial bias. Smith and Jonah Peretti, the CEO of BuzzFeed, were contacted last week about the lawsuit but did not comment by the Banner’s press deadline.
According to the suit, Ellen Pollock served as Smith’s editor on the New York Times stories and ignored repeated attempts by Watson to fully disclose to readers Smith’s interests in a competing company and take him off the story. Pollock referred a request for comment to a Times spokeswoman, who declined to respond.
While saying the core of the lawsuit was about Smith’s “willful misappropriation of Ozy’s trade secrets,” the civil action said “this case is much more; it is also about a total disregard for journalistic ethics and integrity, corporate greed and profiteering, large-scale public deception, and the willful taking of another man’s dream.”
Describing a complex series of business maneuvers, the suit alleges that with BuzzFeed facing enormous losses, Smith and the BuzzFeed team targeted Ozy for acquisition in 2019, hoping to bolster the company’s appeal in advance of going public.
The suit said Watson had the BuzzFeed team sign NDAs and entered into discussions but spurned increasingly higher offers, the last one for $300 million.
Meanwhile, according to the suit, Smith left his BuzzFeed post to become media columnist for the New York Times but failed to divest himself of his interests in the company and downplayed his part in the acquisition talks while writing a series of New York Times articles, starting in September 2021, that proved devastating to Ozy’s survival — essentially taking out a rival and boosting BuzzFeed’s chances of success in going public.
The lawsuit says the timing of the articles was meant to damage Ozy and boost BuzzFeed as both were planning to go public in late 2021, with a tentative evaluation of Ozy’s market appeal set at $2 billion.
According to the civil action, Smith ultimately cashed in on BuzzFeed’s public offering and left the Times to start the Ozy clone Semafor, which the suit says unlawfully pilfered his investor and revenue strategies in violation of the binding NDAs.
Smith’s disclosures in the New York Times articles said he was only “peripherally involved” in the acquisition talks between Ozy and BuzzFeed. But the lawsuit says he was central to merger talks.
The lawsuit says Smith’s New York Times articles deliberately torpedoed Ozy’s efforts to build on its record of success with award-winning newsletters, podcasts, prime-time TV shows and $250 million in contracts with over 100 clients.
