Breaking News: Conflict of Interest Bombshell: Judge Invested in Ozy’s Victim Companies

October 27, 2024

Watson’s Conviction and Motion for Judge’s Disqualification

Ozy Media founder Carlos Watson may not be going to prison after all.

The federal judge who presided over his trial for securities and wire fraud conspiracy and identity theft and who scheduled Watson’s sentencing in December, may have to remove himself from the case for an unprecedented appearance of a conflict of interest.

Watson, 55, who was convicted on all three financial fraud counts, faces a maximum sentence of 37 years, with federal sentencing guidelines ranging from 24 to 29 years, according to prosecutors.

Judge Eric Komitee

Watson’s attorney, Andrew J. Frisch, a former federal prosecutor, in a motion filed in federal court on Friday, made the shocking allegation that Judge Eric R. Komitee had significant investments through hedge funds in all three of Watson’s primary alleged corporate victims – Goldman Sachs, J P Morgan Chase, and Google.

Watson’s motion demands Judge Komitee disqualify himself, vacate the conviction, and dismiss the original indictment against Watson.

Jury Conviction and Unreported Financial Conflicts

In July, a Brooklyn jury convicted Watson for conspiring to defraud Goldman Sachs and JP Morgan Chase by falsely claiming Google and Live Nation were his Ozy Media company sponsors.

Through four hedge funds managed by three asset management companies, Judge Komitee had active investments in all four of these Watson’s alleged victim companies, something the judge did not disclose during the trial.

Komitee, one of, if not the wealthiest federal judges in America, has millions invested in hedge funds, which invest in Watson-victims Google, JP Morgan, and Goldman Sachs and other companies.

Komitee began investing in the Watson victims’ stock through hedge funds before becoming a judge in 2018, during the time he worked as general counsel for Viking, one of the largest hedge funds in the world.

Carlos Watson, CEO of Ozy Media, endured a two month trial in 2024 and was convicted on three felony counts. Watson claims he is innocent and that the real criminals were two of his employees, who became cooperators in the trial.

Post-Trial Financial Disclosure and Scrutiny

It was not until after the trial – on October 2, 2024 – when Judge Komitee’s required annual financial disclosure for 2023 became available to the public. This prompted scrutiny into motives for what Watson’s trial attorney, Ronald Sullivan, called the most biased judge and unfair trial he had ever witnessed in more than 30 years of trial practice and decades as a Harvard law professor.

The 2023 financial disclosure reveals that Judge Komitee, through hedge fund accounts worth more than $16 million, had money invested in the companies singled out by the US Attorney for the EDNY as Watson’s primary victims.

The CETA-required federal judge financial disclosure allows considerable latitude in judge’s disclosures once they reach the multi-millionaire investment class.

Judge Komitee’s signed and certified 2023 disclosure shows he has between $6 and $30 million invested in hedge funds managed by Viking Global Investors, $5 – $25 million in D1 Capital Partners, and $5 to $25 million in Junto Capital Partners LP.

Judge Komitee’s Background and Hedge Fund Ties

Before becoming a judge, Komitee was Viking’s general counsel from 2008 until 2018 and worked closely with the CEOs of his other two hedge funds – Junto and DI, both former Viking executives.

During his tenure at Viking, Komitee managed contractual relationships with Goldman Sachs and J P Morgan, who have provided critical services as custodian of assets and prime broker, making these two giant financial institutions virtual partners with Viking.

As top legal counsel, and a former securities fraud federal prosecutor, Komitee navigated the contractual relationships and, in turn, made millions from Viking’s relationship with Watson victims J P Morgan and Goldman Sachs. Komitee reaped multimillion-dollar windfalls in 2015 and 2016 when his company invested heavily in Google stock. According to published reports, its rise offset other poorer-performing investments in late 2015 and catapulted Viking into the top tier of hedge funds by Google’s continued strong performance in 2016.

During that same period, Komitee earned more than $10 million in compensation from Viking, not to mention the value of his growing portfolio.

Judge’s Wealth and Testimonies in Trial

When Komitee left Viking to become a federal judge, he disclosed a net worth of almost $60 million. Much, if not most, of that wealth came from his relationships with Goldman Sachs, Google, and JP Morgan Chase – the big three victims in the Watsonn case.

During the Watson trial, Goldman Sachs and Google representatives testified against Watson, including the surprise and undoubtedly jury-impressing appearance of Google CEO Sundar Pichai.

Also testifying were Donald Harrison, President of Google’s Global Partnerships, Alex Piper, Google subsidiary YouTube’s former Head of Unscripted Content, and Goldman Sachs’ Hillel Moerman and Allison Ross.

Lack of Disclosure During Trial and Financial Implications

As each testified against Watson, Komitee, presiding, ruling on objections, and making other judicial determinations, did not disclose his financial interest in their companies through his hedge funds in what is called an “allocable beneficial ownership interest.”

He also did not disclose his extensive history with the companies.

Because the judge and hedge funds themselves do not reveal the extent of leveraging – the process of borrowing to make larger investments into a stock, Komitee’s actual financial interest in the Watson victims during the trial is hard to calculate. Watson’s attorney attached a detailed financial analysis with his motion to disqualify and dismiss the case.

Komitee’s Investments and Potential Impact on Case

According to the analysis, Komitee had investments in the Watson victims, which changed in value based on frequent trading, as is common in hedge funds. but is likely to have averaged more than $1 million during the pendency of the case.

What is the chance that either the judge or the US Court of Appeals for the 2nd Circuit will dismiss Watson’s case?

During Watson’s trial, the 2nd Circuit threw out the dismissal of an antitrust lawsuit accusing 10 large banks of overcharging investors by billions of dollars of corporate bonds for much less cause than what is alleged against Judge Komitee in the Watson case.

The 2nd Circuit ruled the trial judge should have recused himself, because his wife owned $15,000 in stock in one of the banks named in the lawsuit.

The 2nd Circuit said that while US District Judge Lewis Liman “almost certainly unknowingly” had a conflict of interest, his partiality could be questioned because his wife’s ownership of Bank of America stock created an “appearance of impropriety.”

 

As it often does, the Frank Report has broken an important news story. This one, we predict, will soon be a national news story with important consequences on judicial conduct, quite possibly leading to Watson’s conviction’s dismissal. Since this is a breaking news story, the Frank Report will delve deeper into the case and provide a wealth of additional extraordinary details never before published. As I previously disclosed I began my investigation into this case based on being retained by a documentary filmmaker’s interest in getting the true facts behind this remarkable prosecution of Carlos Watson.

Stay tuned. This story has only just begun.

 

Previous reports on the Watson case:

Wealthy Judge, Familiar Faces: How the Carlos Watson Trial May Have Been Pre-Determined 

Was Carlos Watson the Mastermind or a Victim of Lies? How Cooperation Deals Shaped the Verdict

Samir Rao’s Transformation: From Culprit to Cooperating Witness in Ozy Media Scandal

 

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