(Bloomberg) -- Ozy Media Inc. Chief Executive Officer Carlos Watson sought to defend himself against criminal fraud charges by blaming company co-founder Samir Rao for orchestrating a fake phone call in 2021 to dupe Goldman Sachs Group Inc. into making a $35 million investment.

Watson, 54, has been testifying since Monday in federal court in Brooklyn, New York, where he’s on trial for allegedly bilking tens of millions of dollars from investors by lying about Ozy’s earnings and audience data. Rao has already pleaded guilty and was the government’s star witness against Watson, an Ozy co-founder who is a graduate of Harvard College and Stanford Law School. 

Rao testified the two men agreed he’d impersonate a YouTube executive on the call with two Goldman bankers in a bid to rescue the flailing digital media company. He said Watson sat across from him and coached him on what to say during the call, and that he’d used a voice-altering app on his phone. 

But Watson, under questioning by his lawyer, testified Tuesday that he was surprised when Rao began to impersonate someone else. “It was a strange call,” Watson told jurors. “I came to believe he was pretending to be someone he wasn’t.” Watson said he got concerned and tried to quickly end the call.

“I started to worry, then began to furiously give him the cut sign to get him to stop,” Watson said. “I assumed at the time I was watching someone melt down, so I tried to end it as gracefully as possible and then get on the phone and explain what had happened.” 

Watson, who denied wrongdoing Monday, also insisted he didn’t have any prior knowledge of Rao’s intention to impersonate the YouTube executive. Watson called the conference call “a clown show.” He added, “Running through my mind was, do I tackle him?”  

Prosecutors have shown jurors emails and chat messages they argue are Watson directing Rao what to say on the call. Rao said Watson later falsely claimed he played no role in the incident and told bankers his co-founder had suffered a mental breakdown.

Rao testified earlier at the trial that he posed as Alex Piper, an executive at Alphabet Inc.-owned YouTube. Former Goldman banker Allison Berardo testified her mind was “blown” during the bizarre call with a strange voice, leading Goldman to cancel plans for an investment in Ozy.

Prosecutors allege that after the Goldman investment fell through, Watson boasted to a prospective investor that Alphabet subsidiary Google had offered to buy the startup for “hundreds of millions of dollars” to attract another Ozy investor. 

Alphabet Chief Executive Officer Sundar Pichai testified the search giant never intended to buy the startup for any amount of money.

Ozy, a once high-flying media startup backed by Marc Lasry, was sent into a tailspin after the New York Times later reported about Rao’s impersonation of the Goldman call. 

Watson returns to the stand Wednesday when prosecutors are expected to begin their cross-examination.

Meanwhile Watson’s lawyer Ronald Sullivan filed a letter to US District Judge Eric Komitee on Tuesday. In it, Sullivan said the judge has consistently taken the prosecution’s side in his rulings, demeaned the defense in front of the jury and even sustained objections prosecutors hadn’t raised.

He said the judge’s conduct of the trial threatened to “impact the demeanor and confidence of defense witnesses” and could bias the jurors against them and his client. He also complained that the judge has barred “any examination or discussion of race in this trial, even where it is plainly relevant.” 

“The court has created an incredibly hostile environment and repeatedly aggressively insulted defense counsel,” Sullivan wrote. He added that even if the judge gave the jury an instruction to counter what he called Komitee’s interference, “the damage cannot be undone” — a phrase that may suggest he could ask for a mistrial to be declared.    

The judge addressed the letter during a break on Tuesday, without the jury in the courtroom.

“I believe my questions have been restrained and appropriate, and they’ll continue to be that,” Komitee said. He said the suggestion that he has been acting as a prosecutor or “that I’ve influenced the jury in any way in terms of my comments” is “simply untrue.”

The case is US v. Watson, 23-cr-82, US District Court, Eastern District of New York (Brooklyn). 

(Updates with letter to judge from Watson’s lawyer at end.)

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