Scandal-plagued Ozy Media is being investigated by the U.S. Justice Department and the Securities and Exchange Commission, according to a new report.
Federal prosecutors in the Eastern District of New York have contacted at least one firm that dealt with Ozy, while the SEC has reached out to two companies that talked about investing in Ozy, The New York Times reported, citing people with knowledge of the matter.
It was not immediately clear what the investigations were focused on, according to the newspaper.
Ozy retained attorney Andrew Levander of the firm Dechert, the Times added. Levander didn't immediately respond to CNBC's request for comment.
Ozy told staffers it was shutting down in early October, following several days of negative media attention. The controversy was triggered by a Times article that described how Ozy's operating chief, Samir Rao, impersonated a YouTube executive on a conference call with Goldman Sachs, which was considering investing $40 million in Ozy. The report also said Ozy had also allegedly inflated its monthly unique visitors, a metric used by media firms to lure advertisers.
Following the Times report, several top people in the company quit, including former BBC anchor Katty Kay and investor-chairman Marc Lasry.
CNBC also reported that media personality and music industry veteran Sharon Osbourne accused the company's co-founder and CEO, Carlos Watson, of lying when he had said two years earlier that Osbourne and her husband, the rocker Ozzy, invested in the company following a legal battle.
A few days after the company announced its closure, Watson denied that Ozy would be shutting down. He did not explain how he would keep the company open.
In an on-air CNBC interview, Watson criticized media reports about his company, but also admitted that Ozy should have done a better job with data, marketing, culture and leadership.
Ozy also received $5.7 million in federal Covid relief loans. Days after Watson said the company wouldn't be closing down, CNBC reported that several former Ozy employees claimed they didn't receive any of the money even as the company trimmed staff and claimed it had reached profitability in 2020.
Read the full New York Times report here.