What's up guys and welcome back to wall street millennial on this channel, we've covered a lot of cases of corporate frauds and scams. We even have a playlist dedicated to financial frauds scandals and corporate failures. Recently, a new corporate fraud came up. That is so bizarre and absurd that it easily takes the cake for craziest fraud.

We've ever covered. On october, 1st 2021 u.s media company aussie media announced that i'd be shutting down its operations after it was exposed as being almost completely fraudulent. You've probably never heard of aussie media because they have very few real viewers. But despite this, they were very popular on wall street and were able to raise 70 million dollars from hedge funds and other supposedly sophisticated investors.

One of the key assets that they tied to their investors was their youtube channels, which they claimed were extremely successful and generated. Significant revenue, but it doesn't take a phd to find out that their youtube pages are a complete joke and the vast majority of their views are probably fake. Aussie was founded in 2013 as early as 2014. They were raising tens of millions of dollars from hedge funds and other institutional investors despite multiple obvious red flags, about their business.

On september 26 2021, the new york times reported on a bizarre conference call with goldman sachs analysts, who were considering investing in aussie on the conference call ozzie co-founder and chief operating officer. Samir rao pretended to be a youtube executive. Telling goldman sachs analysts about how much money aussie is making on youtube when this fraudulent conference call was exposed, the house of cards came crumbling down rapidly, investors abandoned them, like rats fleeing a sinking ship and the company announced it was shutting down within just a few Days in this video we'll go over what aussie is how they scammed investors, out of tens of millions of dollars and the crazy story of how it was finally exposed before we get into this video. We want you to be aware that the information contained in this video is all from publicly available sources, as well as our own opinions.

The case of aussie is still unfolding, and a lot of information may be incomplete. Keep this in mind before drawing your own conclusions about the situation in 2013, carlos watson and samir rao co-founded aussie media as a disruptive new digital media company, both men had impressive credentials, but carlos watson, the man on the left, was especially well respected in the media And financial industries after graduating, from harvard with a ba in government, he got a law degree from stanford after graduating his law degree. He worked at consulting firm mckinsey for a couple years. He then left to start his own education company called the chiva college prep services, which he eventually sold to kaplan one of the largest for-profit education companies in the u.s following the sale of his education business.

He worked as global head of education, investment, banking at goldman sachs throughout the 2000s and early 2010s. He started making appearances on major cable news networks such as fox news and cnn. As a political commentator, he eventually even became co-host of his own news show at msnbc. So why did we just spend so much time talking about carlos watson's credentials? It's because his long and accomplished career was a major key to the founding and growth of aussie media through his work at goldman sachs and major cable news networks, carlos cultivated deep connections with high up executives in the financial and media industries, the other co-founder sumir rao, Was also a former employee at goldman sachs so when they thought of an idea to found a new media startup, they knew exactly who to go to for raising capital.

In 2013, they raised 5 million from a few rich connections and launched aussie media. They hired some journalists and started publishing aussie magazine a digital only magazine which covered stories about politics and current events, carlos and samir, established an editorial vision whereby ozzie would strive to publish niche content that the mainstream media wouldn't cover. The problem is: if the mainstream press isn't covering a story, it's usually because it's too insignificant for readers to care about so aussie ended up covering obscure topics with almost no interest from the public. For example, they recently posted an article on their front page about the role of immigrants in the world of irish sports.

While it could be great journalism. Very few readers outside of ireland would have any interest in the topic. New york magazine interviewed a former editor at aussie media, who said they used to have a counter displayed at the bottom of each article, showing how many views it got. It wasn't uncommon for them to work many hours on an article just to see it get.

No more than 60 views, it didn't matter how high quality the content of the article was. Nobody was interested in reading about these obscure topics. After seeing how disastrous the viewership numbers were, aussies stopped publicly displaying viewership numbers aussie is a primarily ad-supported platform. They probably made a fraction of a penny for each ad.

Its readers saw when they scrolled through the articles to cover the cost of paying the journalists, rent hosting the website and various corporate expenses. They needed millions or even tens of millions of regular viewers. 60 views per article would probably give them less than one dollar of ad revenue, which is little more than a rounding error compared to the costs associated with writing each article. At this rate, they were burning cash quickly and needed to raise a lot more money from outside investors, with their viewership numbers being so pitiful.

No sane investor would give them a penny, so the executives at aussie decide to start exaggerating their viewership numbers to make the company look more enticing to prospective investors. They started hiring third party traffic suppliers who code up bots, which click on aussie articles, thousands of times to inflate their viewership numbers. A bombshell investigative report from buzzfeed, published in 2017, found the aussie paid for fake clicks for sponsored articles. The scheme works as follows: big companies such as jpmorgan, amazon and visa want to launch a pr campaign to show that they care about environmental sustainability.

They pay aussie to write, sponsored articles about their corporate sustainability initiatives. The more viewers aussie gets, the more these corporate sponsors will be willing to pay aussie, allegedly paid third party bot companies to drive thousands, if not millions, of fake views on these sponsored articles. In light of the great traffic numbers, the sponsors are willing to pay aussie a lot of money and perhaps even more importantly, they can take these high engagement and sponsorship statistics to wall street. In order to raise capital by 2019, they had raised 70 million dollars from institutional investors, including german media company, axel springer venture capital, firm gsv capital and billionaire hedge fund manager, mark lasry, who also joined the company as chairman of their board of directors.

In addition to being a hedge fund manager last week, is the owner of the milwaukee bucks, nba team, here's a short clip from a 2019 cnbc interview where mark lassrie and carlos watson talk about the tremendous growth potential for the company. What are you thinking about these? These, what do you think? How are you feeling about valuations in the digital media? Space he's also doing events, and so many other things like. I think, at the end of the day, to do well in this space you need to have a ceo who's got a vision, who's going to be able to do it. I think you also need a forced personality.

I think more time people spend with carlos the more impressed you're going to be and there are going to be just a few winners. So i don't disagree with you there's issues, but where there's issues there's opportunity and if you're able to navigate through that, you should be able to do really well, and i think carlos is that person. That's the reason i invested. I just think carlos is pretty unique and will be able to do the things he's talking about.

As you can see, lassre felt content investing millions of dollars in aussie because of the great reputation of founder and ceo carlos watson. His reputation as an msnbc host goldman sachs, executive and entrepreneur was enough to reassure investors that the company was legit and these people weren't just some random mom and pop investors. They were hedge fund managers and experienced venture capitalists who should be highly sophisticated, but they were blinded by watson's credentials and failed to perform even the most basic of due diligence mark last remade, his multi-million dollar investment and joined aussie's board in 2019, almost two full years After buzzfeed published the bombshell report about aussie paying for fake article views, aussie even admitted that they paid for fake traffic but claimed that it was a legitimate marketing strategy designed to increase their email list. But by this point there were some other blatant irregularities in their viewership numbers that were even harder to explain one of aussie's most valuable assets.

Is the carlos watson show where watson talks about politics and current events? They run a youtube page which at face value, appears to be very successful. They have many videos with millions of views and have scored high profile interviews with the likes of dr fauci andrew yang mark cuban and others. But if you take a closer look at the channel, a couple of things start to stand out as kind of weird. Firstly, the number of views per video have extreme variance.

For example, look at these two circled videos. They are both exactly two minutes. Long have the exact same layout for the thumbnail. One is a clip from an interview with a member of congress.

The other is an interview with an actor. The second video has 22 000 views, while the first one only has 270.. This is almost a 100 fold. Difference while it's normal for there to be some amount of variability from video to video, this level of difference is highly unusual and if you look at some of the channel's most highly viewed videos, there are some even more blatant irregularities.

Their most viewed, video on their youtube page, is an interview with the congressman that was published a year ago and has 4.1 million views. This video, with more than 4 million views, has 242 likes 61 dislikes and a grand total of 44 comments for comparison. This is a video from the joe rogan experience that has 3.5 million views. It has 54 000 likes 18, 000 dislikes and 59 000 comments.

That means that this joe rogan video with less views than the carlos watson video, has more than a thousand times the number of comments. It doesn't take a genius to realize that something strange is going on here. Aussie media runs another youtube channel called aussie media, which has various podcasts and news videos. If you thought the carlos watson show was suspicious.

Wait till you see this channel. If you sort the videos by number of views, the top videos are quite successful with the most popular having more than 400 thousand views. But as you scroll down, the numbers quickly fall off a cliff by the time you get to the third row of videos. They have less than one thousand views each.

If you keep scrolling down you'll, see that many of their videos have less than 10 views, one of their most successful videos is this podcast about farming from august, which has garnered almost 100 000 views. It has a grand total of three comments. Furthermore, all three of these comments were made on october 3rd 2021, shortly after the bombshell new york times, article exposing aussie's shady business practices. All three of these comments are from people who heard about the controversy and decide to check out aussie's youtube page just to see what's what this video, with almost 100 000 views, did not get a single legitimate comment from a regular viewer of aussie media click.

Farms are surprisingly pervasive on the internet, unscrupulous actors, mainly in developing countries, set up walls with thousands of cell phones and paid dozens or even hundreds of low-wage employees to click on youtube or instagram videos all day they sell these services to individuals and companies who want To fan the appearance of having social media clout, this problem is especially bad in china, where streaming platform ite was forced to stop publicly displaying video view counts. After some videos recorded views in excess of 10 billion. Fake views are also a huge problem on youtube, based on the suspicious nature of aussies youtube pages, it's probably safe to assume that the vast majority of their views are not legitimate. All the way, through the beginning of 2021 aussie was able to maintain the facade of success and satisfy its investors with their fake views and clicks.

In fact, they were doing so well that they were receiving interest from additional investors who wanted a piece of their digital media empire. A recent bombshell report from the new york times details a february meeting between investors from goldman sachs asset management, who were considering making a 40 million investment in the company. The goldman analysts were very interested in aussies youtube pages and wanted to know how much ad revenue they could generate to answer these questions ozzie organized a meeting between the analysts and a youtube executive by the name of alex piper, who could tell them about aussie's success On the platform, piper is a big shot at youtube and is in charge of unscripted original programming for the entire platform, piper told the goldman analyst that his zoom wasn't working and asked if they could do a conference call by telephone instead, once the call started piper Told them about how great aussie media is and said that they generate a huge amount of revenue on youtube. But the goldman analyst started to get a little bit suspicious the voice that they heard sounded as if it had been digitally altered.

Like one of those filters that people used to have fake accents online, they contacted alex piper directly and, to their great surprise, piper said that he had never talked to them and had no knowledge of this conference call that he supposedly attended ozzie later contacted goldman sachs. Saying the person on the conference call purporting to be alex, piper was actually aussie's co-founder and chief operating officer sumir rao. They blamed his mental health issues for his impersonation of the youtube executive. You might find it hard to believe that samir acted on his own in this incident.

A 40 million dollar potential funding round from goldman sachs seems like something important enough for all the high-level executives to be involved in google's security team, contacted the fbi about this incident, but today no charges have been filed publicly. This incredibly bizarre and possibly criminal impersonation event happened in february of 2021 aussie continued to operate throughout the spring and summer of this year, as if nothing had happened and mark lastry continued to serve as chairman of the board. It wasn't until september 26th, more than seven months later, that the house of cards started tumbling down, but it came tumbling down very quickly. Just a few days later, on september 30th mark last we announced he was stepping down as chairman after the fraud was exposed.

No investors would give them new money. Aussies operations were burning cash, so without outside capital they had no way to keep the lights on. On october 1st, roughly one week after the new york times report, they announced that they'd be shutting down their operations. Investors lost 70 million dollars in this almost decade-long fraud, especially after they started their youtube channels.

It would only have taken five to ten minutes of due diligence to see that there are serious red flags about this company. You would think that the hedge funds and other sophisticated investors would have done extensive research before handing over tens of millions of dollars of what, in some cases, was their clients money. But it appears that this was not the case as far as the founders, carlos and samir, it's hard to tell why they would do this, especially in the case of carlos. He probably made tens of millions of dollars legitimately as a goldman sachs, executive and msnbc host.

It's also unclear to what extent the fraudulent activities were masterminded by carlos samir, both of them together or other executives at the company. In the beginning, they probably thought that they had a good idea for a disruptive digital company and founded aussie with good intentions, as the business start to underperform their expectations. Maybe they thought they could just do a little bit of fraud to raise some money and buy themselves time to turn the business around. But whenever a business is built on a fraudulent foundations, it's only a matter of time before it collapses under its own weight.

Alright guys that wraps it up for this video, what do you think about aussie? Why do you think their investors were so blind to the obvious red flags? Let us know in the comments section below, as always. Thank you so much for watching and we'll see in the next one wall, street millennial signing out.