(Reuters) - Ozy Media co-founder Carlos Watson lied to investors about the defunct startup's revenue to hide its crippling debt, a federal prosecutor told jurors on Wednesday during closing arguments in the former cable news anchor's fraud trial.

"This is a case about a massive fraud, because the lies they told weren't trivial," prosecutor Gillian Kassner said in U.S. District Court in Brooklyn, New York. "Watson knew the company was failing, but he was determined to turn Ozy and himself into the next big thing, and he wasn't going to let the truth stand in his way."

Ozy and Watson are accused of falsifying information about Ozy's finances and audience size, fabricating contracts and inflating its earnings projections to dupe investors.

Watson and Ozy are charged with securities fraud and wire fraud conspiracy. Both have pleaded not guilty.

Defense lawyers have not yet made their closing arguments.

Two of Watson's top deputies at Ozy, Samir Rao and Suzee Han, pleaded guilty to fraud and conspiracy charges in February 2023. Both testified against Watson.

The case stems from the dramatic downfall of Ozy, which raised more than $70 million from investors and promised to deliver smart news coverage to a young, diverse audience.

Ozy imploded shortly after a series of September 2021 news articles questioned claims about its audience size and finances and revealed that Ozy co-founder Rao had impersonated a YouTube executive during a conference call with investors.

Watson was arrested in February 2023, shortly after Rao pleaded guilty to fraud charges. Watson has acknowledged the impersonation incident, but said Rao's behavior stemmed from a mental health episode.

Watson testified in his own defense over several days at trial, saying Ozy was the victim of a smear campaign by competitors and that his California-based business was being unfairly targeted by Brooklyn federal prosecutors.

During cross-examination, Watson was at times evasive about the inconsistent revenue figures Ozy provided to investors, refusing to give yes or no answers about how much money the company made in given years.

Watson said the revenue projections Ozy provided to investors were based on his nuanced understanding of the media industry and the company's web of handshake deals with business partners and advertisers.

When asked by a prosecutor to break down Ozy's annual revenue in cash rather than future potential earnings, he declined.

"That's not the way I've thought about it before and that's not the way our investors thought about it," he said.