• President Donald Trump commuted the criminal fraud sentence of Ozy Media founder Carlos Watson, hours before he was due to begin serving a 116-month prison term in California.
• Trump also commuted the sentence of probation imposed on Ozy Media for its related conviction in the case.
• Ozy abruptly shut down in October 2021, after The New York Times reported that the company's chief operating officer impersonated a YouTube executive on a conference call with Goldman Sachs.
• Trump also this week pardoned Trevor Milton, the founder and former CEO of electric truck maker Nikola, who was free on appeal after being sentenced to four years in prison.

President Donald Trump commuted the criminal fraud sentence of Ozy Media founder Carlos Watson on Friday, just hours before Watson was due to begin serving a 116-month prison term for a multi-million-dollar scheme, a senior White House official said.

Watson, whose media company start-up falsely claimed to have deals with Google and Oprah Winfrey, planned to surrender Friday afternoon to the Federal Correctional Institution in Lompoc, California, before receiving word of Trump's clemency, a source familiar with the situation said.

Trump also commuted the sentence of one year of probation imposed on Ozy Media for the defunct news and entertainment company's conviction in the same case.

The president's action removes the criminal penalty imposed on Watson, 55, and Ozy, which include a judge's order in February holding them jointly responsible for paying almost $60 million in forfeiture and more than $36 million in restitution.

Watson was convicted at trial in Brooklyn federal court last July of conspiracy to commit securities fraud, conspiracy to commit wire fraud, and aggravated identity theft.

The former Ozy CEO was sentenced in December to a nearly 10-year stint in prison.

Watson's defense attorney, Arthur Aidala, declined to comment when contacted by CNBC.

A spokesman for the Brooklyn U.S. Attorney's Office, which prosecuted Watson, also declined to comment.

Glenn Martin, a criminal justice reform advocate, in a tweet on Friday wrote, "We did it," above a photo of him and Watson.

"President Trump commuted the sentences of Ozy Media and Carlos Watson hours before his surrender," the tweet said.

"@CarlosWatson is not going to prison today," Martin wrote.

"First and foremost, thank God for His grace, mercy and the power of redemption. A very special note of appreciation to @AliceMarieFree," he added, referring to his fellow criminal justice reform advocate Alice Marie Johnson.

"Your advocacy, compassion, and relentless pursuit of fairness have made this moment possible for people like Carlos."

When Watson was sentenced, then-Brooklyn U.S. Attorney Breon Peace said, "Carlos Watson orchestrated a years-long, audacious scheme to defraud investors and lenders to his company, Ozy Media, out of tens of millions of dollars."

Prosecutors said that Watson and his co-conspirators between 2018 and 2021 defrauded investors by misrepresenting Ozy's financial performance, its ongoing business relationships and its acquisition prospects, as well as its contract negotiations.

Ozy abruptly shut down in October 2021, after The New York Times reported that the company's chief operating officer, Samir Rao, had impersonated a YouTube executive on a conference call with Goldman Sachs.

The investment bank was considering a $40 million investment in Ozy at the time.

— CNBC's Eamon Javers contributed to this story.