Carlos Watson, the founder of the troubled startup Ozy Media, has been detained on suspicion of federal fraud.
Days earlier, Samir Rao, a former executive of the company, had pleaded guilty to various fraud-related charges.
A New York Times investigation revealed that Mr. Rao had attempted to defraud investors by pretending to be a YouTube executive, leading to the closure of Ozy Media in 2021.
Authorities in the federal government claim that Mr. Watson "directed a scheme to defraud investors" of millions of dollars.
Investigations into the company have also been opened by the Securities and Exchange Commission and US justice departments.
Mr. Watson, a previous Goldman Sachs banker and MSNBC host, established Ozy Media in California in 2013. The company created left-leaning podcasts, TV shows, events, and profiles of upcoming artists and fashion trends.
In 2020, it was worth $159 million (£132 million).
However, according to federal court documents submitted this week, despite knowing that Ozy Media was "drowning in debt," Mr. Watson misled investors about the company's revenue and falsely claimed that high-profile companies and celebrities had made investments.
The rock star Ozzy Osbourne's wife, Sharon Osborne, has accused Mr Watson of making false claims that the couple had invested in the company, telling CNBC in 2021 that "this guy is the biggest shyster I have ever seen in my life.".
According to the Wall Street Journal, Mr. Watson was arrested on Thursday and will soon be charged with conspiring to commit securities fraud and conspiring to commit wire fraud in federal court in Brooklyn, New York.
The BBC has contacted his attorney for a response.
As Goldman Sachs was considering an investment, Mr. Rao pretended to be an executive from YouTube during a call with the bank, bragging about YouTube's successful partnership with Ozy. This is when Ozy Media's demise started, according to a New York Times report.
While acknowledging that the incident did indeed occur, Mr. Watson asserted that Mr. Rao's mental health issues were to blame. The fact that Goldman Sachs ultimately decided against investing, he continued, did not result in any harm.
In court documents filed this week, prosecutors claim that Mr. Watson was present during the call and was "texting Rao directions of what to say," despite his prior denials to the media.
When confronted with inquiries from investors, Mr. Watson and Mr. Rao allegedly impersonated executives of media companies "on multiple occasions" to conceal earlier false statements, according to the prosecution.
On Tuesday, Mr. Rao entered a plea of guilty to charges of securities fraud conspiracy, wire fraud conspiracy, and identity theft. He also told the judge that he had inflated the company's finances and given investors false information.
According to federal court documents, Suzee Han, the former chief of staff for the company, has also admitted guilt to securities fraud conspiracy and wire fraud conspiracy.