How Fyre Fest Went from Buzzy Luxury Festival to $26 Million Fraudulent Scheme

Image: Fyre Fest

How Fyre Fest Went from Buzzy Luxury Festival to $26 Million Fraudulent Scheme

Want a chance to frolic in the sapphire-blue waters of the Bahamas with Bella Hadid, lounge in the sand alongside Emily Ratajkowski, catch live music on a remote island with Kendall Jenner? Fyre Festival promised that. The new music festival, billed as more upscale and ...

October 11, 2018 - By TFL

How Fyre Fest Went from Buzzy Luxury Festival to $26 Million Fraudulent Scheme

Image : Fyre Fest

Case Documentation

How Fyre Fest Went from Buzzy Luxury Festival to $26 Million Fraudulent Scheme

Want a chance to frolic in the sapphire-blue waters of the Bahamas with Bella Hadid, lounge in the sand alongside Emily Ratajkowski, catch live music on a remote island with Kendall Jenner? Fyre Festival promised that. The new music festival, billed as more upscale and exclusive than Coachella, was the brainchild of entrepreneur Billy McFarland with the help of rapper Ja Rule. However, the event – which was set to take place during two consecutive weekends in April and May 2017 on the Bahamian island of Fyre Cay, and for which eager festival-goers shelled out between $1,500 and $250,000 for tickets – was over before it even started.

The ill-fated festival was, in the words of a U.S. District Judge on Thursday,, in sentencing McFarland to 6 years in a New York State prison, “Not a good idea gone bad, the bad intent was long withstanding.”

The fall of Fyre Fest was swift. Almost immediately after the first guests of the inaugural weekend began to arrival, the heavily-hyped festival was labelled a “hoax” and a “scam.” As tweets and first-hand accounts began to stream in, a media storm erupted. The organizers had left hordes of festival-goers stranded at the Miami and Exumas airports. Those that made it from the airport to the site of the festival found that their “luxury villa” accommodations were little more than sparse, partially constructed tents; their celebrity chef-catered meals were actually scarce amounts of supermarket staples.

More than just a mass of scathing media attention and an excess of “Lord of the Flies” references, what followed from the epic fail that was Fyre Fest was a steady flow of litigation, including upwards of ten different multi-million-dollar class action lawsuits, all of which asserted fraud, breach of contract, breach of covenant of good faith, and negligent misrepresentation, among other claims. A number of those suits claim upwards of $100 million in damages and in addition to naming Fyre Fest Media as a defendant, they are suing McFarland in a personal capacity, as well. One such suit has resulted in $5 million judgment against McFarland in July.

Meanwhile, a separate proceeding was initiated by the Federal Bureau of Investigation.

Less than two months after the festival’s debut weekend, 26-year-old Billy McFarland – who boasted the title of organizer of the Fyre Festival – was arrested on charges of fraud for allegedly using fake financial documentation to potential backers in an effort to secure a $1.2 million investment in Fyre Media. According to the U.S. Attorney’s Office for the Southern District of New York, McFarland also lied to investors, claiming he made millions in revenue from 2016 to 2017, when, in actuality, he had earned under $60,000.

New York-based McFarland, who was released on $300,000 bail early this year, was back in court shortly thereafter, pleading guilty to wire fraud charges, and as part of a plea, agreeing to serve up to a decade in prison for lying to investors, who, according to the U.S. Attorney’s Office, lost over $26 million as a result.

In court in Manhattan in March, McFarland admitted to Judge Naomi Reice Buchwald that he did, in fact, defraud 80 investors. He further owned up to “giving a ticket vendor false information about Fyre Media’s financial condition last April to induce the vendor to pay $2 million for a block of advance tickets,” according to the Associated Press.

McFarland said he planned to organize “a legitimate festival” when he planned the Fyre Festival, but “grossly underestimated the resources that would be necessary to hold an event of this magnitude,” he told the court. “In an attempt to raise what I thought were needed funds, I lied to investors about various aspects of Fyre Media and my personal finances. Those lies included false documents and information.”

“I deeply regret my actions, and I apologize to my investors, team, family and supporters who I let down,” McFarland said. In addition to agreeing to a forfeiture order of $26 million, which would transfer his monetary assets to the government, McFarland will likely serve a jail sentence of between 8 and 10 years, in accordance with prosecutors’ demands, even though his charges typically allow for a prison term of up to two decades.

“William McFarland tendered fake documents to induce investors and a ticket vendor to put more than $26 million into his company and the disastrous Fyre Festival,” U.S. Attorney Geoffrey S. Berman said. “He now awaits sentencing for his admitted swindle.”

But in case wire fraud charges are not enough, McFarland was arrested in July on additional charges stemming from his latest venture, NYC VIP Access. Being called a sham ticket scheme, McFarland allegedly sold fraudulent tickets to fashion, music and sporting events, including the Victoria’s Secret Fashion Show, Burning Man, and and backstage passes to meet top-tier artists like Ed Sheeran, Demi Lovato, and Taylor Swift … all while he was out on bail in connection with those previously mentioned wire fraud charges.

William F. Sweeney Jr., head of New York’s FBI office, said in July that the new charges show that McFarland did not stop committing crimes after pleading guilty in March to defrauding investors and vendors in connection with Fyre Festival. Sweeney says McFarland, now 26, went on to sell fraudulent tickets totaling almost $100,000.

The case has since come to a head with Judge Buchwald sentencing McFarland to six years in prison on Thursday for multiple counts of fraud, including the failed festival in the Bahamas.

Last month, McFarland’s counsel, attorney Randall Jackson, had asked the court – much to prosecutors’ skepticism – to spare the 26-year old of the full 10-year sentence, citing two psychiatric reports in asserting that McFarland had been diagnosed with “bipolar related disorder,” ADHD, and alcohol abuse, which altered his behavior and resulted in “delusional beliefs of having special and unique talents that will lead to fame and fortune” and his inability to distinguish between right and wrong.

“Nothing in this case speaks to any malicious intent on his part, just a sea of bad judgment, poor decisions, and the type of core instability that can only be explained by mental illness,” Jackson argued.

Asserting that being “bipolar does not excuse [McFarland’‘s] behavior,” Judge Buchwald held that “based on all the submissions, the defendant is a serial fraudster and that to date his fraud like a circle has no ending.”

Addressing the court on Thursday, McFarland said, “The remorse I feel is crushing. I’ve lived every day with the weight of knowing that I literally destroyed the lives of my friends and family.”

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