The New York Post has obtained documents indicating that Fyre Festival promoter Billy McFarland spent more than $150,000 on a yacht last April for the band Blink-182. It's no wonder his doomed music festival didn't even have running water. McFarland also allegedly spent $18,208 on towels, and $260,000 on a carpet for the partially-constructed tents where people were expected to sleep.
“There was gross mismanagement and a general misunderstanding of how events like this unfold and that purchases weren’t being vetted,” a source told the New York Post. “At no point in time if you look at the big picture does it appear that there was ever a criminal element. It was just the idea of a 20-something who unraveled.” Blink-182 eventually pulled out of the event, stating, “We’re not confident that we would have what we need to give you the quality of performances we always give our fans.”
McFarland is expected to be in Manhattan federal court on Tuesday. He’s facing wire fraud charges for lying to investors. McFarland claimed that his company, Fyre Media, had made millions from booking thousands of artists, when in reality, his company had revenues well below $60,000. McFarland is expected to plead guilty after waiving his right to a grand jury indictment. He has reportedly been speaking with prosecutors about a “possible disposition of the case” as far back as August.
When reports started coming out about the doomed Fyre Festival, which was originally billed as a “luxury” music festival and advertised by the likes of Kendall Jenner and Bella Hadid and which promised performances from Pusha T, Desiigner, Lil Yachty, Blink-182, and more, it became clear the whole thing had sounded too good to be true.
Billy McFarland, one of the masterminds behind the catastrophic festival and the owner of Fyre Media, has been hit with several lawsuits, arrested and charged with fraud, and been forced to place Fyre Festival LLC under involuntary bankruptcy. But Fyre Media is not the only company McFarland owned. He is also the CEO of Magnises, a company he founded prior to Fyre Media, that functioned as a members-only concierge service. However, documents acquired by VICE News suggest McFarland has been mismanaging that company’s finances, too, by running what appeared to be a complicated concert ticket scheme.
One of the benefits that Magnises offered its members was discounted concert and event tickets. But credit card records suggest that McFarland was buying the tickets from third-party distributors like Ticketmaster, StubHub, and Vivid Seats and then selling them to Magnises members at a significant loss.
Moreover, McFarland used a Fyre Media corporate credit card to pay for many of the Magnises tickets, effectively ensuring that both companies suffered similar financial woes even though they were entirely different entities. McFarland allegedly charged his Fyre Media American Express credit card for more than $1 million worth of tickets in just four months.
The records also show that other Fyre Media company credit cards were issued to at least nine employees including co-founder Ja Rule and Grant Margolin, the music festival’s marketing director. But the charges on those cards “appear reasonably related to the Fyre Media business,” according to VICE. It's the charges on McFarland’s card that raise the most eyebrows, since that’s where more than $1 million worth of Ticketmaster, StubHub, and Vivid Seats tickets were charged.
The problem for McFarland is that Fyre Media was conceived as an app for people to book artists for private events. It never claimed to sell tickets for concerts and events. Magnises did.
Former employees and Magnises members claim that McFarland would advertise and sell tickets to events he did not already have tickets to. And when the event dates arrived, McFarland would either cancel the reservations or provide tickets purchased through third-party organizations.
For example, Magnises advertised tickets to a series of Adele concerts in September 2016. A former employee told VICE McFarland did not possess the tickets he advertised and the whole situation sounds like it was a total clusterfuck.
“What happened with Adele was that we found out that Billy wasn’t going through a source in Live Nation at all, because for that concert, there were no e-tickets available; the whole thing was all ticket stubs,” the anonymous former employee told VICE. “We had to go and meet with these brokers who act as third-party buyers around MSG. And we’re spending the whole time running around the city trying to get them together and figure out how many they have and who’s going to go in which section.”
What’s more, McFarland was apparently buying the tickets on the same day as the performances. McFarland’s credit card records show more than $150,000 worth of StubHub, Vivid Seats, Fan Exchange, and My Ticket Tracker charges on September 19, 20, 22, 23, 25 and 26, the exact days Adele was performing at Madison Square Garden. There were no ticket charges on September 21 and 24, when she did not perform.
A similar situation happened when Magnises offered members $250 tickets for Hamilton. McFarland’s Fyre Media American Express records have charges totaling almost $30,000 labeled with Vivid Seats and Hamilton. The cheapest transaction with this label is $1,401.30, which means McFarland was operating on at least a $1,200 loss per ticket for this Hamilton deal through Magnises.
Finally, McFarland’s company offered discounted floor tickets to Kanye West’s Saint Pablo Tour in June 2016 at $275 each, about $100 less than the median resale ticket price. As should be expected by now, McFarland’s credit card records show more than $10,000 worth of Ticketmaster charges on the first night the Saint Pablo Tour arrived in New York City, September 5, 2016, also at Madison Square Garden.
All of this appears as though it's going to make life even more difficult for McFarland. Outside of the headache he's dealing with due to the Fyre Festival issues, he's also going to have to explain why it appears he was running a ticket scheme in the months leading up to that debacle.
UPDATED 7/2/17 3:15 p.m. ET: Fyre Festival organizer William “Billy” McFarland has been released on $300,000 bail after spending at least one night in a New York detention center following his arrest on wire fraud charges.
“The judge, Kevin N. Fox of United States District Court in Manhattan, set Mr. McFarland’s bail at $300,000, to be secured by $50,000 in cash or property,” reported Ben Sisario of the New York Times. “Mr. McFarland’s lawyer, Sabrina P. Shroff, said that he had been released after the hearing on Saturday, and that he had one week to satisfy the bail conditions.”
The Times also reports Shroff is a public defender, and Shroff told reporters McFarland was unable to pay his previous lawyers enough to continue representing him.
McFarland’s assets, or lack thereof, will likely be a point of contention during the trial. An unsealed, Department of Justice criminal complaint against McFarland released Friday, accused McFarland of misrepresenting his assets and his company's worth to convince investors to financially back the Fyre Festival.
See original story below.
The disastrous Fyre Festival from this spring that resulted in hilarious memes and a very public dragging of Ja Rule, will potentially have more serious results for its founder, Billy McFarland. Friday, the Department of Justice announced the unsealing of a criminal complaint charging McFarland with wire fraud.
“As alleged, William McFarland promised a ‘life changing’ music festival but in actuality delivered a disaster,” acting Manhattan U.S. Attorney Joon Kim said. “McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival. Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”
In April, the inaugural Fyre Festival was canceled at the last minute, leaving some attendees stranded in the Bahamas, as paid celebrity promoters and previously booked music acts distanced themselves from the event.
The charge of wire fraud carries a maximum sentence of 20 years in prison, though the DOJ noted the potential sentencing was only disclosed for illustrative purposes.
According to the unsealed complaint, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings between 2016 and 2017. However, the DOJ accuses McFarland of telling investors that Fyre Media earned millions of dollars in revenue from thousands of artist bookings from at least July 2016 until April 2017. The report went on to blast McFarland for providing “materially false” information to investors and putting on a festival that was “widely deemed to have been a failure.”
When attendees were flown to the Bahamas for Fyre Festival, they expected an exclusive luxury experience on a secluded island; in reality, they were given FEMA tents and dry American-cheese sandwiches.
According to insiders close to the organizers orchestrating the event, inadequate preparation had decided the fate of the festival long before last weekend. No artists had shown up, probably due to the fact that none of them had been paid. When attendees—who forked over thousands of dollars at various celebrities’ behest—arrived, they found “luxury villas” replaced by disaster relief tents and necessities in dangerously short supply. The scene resembled a high school track meet more than a high end resort. Many attendees found themselves hamstrung by sparse transportation largely under the control of the festival organizers and unable to leave the island. The situation quickly plummeted into what was described as some iteration of The Hunger Games.
On Sunday, it was reported that several festival goers had filed a class-action lawsuit against both Fyre Media—the company behind the botched festival—as well as Ja Rule and his partner Billy McFarland as individuals and also a number of employees, agents, or co-venturers of McFarland and Ja Rule that have yet to be named. The lawsuit claims that these employees may be considered a part of the conspiracy just by virtue of being involved in the planning of the ill-fated festival. The lawsuit alleges, in relevant part, that the defendants committed fraud and breach of the sales contract made via each ticket sale. These claims are probably not difficult to prove given the circumstances, but the complaint is littered with tweets and viral images, perhaps meant to go viral itself and elevate the profile of the plaintiffs’ case in hopes of netting a lush settlement. Their chances of obtaining over $100 million in damages are likely low, but one thing is certainly clear—the festival’s peace offering of a paltry refund and a promise for a better experience next year is not going to solve the humiliation and anger of the festival’s affluent clientele.
Events of this proportion usually maintain seriously high insurance policies, but it is unclear whether Fyre had one in this case. If not, the lawsuit is certainly likely to wipe out whatever is left in the Fyre Media Inc. bank account, but the same is not clear cut for Ja Rule and McFarland, as well as other employees of the company, who are named in their personal capacity. Generally speaking, a court will consider many factors to determine if the individuals can be liable, for example, whether the corporation has adequate insurance or funds to pay out the lawsuit, what the misconduct is, and whether other business formalities were adopted. However, this same analysis is not necessarily at play in case of any settlement, where Ja Rule and McFarland could decide to personally fork over some funds, particularly if they have any intention of keeping Fyre Media alive.
Just after the lawsuit was filed, the Fashion Lawreported an exclusive statement from the plaintiff's’ counsel indicating that “all those who recklessly and blindly promoted the festival” will be head accountable. Given the vital role that social media influencers and models played in the promotion of the event, it seems almost unfathomable that they wouldn’t see some legal backlash. Kendall Jenner, Bella Hadid, Emily Ratajkowski, Chanel Iman, and Hailey Baldwin all participated in the campaign, some of them even posting native advertising on their own social media channels, encouraging fans to buy tickets to the world-class festival. Depending on claims that they made about the festival, and of course whether or not they disclosed that their posts were in fact advertisements—as is required by law—the Federal Trade Commission could get involved by prosecuting breach of Truth in Advertising laws.
Given the vital role that social media influencers and models played in the promotion of the event, it seems almost unfathomable that they wouldn’t see some legal backlash.
Ultimately, any personal liability that these celebrities take on will boil down to what their agreements were with the festival; a well-negotiated contract would usually force the festival to cover the cost of any lawsuit against a celebrity if the claim related to the festival itself. The same carefully negotiated agreement usually includes a carve out for the celebrity to abide by all applicable laws. Most of those posts are now deleted, but consider that some of the influencers may not have abided by mandatory FTC disclosure laws in their posts, and there’s a potential route for their liability. It’s hard to imagine that someone with a profile like Kendall Jenner would subject themselves to this kind of legal vulnerability, but there is no doubt that even if they are not themselves liable for the damage done, their reputations are taking a huge hit—effectively damaging their ability to command a high price to hawk the next product.
Finally, it is also possible that the Bahamian Ministry of Tourism could consider their own legal action, as estimations of income lost from the debacle are in the millions. For now though, the Ministry is distancing itself and promising to implement tougher vetting procedures for new festival planners. The Bahamas also issued a statement maintaining that it was not involved in the planning nor was it a sponsor of the festival, and asking guests and others who may have heard of the debacle not to let it tarnish their image of the country.
One thing remains at the core of many of these issues: leveraging your name for a product or event has high stakes, and while the festival organizers seem hopeful, a $100 million lawsuit and a reputation of incompetence is likely to keep them from proceeding next year.
Ja Rule and Billy McFarland, founders of the failed Fyre Festival, have reportedly been “barred” from trying again in the Bahamas. Bahamas Ministry of Tourism sources toldTMZ they were planning to start enforcing a “stricter vetting system” for musicfestivals in the future, an overhaul that will include checking in with organizers repeatedly throughout any event's development process.
The reason the Bahamas Ministry of Tourism didn't intervene during the Fyre Festival's planning process, according toTMZ, is that they didn't have the authority due to its status as a private event. On Sunday, famous lawyer Mark Geragos filed a $100 million lawsuit against Ja Rule, Billy McFarland, and the Fyre Media brand alleging breach of contract, fraud, breach of covenant of good faith, and negligent misrepresentation.
The suit, TMZreported Tuesday, also alleges that Fyre attendees were locked inside the airport terminal “for hours” as security officials put up a fence around the building to make sure no one left the premises. Additionally, some attendees reportedly passed out due to lack of water while waiting for a departing flight. There was also, according to a photo, some sort of tiny fire fyre going on?
Burned Fyre attendees have two options, according to the New York Times' Joe Coscarelli. they can take their refund and get on with their lives, or they can pay it forward by receiving VIP passes for whatever the Fyre team is planning for 2018:
just fyi: Fyre Festival customers can forgo a refund in exchange for VIP passes to next year’s festival 🙂 pic.twitter.com/nUWWlpKX9R
For the last four or five days, your Twitter timeline has no doubt been inundated with the nightmare situation known as Fyre Festival, which went from being a $12,000-a-pop music festival for the rich, white elite to what looked like a disaster recovery situation (with actual disaster relief tents). In the fallout, it's been announced that Ja Rule and the squad behind the Fyre Festivalis being hit with a $100 million class action lawsuit for their gross fuck up.
While it's been easy to chuck “Ja Rule The Scammer” tweets out there, it might be time to look at one of the other “names” on the Fyre Festival lawsuit; Billy McFarland. At 25, dude's already had his name affixed to a number of companies, primarily with an emphasis on millennials who want the finer things in life. He's one of those entrepreneurial guys who always seems to have a plan, and can apparently talk his way into a pile of money without truly delivering on his promises. A.k.a. the American way. Here's a look at Billy McFarland's pre-Fyre highlights.
McFarland's always been a businessman
When you were 13, you probably were trying to bag shorty in your math class; yung McFarland was already building his first startup, which apparently outsourced design work. A few years later, he was already dropping out of Bucknell University to found Spling, which at the time was another addition to the social networking space that secured $400,000 in funding back in 2011.
Neither of these startups caused as much havoc as his 2014 startup Magnises, which found McFarland creating his own black card (which after turned into an app, Magnises NOW) for millennials who were trying to get their IRL social status game up. It sounds dope, but apparently, you had to promise to spend $250,000 a year through the card (with a $250 annual fee) to get the Magnises perks like 24/7 concierge service, special treatment and discounts from elite brands and restaurants, and invites to exclusive events.
At the time, McFarland told Bloomberg that Magnises “enhances and really improves your everyday life in the city,” but in January of 2017, Business Insiderreported that cardholders felt scammed, saying that the perks that Magnises promised (which included everything from Hamilton tickets to SR-22 plane rides to the Hamptons) were not being met. At the time, McFarland said Magnises “hit some roadblocks along the way, and that's what happens when you grow really quickly, and that's on me.” But McFarland's troubles weren't focused solely on Magnises' troubles.
McFarland trashed his $13,000-a-month West Village home
It's a given that when most young guys secure a bag, they might go ham with their earnings. According to the New York Post, in 2013 McFarland had a 500-person birthday party for photographer/socialite Patrick McMullan at his $13,750-a-month duplex on Greenwich Ave. This was one of many “blowout parties” that the landlord said caused roughly $62,000 worth of damage to the spot. At the time, the owner was looking for McFarland to pony up $100,000 in damages, but McFarland said the charges were “not valid.”
WTF is Fyre Media?
That's hard to say; according to LinkedIn, Fyre Media, Inc. was founded in 2015 is “an on demand service that makes booking the most influential celebrities, artists, athletes, models, and entertainers seamless and transparent.” They have an app, and it looks like some of their “exclusive” artists feature Fat Joe, Waka Flocka, Soulja Boy, Jim Jones, and Ja Rule. Rule, who has been listed as a co-founder of Fyre, is reportedly the “mastermind” behind the Fyre Festival, which McFarland was touting as a “luxury music festival” that was due to span two weekends (April 28-30, 2017 and May 5-7, 2017) in the Bahamas.
Aside from the musical acts, which were to include everyone from G.O.O.D. Music and Blink-182 to Disclosure and Lil Yachty, Fyre Festival was reportedly set to have $1 million worth of “hidden treasures” that would be found all over the island. It was also set to feature all kinds of rich, elite millennials attending, paying upwards of $12,000-a-pop to experience the music, art installations, talks, amazing food, and much more while chilling on the sands of Fyre Cay in the Bahamas.
As we now know, what the people got when they hit the island was the exact opposite of a “luxury music festival” experience, a day which McFarland told Rolling Stone was “definitely the toughest day” of his short, intriguing, possibly scam-filled life. It doesn't help that the festival appeared to be doomed from the start, with everything from “a rampant shark problem” and sandflies to the fucking FEMA tents and not having a stage(?!) setup revealed that Fyre was the dumpster fire it turned out to be from the rip.
McFarland also told Rolling Stone that “there will be make-up dates, May 2018 in the U.S., free for everybody who signed up for this festival,” although at this point, with his cache (and the social media shitstorm that followed the Fyre Festival) and that $100 million lawsuit looming over his head, what masochist would want to subject themselves to Fyre Festival, The Sequel?
Maybe McFarland needs to do what he does best: find new ways to rope money-hungry millennials into giving him more of their cheddar.
The Fyre Festival, a “luxury” music festival in the Bahamas that was supposed to happen this week but fell apart because, well, it was a disaster, had a big name attached to it: co-organizer Ja Rule. Ja said the festival chaos was not his fault, but that hasn't stopped people from roasting him—and perhaps rightfully so.
Naturally, a good Ja Rule roast cannot exempt 50 Cent, Ja's longtime rap rival. 50 posted a meme on his Instagram insulting both Ja Rule and President Donald Trump.
The festival was “fully postponed” due to lack of organization, no security, lack of funds, poor facilities, bad infrastructure, and much more. Despite the blowback, Ja Rule and the organizers released another statement on Sunday to reassure everyone that all guests were safe. They also revealed a form has been sent out to everyone who wanted a refund.
Relieved to share that all guest are safe, and have been sent the form to apply for a refund. Our deepest apologies… #fyrefestival