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McFarland is facing jail time after deliberately "misrepresenting the financial status of his businesses in order to rake in lucrative investment deals", alleges the FBI
By Jon Chapple on 03 Jul 2017
Billy McFarland, the CEO of the company behind the ill-fated Fyre Festival, is facing up to 20 years in prison following his arrest for allegedly operating a “scheme to defraud investors” out of approximately US$1.2 million.
Fyre Media founder McFarland – who was, along with rapper Ja Rule (Jeffrey Atkins), the public face of the Bahamian festival, which spectacularly collapsed on its first day on 28 April – has been charged with one count of wire fraud by the US district attorney in Manhattan, which carries a maximum sentence of 20 years’ jail time.
The criminal complaint against McFarland follows several private lawsuits aimed at recovering lost funds from the doomed event, including from attendees, suppliers and a ticketing company, and McFarland and Atkins’ being banned from the Bahamas, for which the festival was a PR disaster.
Announcing McFarland’s arrest, a statement from the US attorney’s office for the southern district of New York says the accused “perpetrated a scheme to defraud, inducing at least two individuals to invest approximately $1.2m dollars in Fyre Media and an associated entity based on misrepresentations about Fyre Media’s revenue and income. In order to procure these investments, McFarland provided materially false information.
“For example, McFarland told investors that Fyre Media earned millions of dollars of revenue from thousands of artist bookings from at least July 2016 until April 2017. In reality, during that approximate time period, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings.”
“McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called Fyre Festival”
McFarland is also alleged to have falsified financial documents to mislead investors as to the value of his own investments, making it appear as if he could personally guarantee their investment in Fyre Media. “Specifically, McFarland provided an altered brokerage statement that purported to show that he owned shares of a specific stock worth over $2.5 million, when in reality he owned shares of that stock valued at less than $1,500,” the complaint alleges.
William F. Sweeney Jnr, assistant director in charge of the FBI in New York, comments: “Under McFarland’s direction, Fyre Media created a promoter’s marketplace for entertainment bidding. In addition to this initial business venture, McFarland went one step further in establishing a subsidiary of the company, Fyre Festival LLC. But in order to drive the success of both entities, as alleged, McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals.
“In the end, the very public failure of the Fyre Festival signalled that something just wasn’t right, as we allege in detail today.”
“As alleged, William McFarland promised a ‘life-changing’ music festival but in actuality delivered a disaster,” adds acting Manhattan US attorney Joon Kim. “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.”
McFarland, who reportedly used a public defender – usually reserved for those who can’t afford to pay for legal representation – was released on $300,000 bail on Saturday morning.
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