Posted: Jul 02, 2017
Forward by Go-Wine: Fyre Festival's impact on consumers is a must read for those in food and beverage operations. It is a perfect example of the importance of needing to have integrity, and quality strategy and execution in your business operations.
One of the organizers of the disastrous Fyre Festival has been arrested and charged with wire fraud, according to the U.S. Attorney’s Office for the Southern District of New York.
Billy McFarland was arrested Friday in New York and accused of making “false representations to investors” in his company, Fyre Media LLC, and in a “luxury” music festival that had been set to take place in the Bahamas over two weekends in April and May.
Acting Manhattan U.S. Attorney Joon Kim said in a statement Friday that McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company.
“William McFarland promised a ‘life changing’ music festival but in actuality delivered a disaster,” Kim said. “Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”
McFarland, 25, appeared Saturday before a judge and was released from jail on a $300,000 bond, according to Variety.
McFarland had promoted the Fyre Festival as “MORE THAN JUST A MUSIC FESTIVAL,” promising not only live music, but luxurious accommodations, gourmet meals and mingling with celebrities on a private island in the Bahamas. In exchange, festivalgoers paid anywhere from $450 to $250,000 to attend.
Expectations were high.
Instead, the festival collapsed in spectacular, public fashion. When attendees arrived in the Exumas, a group of islands belonging to the Bahamas, they discovered that the luxury accommodations were actually disaster-relief tents on the beach, some still not set up. Cheese sandwiches made up the “gourmet meals,” and festival organizers seemed to be equally in the dark, sometimes literally, about what was supposed to happen. Blink-182, one of the festival’s headliners, had pulled out at the last minute.
On social media, the collapse of the “elite” festival was unfurled live for all to see under #fyrefestival, #dumpsterfyre and other unprintable hashtags.
In April, McFarland and his Fyre Festival co-founder, the rapper Ja Rule, had defended their intentions amid accusations that they had set out to defraud people.
“We were a little naive in thinking for the first time we could do this ourselves,” McFarland told Rolling Stone then. “Next year, we will definitely start earlier. The reality is, we weren’t experienced enough to keep up.”
But the U.S. Attorney’s Office’s complaint against McFarland alleges that the entrepreneur deliberately orchestrated a scheme to defraud investors, including at least two people who had invested about $1.2 million in Fyre Media.
One way McFarland did so was by artificially inflating his company’s revenue and income, telling investors that Fyre Media had earned “millions of dollars of revenue” from “thousands of artist bookings” from July 2016 until April 2017, according to the U.S. Attorney’s Office.
“In reality, during that approximate time period, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings,” the attorney’s office said.
The complaint alleges that, with at least one investor, McFarland backed up his claims to vast sums of money with a doctored brokerage statement that made it appear he owned shares of a stock worth more than $2.5 million.
In reality, the shares he owned in that stock were valued at less than $1,500, the complaint states.
“McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals,” William F. Sweeney Jr., assistant director-in-charge of the FBI’s New York field office, said in a statement. “In the end, the very public failure of the Fyre Festival signaled that something just wasn’t right.”
Wire fraud carries a maximum sentence of 20 years in prison.
The New York Times on Friday described Richman as an attorney for Ja Rule, whose real name is Jeffrey Atkins.
“Mr. Atkins is not under arrest and we don’t perceive him to be a subject of this investigation,” Richman told the newspaper.
By Amy B Wang
July 1, 2017
Source: The Washington Post
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