Feds fire fraud charges on Fyre Festival founder

Feds fire fraud charges on Fyre Festival founder

At least one of the founders of the disastrous Fyre Festival will face criminal charges over the promised high-quality “cultural moment.” Federal law enforcement took Billy McFarland into custody yesterday and charged him with wire fraud, which could get him as much as twenty years behind bars. The focus of the prosecution isn’t on the ticket sales, however, but on McFarland’s dealings with investors:

Billy McFarland, the founder of the disastrous Fyre Festival, has been arrested and charged with wire fraud, the Department of Justice said Friday.

Prosecutors allege McFarland, 25, used false information to get at least individuals to invest $1.2 million Fyre Festival, which was supposed to take place over two weekends in the Bahamas.

“As alleged, William McFarland promised a ‘life-changing’ music festival but in actuality delivered a disaster,” said Acting U.S. Attorney for the Southern District  Joon Kim in a statement. “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 wasn’t the only founder of the Frye Festival, however. Rapper Ja Rule (real name Jeffrey Atkins) partnered with McFarland, and helped to promote it. So far, the feds seem uninterested in Atkins, which might bolster his claim that he had no knowledge that the festival wasn’t on the level. That won’t help him in civil court, however, where he faces a $100 million class-action lawsuit on behalf of the attendees, among a dozen other actions. Some of those plaintiffs paid as much as $12,780 each to attend what was supposed to be a five-star Woodstock of sorts, but turned into more like a refugee experience. That is, if refugees paid cash up front for their incidentals:

“The festival’s lack of adequate food, water, shelter, and medical care created a dangerous and panicked situation among attendees — suddenly finding themselves stranded on a remote island without basic provisions — that was closer to The Hunger Games or Lord of the Flies than Coachella,” the suit states. “Festival-goers survived on bare rations, little more than bread and a slice of cheese, and tried to escape the elements in the only shelter provided by Defendants: small clusters of ‘FEMA tents,’ exposed on a sand bar, that were soaked and battered by wind and rain.”

The suit also claims that since the festival was promoted as “cashless,” attendees were encouraged to load funds onto their Fyre wristbands, which resulted in many lacking the money needed to transport themselves away from Fyre.

The rapper’s attorney says that Atkins isn’t a target of the DoJ investigation — at least to this point:

Stacey Richman, a lawyer for Ja Rule, whose real name is Jeffrey Atkins, said that he had not been arrested. “Mr. Atkins is not under arrest and we don’t perceive him to be a subject of this investigation,” Ms. Richman said.

Why not? Perhaps Atkins could be one of the first victims to be duped by McFarland, whose fraud went well beyond the erstwhile attendees who bought tickets to the dumpster Fyre. The US Attorney’s statement alleges that McFarland cooked a book or two along the way to get money from investors:

From in or about 2016 through in or about May 2017, McFARLAND perpetrated a scheme to defraud, inducing at least two individuals to invest approximately $1.2 million 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.

In addition, McFARLAND provided at least one investor an altered stock ownership statement, in an effort to make it appear that McFARLAND could personally guarantee the investment. 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.

Atkins’ name never comes up in the complaint, which seems odd — unless he’s one of the unnamed victim-investors who fell for McFarland’s scheme. That would explain the lack of action against him, and why despite his status as a co-founder of the festival Atkins never gets mentioned by name (victims are usually anonymous in DoJ complaint filings).

Of course, McFarland’s presumed innocent until proven guilty, and it may just be — as McFarland and Atkins have maintained — that they intended to deliver on their promises but got in way over their heads. If McFarland gets convicted, he won’t do twenty years, but he’ll get some prison time if prosecutors prove this level of fraud. Perhaps the court might mete out some creative sentencing and confine him to the same conditions attendees faced at the Fyre Festival for a few months. That might be a form of justice the victims of this debacle could appreciate.

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