Fyre Festival Is Reportedly Under FBI Investigation for Fraud
Just as it seemed like the dust was starting to settle around Fyre Festival, the New York Times has published a lengthy story about the disastrous ultraluxury music fest founded by entrepreneur Billy McFarland and Ja Rule. The biggest news from the Times report is that the festival’s organizers are apparently under fraud investigation by federal prosecutors and the F.B.I.
Sources at the bureau told the paper that authorities are “looking into possible mail, wire and securities fraud,” and that the case is being handled by the complex frauds and cybercrime unit of the U.S. attorney’s office for the Southern District of New York. Last time we heard Fyre Fest mentioned in conjunction with the F.B.I., it was the festival’s own employees, asking McFarland whether they should worry about being investigated, on a company conference call that was later leaked to Vice. “I don’t know,” he answered at the time. “I think that’s an individual thing.”
Beyond news of the investigation, the Times story is full of previously unheard details about the festival in the Bahamas, which became the object of media fascination when it was canceled by organizers who were woefully unprepared last month. We learn, for instance, that planned headliner Blink-182 has gear that’s still stuck in “customs limbo,” and that many Fyre employees and contractors still haven’t been paid. For awhile before settling on its planned location in the Exuma Islands, Fyre advertised that it would take place on “Fyre Cay,” a tropical island that doesn’t actually exist. From the Times:
Well into March, the event’s website — which briefly vanished because its designer had not been paid — claimed it would take place on Fyre Cay, a private island that once belonged to the drug lord Pablo Escobar. Ticket packages included the $400,000 “Artist’s Palace,” with four beds, eight V.I.P. tickets and dinner with one festival performer.
But there was no such island or palace. Fyre employees recalled higher-ups inventing extravagant accommodations just to see if people would buy them — and some did, they said.
It appears that funding was a struggle for McFarland and Fyre Fest long before its woes became public. The story has anecdotes about the 25-year-old cofounder texting his contacts to solicit weekend rentals of his Maserati, and to advertise paid opportunities to be namedropped in an upcoming Ja Rule song. And before the festival began, Fyre urged customers to preload money onto a “Fyre Band” for incidental purchases on the island–money that was reportedly used to cover the company’s past debts:
Weeks before the festival, Fyre informed ticketholders that the event would be “cashless (and cardless),” and encouraged attendees to put up to $1,500 in advance on a digital Fyre Band to cover incidentals, according to one lawsuit.
Those wristbands were merely a stopgap solution to help the company’s cash flow, according to two employees with knowledge of the accounts. They said that the Fyre Bands took in nearly $2 million; some of that money, according to another lawsuit, went to pay back part of a recent $3 million loan.
All in all, it sounds like Fyre was doomed from the beginning–about what you’d expect from an undertaking by a flashy 25-year-old with a history of sketchy business dealings. Read the full Times story here.