In Wreckage of the Fyre Festival, Fury, Lawsuits and an Inquiry
By
JOE COSCARELLI,
MELENA RYZIK and
BEN SISARIOMAY 21, 2017
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- aborted opening, with reports of panicked millennials scrounging for makeshift shelter on a dark beach.
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Billy McFarland, 25, is a brash entrepreneur with a gift for networking and social media.CreditPatrick McMullan/Patrick McMullan, via Getty Images
Yet, speaking on May 2 with unnerved employees at his TriBeCa office — with its $30,000 sound system and frequent fashion-model visitors — Mr. McFarland deflected blame and vowed that Fyre would survive to mount another festival next year. The coverage had been “sensationalized,” he insisted, according to a recording obtained by The New York Times. (Fyre has attributed its cancellation to a combination of factors, including the weather.)
Ja Rule, the rapper and Mr. McFarland’s celebrity business partner, looked on the bright side. “The whole world knows Fyre’s name now,” he said. “This will pass, guys.”
Their company, Fyre Media, however, was already facing the first of more than a dozen lawsuits seeking millions and alleging fraud, breach of contract and more.
The endeavor has also become the focus of a criminal investigation, with federal authorities looking into possible mail, wire and securities fraud, according to a source with knowledge of the matter, who was not authorized to discuss it. The investigation is being conducted by the United States attorney’s office for the Southern District of New York and the F.B.I.; it is being overseen by a prosecutor assigned to the complex frauds and cybercrime unit. (A spokesman for the United States attorney’s office and a spokeswoman for the F.B.I. declined to comment.)
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MaryAnn Rolle, the owner of Exuma Point Beach Bar and Grill in the Bahamas, says she’s owed $134,000 from festival organizers. CreditScott McIntyre for The New York Times
There are many potential victims: ticket buyers, investors and businesses small and large, spread across the United States and the Bahamas. Blink-182, a planned headliner, can’t get its equipment out of customs limbo. Fyre’s employees have not been paid. MaryAnn Rolle, a restaurant owner in the Bahamas who catered daily meals and rented villas to the festival crew, says she is owed $134,000.
“I’m struggling” and feeling taken advantage of, Ms. Rolle said. “It’s embarrassing.”
Announcing Fyre Festival Video by Fyre Festival
Ja Rule was Fyre’s famous face, but at the center of the controversy is Mr. McFarland, a brash, 25-year-old entrepreneur with a gift for networking and buzzy social media. In his short career, he has persuaded people, over and over, to buy or invest in whatever he was selling, leaving behind a trail of aggrieved customers and business partners. He could be the Wolf of Wall Street for the selfie set, or Gatsby run through an Instagram filter.
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The rapper Ja Rule, who was promoted as the star at the heart of the festival, “would never participate in anything fraudulent,” his lawyer said. “It’s simply not in his DNA.” CreditNina Westervelt for The New York Times
Mr. McFarland and his lawyers declined to address specific allegations. But in a statement, he said: “I cannot emphasize enough how sorry I am that we fell short of our goal,” adding, “I’m committed to, and working actively to, find a way to make this right, not just for investors but for those who planned to attend.”
Stacey Richman, a lawyer for Ja Rule, said that he “would never participate in anything fraudulent; it’s simply not in his DNA.”
But interviews with more than two dozen people associated with Mr. McFarland or the festival, many of whom requested anonymity because of pending legal issues, turned up few who were surprised by the ruins in the Bahamas and beyond.
“The lies didn’t start with the Fyre Festival, let’s make that clear,” said Patrick McMullan, the veteran
party photographer who came to regret his trust in Mr. McFarland’s business savvy.
The Card That Opened Doors
Raised in Short Hills, N.J., by real estate developer parents, Mr. McFarland was already starting technology companies as a teenager. With the creation of
Magnises in 2013, he took on the profile of a budding New York entrepreneur, with bottle service tastes.
Modeled after the American Express black card, Magnises — “Latin for absolutely nothing,” Mr. McFarland once
said — was a membership club for upwardly mobile millennials, offering discounts at select hot spots and access to a West Village townhouse.
“We had some great events — everything ran like clockwork,” said Craig Lawrence of the modeling agency One Management.
Through Magnises, Mr. McFarland became a nightlife fixture. He came to know
Ja Rule, whom he booked for a private concert; Mr. McMullan’s company photographed his events.
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Swingsets were built on Coco Plum Beach in Great Exuma, the Bahamas, one of the festival’s staging areas.CreditScott McIntyre for The New York Times
Magnises was a template for what Mr. McFarland’s other businesses would become — a touch of celebrity, a gloss of tech and the veneer of success, thanks to social media and high-powered connections.
But as Magnises expanded, members
complained that offers, like Beyoncé tickets, never materialized, and that annual dues were charged to their credit cards months early.
Mr. McFarland also looked for money on the side. Molly Krause, a publicist who briefly joined Magnises, described Mr. McFarland’s mass text messages offering deals on hoverboards and weekend rentals of his Maserati.
“Ja Rule is working on a new song and can mention your name, nickname, company name, etc in the upcoming hit single for $450,” Mr. McFarland texted last year. “5 Spots. LMK!”
Still, he had a way of engendering trust.
Mr. McMullan said that he paid Mr. McFarland almost $100,000 for a website, which was never delivered. “I was told he had made this big company, he had made millions of dollars,” Mr. McMullan said. “I thought he was smarter than he was.”
Stars and Investors Needed
Early in 2016, Mr. McFarland became consumed with a new endeavor: Fyre Media.
With it, he hoped to build an app that would allow individuals to bid for celebrity appearances at their events.
Mr. McFarland hired developers in Portland, Ore., and used a roster of the famous and semifamous (Iggy Azalea! Soulja Boy!) to woo investors, including Carola Jain, married to Bob Jain, a prominent hedge fund executive. (Ms. Jain has been named as a defendant in at least one Fyre lawsuit. Through a spokeswoman, she declined to comment.)
In his bid for moguldom, however, Mr. McFarland had little regard for traditional business practices. According to four Fyre Media employees, who requested anonymity because of the continuing fallout, there was no paperwork upon their hiring, and the payroll system was ad hoc at best — employees were typically paid via wire transfer, and sometimes in cash, receiving no pay stubs.
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Ian Nicholson, a carpenter, says he is still owed payments for the 18-hour days he worked for the Fyre Festival.CreditScott McIntyre for The New York Times
Mr. McFarland is now accused of more than sloppy bookkeeping. Some investors believe that his company was overstating its financial position. In January, Fyre Media said in company documents that it owned land in the Bahamas worth
$8.4 million and had $21.6 million in revenue from December alone — claims that one investor, Oleg Itkin, said in a lawsuit were probably fictitious.
A Passion Project
Toward the end of last year, with Fyre Media still in its early stages, Mr. McFarland became increasingly distracted by yet another project. A music festival in the Bahamas would combine what he called his three biggest passions — tech, rap music and the ocean — and publicize the app, he told his staff.
Mr. McFarland knew how to promote it. He and Ja Rule enlisted influencers (called
Fyre Starters) like Ms. Jenner, Emily Ratajkowski and Bella Hadid to post about the festival on Instagram, and he pursued deals with SiriusXM and a yacht startup called YachtLife.
As advertised, Fyre Festival would be a site of fantastical opulence, featuring acts like G.O.O.D. Music, Major Lazer and Migos.
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.
Mr. McFarland had been scouting sites, taking private planes to the Bahamas with his Fyre entourage and models in tow. But long after tickets had been sold, he was still nailing down a location.
By early April, the festival team finally set up at
Roker Point, a largely unbuilt housing development on Great Exuma that borders a Sandals resort.
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Girty Rolle Moxey helped her 8-year-old son, Kaelin, on a swing set on Coco Plum Beach while Derek McKenzie enjoys the water. The swing set was built for the Fyre Festival. CreditScott McIntyre for The New York Times
The festival hired a series of experienced producers, cycling through them quickly. With guests set to arrive on April 27, the team had a long way to go to deliver the vision that Mr. McFarland had sold.
Mr. McFarland and his executive team lived near the site in a resort villa, riding ATVs around to check the progress. Organizers found enthusiastic partners in Bahamian workers, who hoped for a long-term economic boost.
Still, residents who had seen Fyre’s ostentatious marketing pitch worried about its distance from reality. “Something like this, it could build Exuma and it could break Exuma,” said Ian Nicholson, a carpenter working for the festival.
About three weeks out, Richard Hooban, a Brooklyn DJ booker, toured the site. He saw a craggy beach and a gravel-strewn plot where the main stage would be. “This is going to take a lot of money or time to transform,” he recalled thinking.
Mr. McFarland seemed flush enough. “He always had a few thousand dollars cash in his swimsuit,” said Luca Sabatini, an owner of
Unreal-Systems, which built the festival stages and supplied the high-caliber sound systems and lighting. If someone needed extra cash, Mr. McFarland would dole it out — “$500, crumpled up, a little humid because he went jet skiing with it,” Mr. Sabatini observed.
But behind the scenes, Mr. McFarland was scrounging for funds.
No Walkie-Talkies?
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.
Expenses were swelling: Bed frames and beach chairs were rush-ordered; beach umbrellas had to be flown in, rather than shipped, because of late payments, according to three production staff members. Essential production tools, like walkie-talkies, never even arrived.
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Text messages from Billy McFarland.