Billy McFarland and the debacle that was the Fyre Festival are in the news again with the recent release of not one, but two documentaries on the failed music festival from Netflix and Hulu. McFarland managed to scam more than $26 million from people and millennials obsessed with their image in the months leading up to the collapse of the Fyre Festival. One man in his 50s was hit so hard by McFarland's scam, that he testified at the trial that he and his wife could no longer retire after McFarland conned them out of their life savings. Now, it has surfaced that McFarland raised all of those millions using forged documents.
A 2018 SEC filing against McFarland stated, "In 2016 and 2017, the felon raised about $7.9 million from at least 43 investors in the Fyre Media offerings and approximately $16.5 million from at least 59 investors in the Fyre Festival offerings."
Billy McFarland scammed the money by lying about key Fyre Media and Fyre Festival financial details and assets. He falsely claimed he had $100 million in bookings with Jennifer Lopez, Drake, Foo Fighters, and Selena Gomez. He created a fake brokerage statement to back up his claim that he had the personal collateral to secure the money from investors and banks. He showed an investor a Scottrade balance sheet reflecting that he owned 18,000 shares of Facebook at $142.05 a share for a total of $2.565 million.
In reality, McFarland had less than $1,500 worth of Facebook shares.
Image via Ian Moran/Wikimedia Commons
He used these false documents to insure a return on investment to one man who gave him $700,000 in the three months leading up to the Fyre Festival. Another investor gave McFarland $500,000 because the records he was shown led him to believe it was a sound investment. McFarland provided investors with a chart claiming that Fyre Media had $4.5 million in cash and cash equivalents as well as $18 million in accounts receivable. He also claimed the company owned an island in the Bahamas worth $8.4 million.
In reality, Fyre Media had less than $40,000 in cash and did not own an island.
Investors also received a projection sheet that showed the company's total revenue would be just short of $1 billion by the end of 2017. That revenue would come, in part, from the money made from bookings with Drake, Kendrick Lamar, and Chance the Rapper. McFarland boldly claimed that his company was netting 10% of the money made for private events booked through the Fyre app. Drake was listed as $81.1 million, Kendrick Lamar at $28.35 million, and Chance the Rapper at $17.28 million.
McFarland also provided a report to investors showing that Fyre Media had 15 accepted bookings totaling $5.4 million. This report claimed to have accepted offers from Jennifer Lopez for $1.75 million, the Foo Fighters for $1.5 million, and Selena Gomez for $1 million.
It wasn't just individual investors that McFarland was scamming. He also tried to get millions in personal loans from traditional banks. The SEC documents say:
"In early 2017, in an effort to keep the struggling Fyre Festival afloat, McFarland sought millions of dollars in personal loans from two well-established banks. To attempt to induce the banks to grant him loans, McFarland provided false information in his loan applications, including representations inflating his net worth and reiterating the false claim that he owned $2.56 million worth of Facebook stock. McFarland also provided one of the banks with a copy of the fake brokerage statement, as well as a fraudulent Fyre Media income statement, which grossly inflated the company's revenue and income."
McFarland was quickly turned down by the banks.
Text messages also show that he promised one investor a 120% return four months after receiving a wire transfer for $200,000. He promised another investor the same 120% return on his $700,000 investment just two months before the disastrous festival.
McFarland, in an effort to lend more legitimacy to his scam, started creating fictitious individuals that he said worked for Fyre Media. Again, from the SEC filing:
"To imbue this scheme with a gloss of legitimacy, McFarland engaged two large and reputable law firms to prepare transactional documents to unwittingly "paper" the fictitious business. McFarland also created a fake employment retainer agreement between himself and Saddleback Media. This agreement bears the electronic signature of Saddleback's purported President, a certain "G. Smythe," an individual who – on information and belief – does not exist."
All in, Billy McFarland scammed $27.4 million from the Fyre Festival's investors. Where did that money go? Certainly not to catering, villas, or the bands.
Billy McFarland, 27, is currently serving a six year prison sentence and has been ordered to repay $26 million of the money he obtained fraudulently.
