The U.S. Securities and Exchange Commission is investigating another company ran by Fyre Festival organizer Billy McFarland, Page Six reports.
The SEC apparently is looking into Magnises, McFarland’s venture that launched a credit card for millennials designed to look like American Express’s Centurion card, but was instead tied to members’ bank account.
There’s no word yet publicly from either the SEC or McFarland, according to Page Six.
Magnises raised more than $3 million in venture capital, the report says. It eventually transitioned into a concierge service that offered tickets to plays and concerts.
An investigation by Vice News says that at least $1 million worth of tickets to big-time events – the Broadway hit “Hamilton,” for instance – were purchased from third-party brokers using a Fyre Festival corporate card and offered to cardholders. In September, Magnises’ website was shut down and the 25-year-old tried to sell it in an online auction, claiming it had seen nearly $10 million in revenues. He relisted the site for $1, Page Six says, but then the auction site pulled it.
While he has yet to face any charges over Magnises, McFarland is currently being prosecuted over the failed Fyre Festival — McFarland has plead not guilty in U.S. District Court in Manhattan to two counts of wire fraud and two counts of making false statements to a bank. He was arrested in June and charged with defrauding investors. Authorities believe McFarland went to great lengths in order to fool others into giving him money for a festival that was never the exclusive luxury event he and fellow organizer Ja Rule had claimed it would be.
McFarland and Ja Rule had created the Fyre Festival in part to drum up excitement for Fyre Media, a booking app they created. The Fyre Festival, scheduled for two weekends in the Bahamas in April and May, had been billed as a high-end, exclusive concert on a private island. Ticket packages ranged between $1,500 and $250,000. Acts like Blink-182, Disclosure, Kaytranada, Migos, Rae Sremmurd, Tyga, Desiigner, Pusha T and Major Lazer signed on.
But when festival guests started to arrive, they found conditions that were starkly different from the paradise they were promised. There were disaster-relief tents set up for shelter, rationed food, no medical care, scarce electricity and little to no help or information from festival staff. In the weeks that followed the doomed event, a dozen civil lawsuits were filed against Fyre Festival organizers, including a $100 million class-action lawsuit from ticket holders who want their money back.
According to the federal wire fraud indictment, McFarland “conducted a scheme to defraud individuals by inducing them into investing millions. McFarland represented to investors that (Frye Media Inc.) had earned millions of dollars of revenue solely from talent bookings; a review of the company’s records show that those numbers were significantly overstated.”
Ja Rule has not been criminally charged, though the rapper has been named as a defendant in the civil lawsuits.