Billy McFarland allegedly falsified financial records, exaggerated his assets and flat-out lied to investors in an attempt to secure millions of dollars for his ill-fated Frye Festival, federal prosecutors say.
McFarland on Monday pleaded 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, according to the court docket. The 25-year-old was arrested in June and charged with defrauding investors. The new, expanded charges further reveal the lengths authorities believe McFarland went to in order to fool others into giving him money for a festival that was never the high-level luxury event he and fellow organizer Ja Rule had claimed it would be.
McFarland “conducted a scheme to defraud individuals by inducing them into investing millions,” U.S. Attorney Joon H. Kim wrote in the indictment. “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.”
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 festival on a private island. Ticket packages ranged between $1,500 and $250,000. Major 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.
Ja Rule has not been criminally charged, though the rapper has been named as a defendant in the civil lawsuits.
The government, according to the indictment, also claims that McFarland:
- Manipulated emails and financial records to hide Frye Media’s financial condition.
- Falsified financial statements between April 2016 to February 2017 to show that the company had earned millions when it had not. Instead, Frye Media had only earned $57, 443 between May 2016 and April 2017.
- Showed investors there were 2,500 talent bookings over the course of a year when there had really only been 60.
- Told investors that a venture capital firm, the VC Firm, was a Frye Media investor when it had not agreed to any kind of deal.
- Lied to investors about his own finances, claiming to have stocks and assets that didn’t exist and said he had secured bank loans totaling millions that could be collateral for an investment into the festival. The loans had not been approved.
- Planned a scheme to defraud a ticket vendor of $2 million for a block of advance tickets to future festivals. According to Joon, he provided the vendor with a financial statement that “grossly inflated” his income.
- Lied on loan applications to banks by, among other things, overstating the value of the securities he owned.
McFarland has waived indictment which eliminates the need for a grand jury and could mean plea deal negotiations are underway.
Regardless, Joon can now take the case directly to trial after he presents discovery to McFarland’s defense team. A pre-trial hearing is scheduled for Dec. 13. If the case goes to trial, proceedings would likely begin early next year.