Manhattan U.S. Attorney Announces Charges Against Individual For Defrauding Investors In Digital Media Company
William McFarland Made False Representations to Investors in Fyre Media LLC and the Fyre Festival
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal Complaint charging WILLIAM McFARLAND with wire fraud, in connection with a scheme to defraud investors in a company controlled by McFARLAND, Fyre Media LLC (“Fyre Media”), as well as a related entity responsible for organizing a music festival set to take place in the Bahamas (the “Fyre Festival”). McFARLAND was arrested today in New York, New York, and is expected to be presented before U.S. Magistrate Judge Kevin N. Fox tomorrow.
Acting Manhattan U.S. Attorney Joon Kim said: “As alleged, William McFarland promised a 'life changing' music festival but in actuality delivered a disaster. McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival. Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”
Assistant Director-in-Charge William F. Sweeney Jr. said: “Under McFarland's direction, Fyre Media created a promoter's marketplace for entertainment bidding. In addition to this initial business venture, McFarland went one step further in establishing a subsidiary of the company, Fyre Festival LLC. But in order to drive the success of both entities, as alleged, McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals. In the end, the very public failure of the Fyre Festival signaled that something just wasn't right, as we allege in detail today.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:
McFARLAND was the founder and Chief Executive Officer of Fyre Media. In 2016, McFARLAND started Fyre Media to build a digital app that would allow individuals organizing commercial events, such as concerts, to bid for artist and celebrity bookings at such events. According to Fyre Media documents provided to investors by McFARLAND, Fyre Media’s historical and projected revenue from at least April 2016 to November 2017 consisted solely of artist bookings. In late 2016, McFARLAND established a subsidiary of Fyre Media known as Fyre Festival LLC and began promoting the Fyre Festival. McFARLAND promoted the Fyre Festival in part by claiming that it would bring a global audience together to share a life changing experience. Ultimately, the Fyre Festival was widely deemed to have been a failure.
From in or about 2016 through in or about May 2017, McFARLAND perpetrated a scheme to defraud, inducing at least two individuals to invest approximately $1.2 million dollars in Fyre Media and an associated entity based on misrepresentations about Fyre Media’s revenue and income. In order to procure these investments, McFARLAND provided materially false information. For example, McFARLAND told investors that Fyre Media earned millions of dollars of revenue from thousands of artist bookings from at least July 2016 until April 2017. In reality, during that approximate time period, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings.
In addition, McFARLAND provided at least one investor an altered stock ownership statement, in an effort to make it appear that McFARLAND could personally guarantee the investment. Specifically, McFARLAND provided an altered brokerage statement that purported to show that he owned shares of a specific stock worth over $2.5 million, when in reality he owned shares of that stock valued at less than $1,500.
McFARLAND, 25, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Kim praised the investigative work of the FBI’s New York Field Office, and thanked the Securities and Exchange Commission for their assistance.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Kristy J. Greenberg and Dina McLeod are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Tags: Financial Fraud