Manhattan U.S. Attorney Announces Charges Against Individual For Defrauding (Fyre Fest related)

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https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-individual-defrauding-investors-digital

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Friday, June 30, 2017

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.
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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.
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