What was supposed to be a music festival made in heaven spiraled downward into a nightmare for everyone involved, including a famous rapper from Queens who was one of its organizers.
A-list musical acts, such as Major Lazer and Migos, were attached to perform in the luxurious private-island setting, but the planning and execution failed to live up to the grandiose billing for the first annual Fyre Festival in the Bahamas, which was supposed to take place over two weekends last year.
Among the vendors that signed on was National Event Services (NES), which was to provide emergency medical services. Upon arrival on Great Exuma Island in April 2017, NES staff says it discovered organizers failed to provide any of the necessary facilities.
“The cost probably spiraled out of control, the interest increased, and things went haywire,” said Gail Bower, who worked as a festival producer of the New Orleans Jazz & Heritage Festival, the Essence Music Festival, the Newport Jazz Festival and others.
Founders Jeffrey Atkins, better known by his stage name Ja Rule, and William “Billy” McFarland had allegedly neither secured a private island nor ensured adequate infrastructure for the heavily marketed VIP experience.
Although the music event was expertly promoted, that wasn’t enough. NES claims the medical clinic was closed, housing lacked air conditioning, mattresses were bloodstained and there was an infestation of bugs.
“A festival such as the Frye Festival requires tremendous planning to execute,” said Michael A. Hodge, an attorney who works as a security liability consultant in Atlanta. “Every aspect to include entertainers, products, lodging, security, transportation and communication should have been addressed in a detailed plan with primary and alternative plans for each area of operation.”
Organizers had borrowed money to promote the festival through YouTube videos and social media promotions featuring famous celebrities and as a result of this advertising and promotional blitz, thousands of people purchased tickets to the Festival, according to court documents.
“You have to deliver on the promise of the marketing as well,” said Ms. Bower who is president of Bower & Co. Consulting in Philadelphia. “I give these guys the benefit of the doubt that they had good intentions, but they hit a wall and couldn’t deliver.”
On April 28, 2017, NES was informed that the Festival was canceled. NES wasted no time lodging a lawsuit. The federal breach of contract complaint was filed the next week in the Eastern District of Pennsylvania against Fyre Festival LLC and Fyre Media Inc., as well as the festival organizers McFarland and Atkins.
“From inception of the Agreement, Atkins, McFarland and Fyre Media, Inc. embarked on a campaign of incompetence, fraud and deceit in the provision of information not only to NES, but also to virtually any third-party vendor associated with the 2017 Festival as well as the people who had purchased tickets,” the NES complaint states.
NES is among a slew of vendors, lenders and attendees who have filed suit. Other lawsuits include Petrozzielllo v. Fyre Media, et al., Reel v. McFarland, et al., Jung v. McFarland, et al., Daly v. McFarland, et al., Jutla v. Fyre Media, et al. and Herlihy et al v. Fyre Media, Inc et al filed in the Southern District of New York.
“Defendants had instructed attendees to upload funds to a cashless wristband, dubbed a “FyreBand” for use at the Fyre Festival rather than bringing any cash,” the Herlihy complaint states. “As such, attendees were generally unable to purchase basic transportation on local taxis or buses. As a result, Plaintiffs were not only misled and defrauded by the Defendants’ false representations of the Fyre Festival, but also were stuck on an island to fend for themselves.”
The Fyre Festival was forced into bankruptcy with an involuntary Chapter 7 petition on July 7, 2017, by investors John Nemeth, Raul Jimenez and Andrew Newman.
“Involuntary bankruptcy is often used when creditors suspect fraud – such as a Ponzi scheme – or for some other extraordinary reason,” said Taso Pardalis, an attorney and partner with Pardalis & Nohavicka Lawyers in Manhattan. “Involuntary bankruptcy approval gives the authorization for an accounting forensics order requiring McFarland and Atkins to produce documents and avail himself to questioning. It will uncover how Nemeth, Jimenez and Newman’s funds were spent.”
The trio of investors collectively claim they are owed $530,000 but by September 12, 2017, festival organizers had not responded to the interim Trustee Gregory M. Messer who was appointed by the bankruptcy court.
Three months ago, McFarland pled guilty to two counts of wire fraud related to the festival.
“William McFarland tendered fake documents to induce investors and a ticket vendor to put more than $26 million into his company and the disastrous Fyre Festival,” said Geoffrey S. Berman, the United States Attorney for the Southern District of New York. “He now awaits sentencing for his admitted swindle.”
McFarland’s guilty plea to the criminal charge of wire fraud is expected to have a profoundly negative impact.
“If a party pleads guilty in a criminal case, the admission will generally be admissible in a subsequent civil case,” Mr. Pardalis told PacerMonitor News. “A guilty plea to certain criminal charges makes potential civil claims extremely difficult to defend.”
Most recently, court records reveal that Ja Rule’s attorney is in ongoing negotiations with Mr. Messer. However, he declined to comment.
“I am not in a position to comment on this case at this point in time,” Mr. Messer told PacerMonitor News in email correspondence.
The best outcome would be that all investors and guests are reimbursed for their seed funding, ticket purchases and all other resulting expenses incurred however legal experts are skeptical.
“The problem yet to be resolved is whether McFarland and Fyre Media have assets in general that may be sold off to satisfy their debts,” Mr. Pardalis said. “There is a small likelihood that those injured – creditors, vendors and attendees alike – will see little, if any, monetary compensation given the large outstanding financial obligations of the company and the multiple civil suits filed against it, which could potentially result in big judgments.”
A Hulu docuseries about what happened at the Fyre Festival in the Bahamas will stream in 2019, according to Rolling Stone Magazine. In the meantime, McFarland is cooling his heels in federal custody while Atkins faces the music in bankruptcy court.
