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Business News Legal
Billy McFarland reaches deal with SEC over Fyre Festival fraud
By Chris Cooke | Published on Wednesday 25 July 2018
Occasional festival promoter and frequent fraudster Billy McFarland has settled a case being pursued against him by the US Securities And Exchange Commission in relation to various fraudulent activities that occurred in the run up to the failed Fyre Festival.
McFarland, of course, set up the Fyre Festival with his celebrity pal Ja Rule. The event, which promised to be a super luxury experience in the Bahamas, was linked to a talent booking app McFarland was trying to get off the ground. But the festival collapsed just as it was getting started when it emerged McFarland had failed to put in place the infrastructure for even a basic event, let alone the luxury set-up ticket-buyers had been promised.
A flood of litigation followed the collapse of the Fyre Festival and its associated businesses, with ticket-buyers, suppliers and investors among those to go legal. There were also criminal charges of fraud filed against McFarland and an SEC investigation.
The latter has now come to an end with the regulator reaching a deal with McFarland and two of his former business associates. McFarland himself will not have to hand over any money as part of that settlement, mainly because of monies already forfeited as part of the criminal case, which are in the region of $27.4 million. He has, however, agreed to never act as an officer or director in any publicly-traded company ever again.
According to Law360, the SEC has also settled with one Grant Margolin, who worked with McFarland in a marketing role, and Daniel Simon, who created fraudulent documents for the Fyre Festival chief without verifying the accuracy of the information. They will hand over $35,000 and $15,000 respectively.
Among the revelations unearthed by the SEC investigation are that McFarland told investors he had booked artists including Jennifer Lopez, the Foo Fighters and Selena Gomez, when in fact his company had no relationships with any of those acts. He also created fake statements that claimed he owned millions in Facebook stock which were used as collateral to guarantee investments being made by his financial backers.
In the separate criminal investigation into his business affairs, the Fyre man pleaded guilty to two charges of wire fraud back in March. He reached a plea deal with prosecutors and was due to be sentenced last month. But sentencing was postponed following new allegations of fraud relating to a business set up after the Fyre Festival’s collapse.
