Billy McFarland was born in New York City in 1991. At the age of 13 he founded an online company selling web space to mainly adult websites. By the time he finished high school he claimed to have founded two other companies. He briefly attended Bucknell University before dropping out to raise venture-capital funding to develop a social-media site where friends could share music and videos. He then set up Magnises, an invitation-only club based on a charge card, offering invitations to exclusive events. Despite receiving funding from energy tycoon Aubrey McClendon, McFarland became bored with the venture and founded Fyre Media instead.
What was the scam?
Fyre Media was based on a website that would make it easier to book artists and celebrities for events. The firm made less than $60,000 from 100 bookings between July 2016 and April 2017, so McFarland presented investors with false financial reports that portrayed the company making millions of dollars from thousands of bookings. He also forged brokerage statements to claim that he had $2.5m-worth of Facebook stock that he could use to personally guarantee some of the larger investments.
What happened next?
To publicise the website, McFarland planned the Fyre Festival, a lavish event on an island in the Caribbean that was to run in April and May 2017. A clever social-media campaign, involving various celebrities and supermodels, lured around 5,000 people, paying between $1,200 and $100,000 each, to buy in. Instead of the promised luxury experience, revellers arrived to find accommodation consisted of little more than some emergency tents. The subsequent media storm led to an investigation by the FBI and McFarland was charged with fraud in June 2017. He was sentenced to six years in jail.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
The failure of the Frye Festival generated the most publicity, but the biggest losers were the investors who had put a total of $27.4m into the company, including fashion tycoon Carola Jain, who loaned McFarland $4m. Many start-ups fail, but there were several red flags here, including the fact that many of the artists who had supposedly signed up to the website were already represented by other agencies. Another investor pulled out after realising that the “private island” where the festival was due to take place was actually part of an undeveloped resort.
-
M&S and Tesco among those warning of a £7bn Budget hitSeventy-nine UK retailers have written to Chancellor Rachel Reeves about possible price rises and job cuts - here is what it means
-
How much does it cost to move home under the Labour government?Home-moving costs are rising and could get more expensive once stamp duty thresholds drop in April 2025
-
Sri Mulyani Indrawati: Indonesia’s Iron LadyKeeping Sri Mulyani Indrawati on as Indonesia's finance minister has steadied the ship after the election of a former military general spooked financial markets
-
Media mogul James Dolan takes straight shot at the limelightControversial media mogul James Dolan has been hailed as a visionary for his Sphere arena in Las Vegas. But can he square the circle financially?
-
Do we need central banks, or is it time to privatise money?Analysis Free banking is one alternative to central banks, but would switching to a radical new system be worth the risk?
-
Byju’s – the startling rise and fallIndia’s educational technology start-up Byju's attracted big-name backers and soared to vertiginous heights during Covid. It has now plummeted. What happened?
-
Indian magnate Ratan Tata dies at 86 – how he made a mark in the UKRatan Tata took the helm of the family business in 1991 and transformed it into an international conglomerate worth $365bn. His death plunged India into mourning
-
Jimmy Carter makes history as the first former US president to turn 100When Jimmy Carter left office, few would have predicted an outbreak of national affection for the former president’s 100th birthday four decades later. But his legacy is worth celebrating
-
Eric Adams: the New York City mayor charged with corruptionControversy and accusations of corruption have followed Eric Adams in his rise to the mayoralty of New York City. Now he has been charged with a federal crime.
-
How much does the prime minister get paid?How much does the prime minister get paid and should he get more?
