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Billy McFarland propped up another company with his Fyre credit card, says Vice

By | Published on Monday 11 September 2017

Fyre Festival

The founder of the shambolic Fyre Festival might have used a corporate credit card associated with the Fyre business to buy up to a million dollars of tickets on behalf of another company he set up called Magnises, according to Vice News.

Fyre Festival, of course, was the music event due to take place on an island in the Bahamas in April and May this year. Marketed as a super luxurious experience, the festival collapsed just as people were arriving, as it became clear management hadn’t put in place the infrastructure for even a basic event, let alone the luxury set-up that had been promised.

The festival was founded by Ja Rule and Billy McFarland, who were also collaborating on a talent-booking app under the Fyre brand, which the abandoned island adventure was designed to promote. Since the event’s collapse, the Fyre companies and their founders have been on the receiving end of a stack of lawsuits from disgruntled ticket-buyers, suppliers and investors, while McFarland also faces criminal charges of fraud.

As previously reported, Fyre Festival LLC – the company that was actually promoting the failed event – was recently forced into bankruptcy by three financial backers. A legal rep for the investors conceded that his clients may never get their money back, but said that the bankruptcy proceedings should nevertheless mean “at least we’ll know where it went”.

The new Vice report, meanwhile, focuses on how monies were spent at the parent company Fyre Media, which was also developing the aforementioned app. It claims that paperwork shows that McFarland used one of that company’s American Express cards to buy a million dollars of concert tickets. Those tickets, it seems, were required by a separate business McFarland was involved in called Magnises.

Magnises was a members-only concierge service which, among other things, promised to help subscribers get access to tickets to in-demand shows. Making good on those promises, it is alleged, often involved McFarland buying last minute tickets via resale sites like StubHub and Vivid Tickets, and then selling them onto Magnises members at a loss.

Vice reports that “most of the StubHub, Ticketmaster, Vivid Seats and Fan Exchange charges on McFarland’s Fyre American Express card correspond with events advertised by Magnises”, adding that the credit card records suggest “he was purchasing most, if not all, of [the tickets] on the same day the events were scheduled to take place”.

It’s thought that Fyre and Magnises had some investors in common, though they were separate businesses, which means credit facilities offered to one shouldn’t have been used to prop up the other. Though a lawyer interviewed by Vice says that McFarland’s use of his Fyre credit card to buy tickets for Magnises would only add to the fraud charges he already faces if it could be shown his motives were to specifically defraud investors.

Lawyer Jack Sharman says: “If he had fraudulent intent, that is to say, to rip off his investors, that could be a state or maybe a federal securities claim. On the other hand, if what you’re talking about is essentially gross mismanagement – somebody bad at running the company, who had a bad idea how to finance it, and used his investors’ funds improperly – that might be grounds for a lawsuit by those investors”.