Investor believes that until detailed accounts emerge, suspicions will mount that festival was an elaborated Ponzi scheme and buried in debt before it even began
Investors in the ill-fated Fyre Festival in the Bahamas was starting to assert legal claims against organizer William Billy McFarland this week in what is likely to be a protracted effort to recover assets from the supermodel-fronted luxury private-island music celebration that collapsed in spectacular dissension last month, stranding hundreds.
The first petition to freeze festival assets to get a court hearing comes from Oleg Itkin, a Manhattan investor who says he handed over a $700,000 loan from January to April to fund a Fyre-branded app designed to streamline the process of booking entertainers for private and corporate events.
Itkin claims McFarland proved him a projected income statement depicting $932 m in proceeds from the celebration and the app. Lawyers for Itkin provided documents indicating organizers claimed $31 m in assets in January, including land in Grand Exuma valued at $8.4 m.
Itkin asserts organizers told him the festival had secured $4.2 m in bookings from acts including Drake, Kendrick Lamar, Iggy Azalea and Ja Rule, one of the founders of Fyre Media. The app is no longer available, as the festivals legal woes mount.
While many investors tied their stakes to Fyre Festival, Itkin tied his investment to the Fyre Media app. They built Fyre appear to be a good investment, says Itkins lawyer, Michael Quinn. But McFarland defaulted on the loan, and other investors, ticket holders, employees and vendors have been unable to recoup their money. No one is find what theyre owed.
Quinn believes that until organizers render detailed accounts for the festival, suspicions will mount that it was an elaborated Ponzi scheme doomed to leave investors frustrated. McFarland will potentially be seen as the Madoff of the millennials, Quinn says, referring to convicted fraudster Bernie Madoff.
Recent reports indicate the festival, which appeared to promise ticket holders a luxury experience weekend, potentially cavorting with models and social media starrings including Kendall Jenner, Bella Hadid and Emily Ratajkowski, was buried in debt before it even began.
As it unfolded, hundreds of ticket holders received themselves stranded on Grand Exuma with little accommodation, poor food and no live music. The celebrity models are reportedly warned off before the event get under way. Some who attended likened conditions to a refugee camp.
The organizers used Instagram and Snapchat to garner interest, and Billy McFarland was going to follow in the footsteps of Bill Gates and Mark Zuckerberg, Quinn says. It was just going models and yachts. But the luxury experience turned into a disaster. Everything hed promised to investors, ticket holders, and everybody else, he couldnt come up with.
Read more: www.theguardian.com