Billy McFarland was arrested in his Manhattan condo on account of fraud for falsifying financial documents. He duped investors into dumping millions of dollars into failed Fyre Fest, dragging Ja Rule along for the ride. At least 12 different cases are currently pending between the two.
Ja Rule claimed that he was touted by McFarland, so even though he is still dealing with an incredibly uncomfortable PR blunder with accompanying lawsuits, he managed to avoid prosecution while McFarland could have faced up to 20 years in federal prison.
The millennial money-maker
Apparently, McFarland was already accustomed to the functionality of the “startup ecosystem.” Prior to this PR disaster, he introduced “Magnises,” a subscription-based service that was based on a concept similar to American Express’s “Black Card” perks program.
It was when he realized that he was light years away from owning a “Black Card” of his own, that McFarland concocted this service to satisfy the desires of like-minded individuals.
A hefty $250 annual fee was set forth to attract those looking for validation based on a quantifiable measure of socioeconomic status. Younger millennials such as “trust fund babies” or “yuppies” who haven’t yet been on this earth long enough to qualify for the American Express “Black Card,” would have the option to feel like they could buy their status without having to prove that they know how to be responsible with their money.
This proved to be a popular choice for kids who wanted to buy their way into some sort of popularity contest much like the “Kardashian” types whom nobody really seems to understand yet still appear to be enamored with.
McFarland lost control on that slippery slope when he bought into his own hype. He compromised his ability to think rationally when he allowed his material desires to dominate his ability to keep his commitments. He put the nail in his own coffin when he convinced himself to project an image with a lifestyle that pressured him to spend far beyond his means.
Savage spending spree setbacks
An appetite for lavish spending with expensive tastes appeared to prompt risky business moves. According to Bloomberg, McFarland was spending $21,750 per month for a Manhattan penthouse and drove a $110,000.00 Maserati. He accumulated, but then quickly blew millions of dollars in what turned out to be a rotten attempt to meet the expectations of investors, vendors, and performers alike.
Money that was collected for this event was spent frivolously spelling deception the whole way. Kendall Jenner was even paid $500,000.00 dollars to promote Fyre Fest on Instagram. Between misleading promo videos and deceptive celebrity endorsements, it’s no big surprise that expectation quickly turned to heartache for festival goers.
Influencers inspire investigations
There is a brighter side to this whole disaster because now we can expect to see a little more transparency from celebrity influencers. We credit this incident for prompting a sense of urgency behind the launch of new Instagram features that were designed to resolve issues pertaining to FCC compliance.
These long-overdue features are giving community creators and businesses the ability to tag each other in sponsored posts to help prevent crooked marketing practices.
Bad business bottoms out
As you can see, it can be difficult to tell whether a business venture has failed as a result of poor planning, inadequate project management, or if something more sinister has occurred. If you remember, we’ve discussed ways to sniff out a crowdfunding scam. We provided examples, some of which were nearly impossible to decipher without a considerable amount of research. Fraud is not always easy to detect, but anytime a business fails the skeptic in all of us tends to call foul play.
McFarland was released on a $300,000.00 bail. This was a day after his first court appearance.
McFarland’s first mistake was the fact that he placed too much value on seeking validation from those who made him feel pressured to spend far beyond his means. In an attempt to tame an insatiable urge to measure up to the impossible expectations of those living well above his tax bracket, greed became a vice that caused his entire operation to crumble. From the get-go, he built this business on a faulty foundation with despicable business moves that were prompted by his inability to control his vices.
Never the right time for fraud
Not to get preachy, but there is something to consider here. Everyone has vices. Everyone is faced with making difficult decisions too. If you ever find yourself in a situation where you feel the need to falsify financial documents to jumpstart a large-scale capital venture, you might want to consider re-evaluating your life choices.