throbber
Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 1 of 7
`
`Approved:
`
`l 'l MAG
`ORIGINAL
`~le jf~r • 4 9 8 8 \l~.OI~~~
`
`STY J. GREENBERG
`Assistant United States Attorney
`
`Before:
`
`HONORABLE KEVIN NATHANIEL FOX
`United States Magistrate Judge
`Southern District of New York
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`- x
`
`UNITED STATES OF AMERICA
`
`- v. -
`
`WILLIAM McFARLAND,
`
`Defendant.
`
`SEALED COMPLAINT DOG#j_
`
`Violations of
`18 u.s.c. §§ 1343 & 2
`
`COUNTY OF OFFENSE:
`NEW YORK
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`-
`
`x
`
`SOUTHERN DISTRICT OF NEW YORK, ss.:
`
`BRANDON RACZ, being duly sworn, deposes and says that
`he is a Special Agent with the Federal Bureau of Investigation
`(the "FBI"), and charges as follows:
`
`Count One
`
`(Wire Fraud)
`
`From at least in or about late 2016, up to and
`1.
`including in or about May 2017, in the Southern District of New
`York and elsewhere, WILLIAM McFARLAND,
`the defendant, willfully
`and knowingly, having devised and intending to devise a scheme
`and artifice to defraud, and for obtaining money and property by
`means of false and fraudulent pretenses,
`representations and
`promises,
`transmitted and caused to be transmitted by means of
`wire,
`radio,
`and
`television communication
`in
`interstate and
`foreign commerce, writings, signs, signals, pictures, and sounds
`for the purpose of executing such scheme and artifice, to wit,
`McFARLAND engaged in a scheme to induce others to make financial
`investments in Fyre Media LLC
`( "Fyre Media") , a digital media
`company controlled and operated by McFARLAND, by, among other
`things, making false representations about Fyre Media's revenue
`and McFARLAND's own finances, and in connection therewith and in
`
`1
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 2 of 7
`
`thereof, McFARLAND caused wire communications and
`furtherance
`wire transfers of funds to be sent in interstate commerce.
`
`(Title 18, United States Code, Sections 1343 & 2.)
`
`the
`for
`for my knowledge and
`The bases
`charge are, in part and among other things, as follows:
`
`foregoing
`
`I am a Special Agent with the Federal Bureau of
`2.
`("FBI") .
`I have been an FBI Special Agent for
`Investigation
`two years and
`I
`am assigned to a White Collar
`approximately
`Fraud squad within the New York Division. As part of my work at
`the FBI,
`I have received training regarding fraud and white
`collar crimes.
`I am familiar with the facts and circumstances
`set
`forth
`below
`from my
`personal participation
`in
`the
`investigation, including my examination of reports and records,
`interviews
`I have conducted, and conversations with other law
`enforcement officers and other
`individuals.
`Because
`this
`affidavit
`is being
`submitted
`for
`the
`limited purpose of
`establishing probable cause, it does not include all the facts
`that
`I have
`learned during
`the course of my
`investigation.
`Where the contents of documents and the actions, statements and
`conversations of others are reported herein,
`they are reported
`in substance and in part, unless noted otherwise.
`
`THE DEFENDANT AND HIS COMPANY
`
`At all times relevant to this Complaint, WILLIAM
`3.
`the defendant, was
`the founder and Chief Exe cu ti ve
`McFARLAND,
`Officer of Fyre Media.
`In 2016, McFARLAND started Fyre Media to
`build a digital app
`that would allow
`individuals organizing
`commercial events,
`such as concerts,
`to bid for artist and
`celebrity bookings at such events.
`According to Fyre Media
`documents provided
`to
`investors by McFARLAND,
`Fyre Media's
`historical and projected revenue from at least April 2016
`to
`November 2017 consisted solely of artist bookings.
`
`the defendant,
`In late 2016, WILLIAM McFARLAND,
`4.
`established a subsidiary of Fyre Media known as Fyre Festival
`LLC and began promoting a music festival set to take place over
`two weekends in the Bahamas
`(the "Fyre Festival"). McFARLAND
`promoted the Fyre Festival in part by claiming that it would
`bring a global audience
`together
`to share a
`life changing
`experience. Ultimately, the Fyre Festival was widely deemed to
`have been a failure.
`
`2
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 3 of 7
`
`OVERVIEW OF THE SCHEME TO DEFRAUD
`
`the
`forth below, WILLIAM McFARLAND,
`set
`As
`5.
`a
`scheme
`to defraud
`individuals by
`defendant, perpetrated
`investors to invest approximately $1. 2
`inducing at least two
`million dollars in Fyre Media and Fyre Festival LLC based upon
`misrepresentations about Fyre Media's
`revenue and
`income.
`In
`furtherance of
`the
`scheme McFARLAND provided
`to
`investors
`material information that was false.
`For example, contrary to
`representations to investors by McFARLAND that Fyre Media earned
`millions of dollars of revenue from at least July 2016 until
`April 2017, a review of Fyre Media's records shows that, during
`that
`same
`timeframe, Fyre Media earned significantly
`less
`revenue.
`Furthermore, in order to induce at least one investor
`to make an
`investment
`in Fyre Media, McFARLAND provided an
`altered stock ownership statement
`to
`inflate
`the number of
`shares he purportedly owned, so it would appear that McFARLAND
`could personally guarantee the investment.
`
`MCFARLAND'S MISREPRESENTATIONS TO VICTIM-INVESTORS
`ABOUT FYRE MEDIA'S REVENUE
`
`( "Victim-1"
`individuals
`two
`From speaking with
`6.
`and "Victim-2") who invested in Fyre Media and Fyre Festival LLC
`based in part upon misrepresentations by WILLIAM McFARLAND,
`the
`defendant,
`and
`reviewing documents provided by Victim-1 and
`Victim-2,
`I
`have
`learned,
`in substance
`and
`in part,
`the
`following:
`
`Victim-1
`
`From in or about February 201 7 , up to and
`a.
`including in or about April 2017, Victim-1 made a series of
`investments
`in Fyre Media
`and Fyre Festival LLC
`totaling
`approximately $700, 000.
`On one occasion on February 14, 2017,
`Victim-1, who was
`in London, England, wired an
`investment of
`$200,000 to a Fyre Media bank account in New York, New York.
`
`b. Victim-1 was first introduced to McFARLAND
`in or about early 2017. McFARLAND told Victim-1 that McFARLAND
`wanted to raise capital for Fyre Media. On or about February 8,
`2017, McFARLAND emailed Victim-1 a Private Placement Memorandum
`(the "Memorandum") concerning Fyre Media and the Fyre Festival.
`
`3
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 4 of 7
`
`"[s]ince
`the Memorandum,
`to
`c. According
`launching in May 2016,
`thousands of offers representing tens of
`millions of dollars of performances and appearances have been
`made and accepted with Fyre."
`
`The Memorandum also provides Fyre Media's
`d.
`purported financials in an appendix consisting of a statement
`detailing Fyre Media's income from April through December 2016,
`and the projected income from January through November 2017 (the
`"Fyre Media Income Statement"). The Fyre Media Income Statement
`shows millions
`in
`revenue derived solely
`from
`thousands of
`artist bookings.
`McFARLAND confirmed
`to Victim-1
`that
`the
`numbers
`reflected
`in
`the Fyre Media
`Income Statement were
`accurate.
`
`On or about April 24, 2017, Victim-1 asked
`e.
`McFARLAND to send "the latest on bookings," to which McFARLAND
`replied,
`"$44
`for march and April will be
`just under $50 ! "
`Victim-1 understood McFARLAND
`to be referring to 44 million
`dollars and 50 million dollars, respectively,
`in revenue from
`bookings with Fyre Media. Victim-1 asked again for "any break
`down details. Maybe by artist or something like that.
`It's a
`mind boggling number per month and u have not started fully
`marketing yet! Im really curious to understand how it happens."
`
`emailed
`later, McFARLAND
`an hour
`About
`f.
`"Offers"
`and
`stated
`"See
`the
`subject
`line
`Victim-1 with
`attached. Will share Feb and March once finalized." Attached to
`the email was a spreadsheet containing a list of artists with
`the dates of purportedly confirmed bookings with Fyre Media from
`December 2016-January 2017,
`the booking amounts, and assorted
`information about
`the buyer for each booking
`(the "McFarland
`Fyre Media Booking Chart").
`
`information about
`to Victim-1,
`g. According
`Fyre Media's revenue from bookings was
`important to Victim-1' s
`decisions to invest in Fyre Media and Fyre Festival LLC.
`
`Victim-2
`
`in orP.P.. about
`From
`h.
`including April 2017, Victim-1r"'made a
`Fyre Media
`and Fyre Festival
`LLC
`$500,000.
`
`to and
`up
`late 2016,
`series of investments in
`totaling
`approximately
`
`i. Victim-2 first met McFARLAND at Fyre Media's
`office in New York, New York in or about late 2016. During that
`4
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 5 of 7
`
`meeting,
`bookings
`received
`McFARLAND
`
`that Fyre Media had artist
`told Victim-2
`McFARLAND
`of up
`to $10, 000, 000 per month, of which Fyre Media
`a
`ten percent cut.
`On or about January 29, 2017,
`provided the Fyre Media Income Statement to Victim-2.
`
`information about
`to Victim-2,
`j. According
`Fyre Media's revenue from bookings was important to Victim-2' s
`decisions to invest in Fyre Media and Fyre Festival LLC.
`
`Employee-1
`
`former Fyre Media employee
`From speaking with a
`7.
`( "Employee-1"), reviewing documents provided by Employee-1, and
`reviewing Company records,
`I have learned,
`in substance and in
`part, the following:
`
`Employee-1 worked at Fyre Media from in or
`a.
`about May 2016, up
`to and
`including
`in or about May 2017.
`Employee-1 was responsible for overseeing talent relationships
`and bookings of artists for Fyre Media.
`
`Employee-1 tracked all bookings from in or
`b.
`about May 2016, up to and including in or about April 2017, on a
`spreadsheet (the "Employee-1 Fyre Media Booking Chart").
`In the
`course of Employee-1' s work at Fyre Media, WILLIAM McFARLAND,
`the defendant, had access to the Employee-1 Fyre Media Booking
`Chart. Moreover, Employee-1 updated McFARLAND and other Fyre
`Media employees on
`the number of bookings and corresponding
`revenue at weekly Fyre Media meetings.
`
`The Employee-1 Fyre Media Booking Chart
`c.
`shows that from in or about May 2016, up to and including in or
`about April
`2017,
`only
`60 bookings
`for performances
`and
`appearances were confirmed and paid.
`The fees paid to Fyre
`Media as a result of these 60 bookings totaled only $57,443.
`
`During my interview of Employee-1, Employee-
`d.
`shown a copy of
`the Fyre Media
`Income Statement, and
`1 was
`reported never having seen it before. Employee-1 also could not
`identify any basis for the thousands of bookings and millions in
`revenue represented on the Fyre Media Income Statement.
`
`Based on my comparison of the Fyre Media Income
`8.
`Statement with
`the Employee-1 Fyre Media Booking Chart,
`it
`appears
`that
`the Fyre Media
`Income Statement
`that McFARLAND
`provided
`to Victim-1
`and Victim-2 overstates Fyre Media's
`revenue, profits and
`income.
`For example, Fyre Media Booking
`5
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 6 of 7
`
`in total
`received $57,443
`the Fyre Media
`that
`shows
`Chart
`revenue from confirmed bookings for the entire time period from
`May 2016
`to April 2017.
`However,
`the Fyre Media
`Income
`Statement
`represents
`that Fyre Media's
`income
`from bookings
`during only a subset of that timeframe (August 2016 to December
`2016)
`ranged from hundreds of thousands of dollars to over $1
`million per month.
`
`Based on my review of the McFarland Fyre Media
`9.
`Booking Chart and the Employee-1 Fyre Media Booking Chart, it
`appears that the McFarland Fyre Media Booking Chart dramatically
`overstates the number and dollar amounts of Company bookings.
`For example,
`the Bmployee-1 Fyre Media Booking Chart shows 60
`closed and paid bookings over a
`roughly year-long period. By
`contrast,
`the McFarland Fyre Media Booking Chart lists 4, 637
`confirmed bookings between December 1, 2016 and January 31,
`2017.
`Similarly,
`in many instances, the total booking amounts
`reflected in a single day in the McFarland Fyre Media Booking
`Chart exceeded the total actual booking amounts over 15 months
`in
`the Employee-1 Fyre Media Booking Chart. Moreover,
`the
`Employee-1 Fyre Media Booking Chart does not show any artist
`being paid more than $45,000 for a single booking. By contrast,
`the McFarland Fyre Media Booking Chart shows several bookings
`exceeding $300,000 each,
`and numerous bookings
`for amounts
`greater than $100,000.
`
`MCFARLAND'S MISREPRESENTATIONS TO VICTIM-1 ABOUT HIS OWN ASSETS
`
`10. From speaking with Victim-1, who invested in
`and
`Fyre
`Festival
`LLC
`based
`in
`part
`Media
`misrepresentations by WILLIAM McFARLAND,
`the defendant,
`reviewing documents provided by Victim-1,
`I have
`learned,
`substance and in part, the following:
`
`Fyre
`upon
`and
`in
`
`regarding
`McFARLAND
`company's
`
`the
`a. During
`Victim-l's potential
`represented
`that he
`stock (the "Stock")
`
`course of
`investments
`owned shares
`
`their discussions
`in
`the Company,
`of
`a particular
`
`On April 24, 2017, McFARLAND and Victim-1
`b.
`executed a revenue share agreement in which Victim-1 agreed to
`invest $200,000 in Fyre Festival LLC, with a 120% return, or 5%
`of the Fyre Festival revenue, whichever was greater, due on or
`before May 1, 2017. The Company guaranteed the 120% return on
`Victim-l's investment on or before May 1, 2017; and the return
`was guaranteed in entirety by McFARLAND' s Stock. Attached to
`the agreement was a Scottrade statement provided by McFARLAND
`6
`
`

`

`Case 1:17-mj-04988-UA Document 1 Filed 06/30/17 Page 7 of 7
`
`that purported to show McFARLAND's ownership in the Stock (the
`"Fake Scottrade Statement").
`
`Statement
`The Fake Scottrade
`c.
`in Stock.
`show that McFarland owned $2,565,079.18
`
`purported
`
`to
`
`in part on McFARLAND's
`least
`Relying at
`d.
`personal guarantee of Victim-l's investment, as reflected in the
`Fake Scottrade Statement, Victim-1 invested in Fyre Festival LLC
`on April 24, 2017.
`
`from
`review of records obtained
`11. Based upon my
`the
`Scot trade for an account belonging to WILLIAM McFARLAND,
`defendant,
`I have learned that McFARLAND altered his Scot trade
`statement (the "Real Scot trade Statement") to show ownership of
`a greater value of the Stock than he actually had.
`The Real
`Scot trade Statement shows that McFARLAND' s Stock is worth only
`$1,499.68.
`By contrast, the Fake Scottrade Statement purported
`to show that McFARLAND'S Stock was worth $2,565,079.18.
`
`WHEREFORE, deponent prays that an arrest warrant be
`issued for the arrest of WILLIAM McFARLAND,
`the defendant, and
`that he be arrested and imprisoned or bailed, as the case may
`be.
`
`SPECIAL AGENT
`FEDERAL BUREAU OF INVESTIGATION
`
`Swoin to before me this
`30th day of June 2017
`
`UNITED STATES MAGISTRATE JUDGE
`SOUTHERN DISTRICT OF NEW YORK
`
`7
`
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket