William McFarland Pleads Guilty In Manhattan Federal Court To Engaging In A Fraudulent Ticket Scam, Committing Bank Fraud, And Making False Statements To Federal Law Enforcement Agent
William McFarland, While Awaiting Sentencing for Defrauding Investors of Fyre Media Inc. and Fyre Festival LLC, Made False Representations to Customers of NYC VIP Access, Business Associates, and Federal Law Enforcement
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WILLIAM McFARLAND pled guilty today to one count of wire fraud, in connection with his operation of a sham ticket scheme in which he purported to sell tickets to exclusive fashion, music, and sporting events though NYC VIP Access, a company controlled by McFARLAND. McFARLAND also pled guilty to one count of bank fraud for writing a check with the name and account number of one of his employees without authorization, and one count of making false statements to a federal law enforcement agent in which he, among other things, falsely denied the wire fraud and bank fraud conduct to which he now has pled guilty. McFARLAND pled guilty before U.S. District Judge Naomi Reice Buchwald. During today’s plea proceeding, McFARLAND affirmed his previously entered guilty plea to one count of wire fraud in connection with a scheme to defraud investors in a company controlled by MCFARLAND, Fyre Media Inc. (“Fyre Media”), as well as its subsidiary (“Fyre Festival LLC”), which was formed to hold a music festival over two weekends in the Bahamas. McFARLAND also affirmed his previously entered guilty plea to one count of wire fraud in connection with a scheme to defraud a ticket vendor for the Fyre Festival. Sentencing is scheduled for September 17, 2018 at 3:30 p.m. before Judge Buchwald.
Manhattan U.S. Attorney Geoffrey S. Berman said: “William ‘Billy’ McFarland, CEO of Fyre Media, previously pled guilty to defrauding investors of Fyre Media and the infamous Fyre Festival and a ticket vendor of over $26 million. While that fraud case was pending, McFarland engaged in yet another scam, purporting to sell tickets through a company called NYC VIP Access to exclusive events, such as the 2018 Met Gala, Burning Man 2018, Coachella 2018, the 2018 Grammy Awards, and the Super Bowl. McFarland concealed his association with NYC VIP Access so that he could solicit customers of Fyre Festival and his other company Magnises to buy tickets without raising suspicion. These customers later learned that the tickets didn’t exist, and that this was just another fraud in McFarland’s disturbing pattern of deception. McFarland’s fraudulent schemes cost real people real money, and now he faces real time in federal prison for his crimes.”
According to the allegations in the Complaint and Superseding Information to which McFARLAND pled guilty, as well as statements made in court:
On March 6, 2018, McFARLAND pled guilty before Judge Buchwald to one count of wire fraud in connection with a scheme to defraud over 80 investors in Fyre Media and Fyre Festival LLC of over $24 million, and one count of wire fraud in connection with a scheme to defraud a ticket vendor for the Fyre Festival of $2 million, in the case captioned United States v. William McFarland, 17 Cr. 600 (NRB). In connection with that case, McFARLAND was on pretrial release from July 1, 2017, to June 12, 2018.
From at least in or about late 2017, up to and including at least in or about March 2018, McFARLAND owned and operated NYC VIP Access, a company based in New York, New York. NYC VIP Access purported to be in the business of obtaining and selling for profit tickets to various exclusive events such as fashion galas, music festivals, and sporting events, including the following events, among others: the 2018 Met Gala, Burning Man 2018, Coachella 2018, the 2018 Grammy Awards, Super Bowl LII, and a Cleveland Cavaliers game and team dinner with Lebron James. McFARLAND, while on pretrial release, perpetrated a scheme to defraud attendees of the Fyre Festival, former customers of Magnises (another company operated by McFARLAND), and other customers by soliciting them to purchase tickets from NYC VIP Access to these exclusive events when, in fact, no such tickets existed.
In furtherance of the fraudulent ticket scheme and to conceal his involvement in NYC VIP Access, McFARLAND took steps to make NYC VIP Access appear as it if were controlled and operated by other individuals. For example, in soliciting ticket sales, McFARLAND used an email account in the name of a then-employee (“Employee-1”) and a fake employee (the “Fake Employee”) to communicate with customers. In addition, McFARLAND did not personally meet or speak with customers. Instead, at the direction of McFARLAND, Employee-1 met and spoke with customers to solicit ticket sales. McFARLAND also directed Employee-1 to sign the contracts between NYC VIP Access and the customers for the sham ticket sales.
McFARLAND also took steps to conceal his receipt of the proceeds from the scheme. McFARLAND arranged for customer payments to be made by wire transfer, or through a payment processor, to bank accounts to which McFARLAND or his associates had access, including bank accounts belonging to Employee-1 and McFARLAND’s driver (the “Driver”). Alternatively, McFARLAND used mobile payment service accounts belonging to other NYC VIP Access employees to receive customers’ payments for tickets. Employee-1, the Driver and other NYC VIP Access employees then provided the ticket sale proceeds to McFARLAND in cash. After McFARLAND induced customers to pay for the tickets, McFARLAND either did not provide tickets at all, or did not provide tickets as advertised. Altogether, McFARLAND obtained approximately $150,000 in fraudulent ticket sales from at least 30 customer-victims of NYC VIP Access.
In or about March 2018, McFARLAND provided a forged check in the name of Employee-1 to the Driver, which the Driver attempted to deposit into the Driver’s bank account and would have resulted in the unauthorized withdrawal of funds from Employee-1’s bank account.
On or about June 20, 2018, in an in-person interview with a federal law enforcement agent about his involvement in NYC VIP Access, McFARLAND falsely stated, among other things, that (i) McFARLAND did not think that he would defraud customers from his prior businesses, Magnises and Fyre Festival, when he solicited them to buy tickets for NYC VIP Access; and (ii) Employee-1 authorized McFARLAND to write a check from Employee-1’s bank account for $25,000 in the name of Employee-1 to the Driver for the Driver to deposit into the Driver’s bank account.
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McFARLAND, 26, of New York, New York, pled guilty to one count of wire fraud while on pretrial release, which carries a maximum sentence of 30 years in prison, one count of bank fraud while on pretrial release, which carries a maximum sentence of 40 years in prison, and one count of making false statements, which carries a maximum sentence of 5 years in prison. McFARLAND also affirmed his previously entered guilty plea to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison. In connection with his previously entered plea, McFARLAND agreed to forfeit $26,040,099.48. In connection with today’s guilty plea, McFARLAND agreed to forfeit an additional $151,206.80.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by Judge Buchwald.
Mr. Berman praised the investigative work of the FBI’s New York Field Office.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United State Attorney Kristy J. Greenberg is in charge of the prosecution.