What Business Owners And Investors Can Learn From The Fyre Festival Disaster

It’s hard to forget the infamous Fyre Festival. The music festival’s sleek, influencer laden marketing techniques that promoted an exclusive experience that never was were detailed in two different documentaries on Hulu and Netflix earlier this year. While the incident has resulted in prison time for the founder and a multitude of media coverage—it’s important to note the many lessons that business owners and investors can learn from this ultimate blunder.

Recently, Fyre Festival founder Billy McFarland lost his $100 million lawsuit that will ultimately require him to refund one of the investors who funded the defunct music event. According to court documents, McFarland has been ordered to pay EHL Funding $2.8 million, plus 30 percent interest, as well as the company’s attorney fees. The ruling was taken as a default judgment against McFarland, as he failed to appear in the case. Now currently serving a six-year prison sentence for wire-fraud, McFarland also pleaded guilty to using fake documents to lure investors. With eight lawsuits filed, McFarland agreed to forfeit over $26 million.

Warning Signs of Fraud

Businesses and investors need to to know the signs of fraud, like those that occurred in the Fyre Festival debacle, to ensure they don’t fall prey to the same fate.

Erratic reporting

Erratic, incomplete, or late management reporting can be a sign that something may be wrong. Common excuses used include IT failures, technology compatibility issues between different company systems, or international systems. Oftentimes once the reports are complete, there are delays in the reports reaching those who need to review the data.

Organizational changes or trashed files

A major indicator of fraudulent activity can be the deleting or putting pressure on staff to delete, remove, or otherwise trash past records following a restructure. While a notice of files being destroyed should be cause for alarm, an even bigger problem arises when international operations are involved, as it’s far harder to find or recreate evidence in a foreign territory.

Data inconsistencies

Whether it’s archived data or cross-reference checks that are missing or wrong, factual inconsistencies will also be another indicator of fraud. Those who seek to defraud an organization will try to explain away these inconsistencies and hide their fraudulent activity.

Audit delays

Excuses and confusion when disclosing to auditors, be they internal or external, can be another telltale sign of fraudulent behavior.


A title might be given out to an employee who does not bear any actual responsibility to cover up what is actually going on with those who do have power in the situation. The hope is that should the fraud be detected, the scapegoat will take the blame, at least for long enough for records to be destroyed and any evidence removed.

Fraud and Misrepresentation Litigation

Most parties entering into a contract do so with good intentions, but sometimes individuals or companies commit fraud or make misrepresentations to encourage a transaction. The laws regarding fraud and misrepresentation are often complex, and require certain criteria be met in order for the injured party to obtain compensation.

Accusations of fraud or misrepresentation are very serious. Whether you have been a victim of fraud or misrepresentation or you have been accused of such, you will need an experienced business attorney to protect your interests. The experienced fraud and misrepresentation attorneys at Adair Myers Graves Stevenson are aggressive litigators with decades of experience. If you or your business have been the victim of fraud or misrepresentation or have been accused of fraud or misrepresentation, our attorneys can explain your legal options and provide skilled and cost-effective representation.