WASHINGTON (CN) — The 26-year-old creator of last year’s failed “once-in-a-lifetime” Fyre music festival in the Bahamas admitted to SEC charges Tuesday, and the SEC agreed to accept the $27.4 million that Billy McFarland agreed to disgorge in a parallel criminal case.
William Z. “Billy” McFarland admitted in the settled complaint that he defrauded more than 100 people of more than $27.4 million through his co-defendant companies Fyre Media Inc. and Magnises Inc. His financial victims also invested in a third McFarland business, Fyre Festival LLC, which is not named as a defendant in the SEC complaint
In the same complaint the SEC also sued Grant Margolin, 25, of Brooklyn, who was vice president of branding and marketing for Magnises, and chief management officer for Fyre Media; and Daniel Simon, 23, of Weehawken, N.J., a high school buddy of McFarland’s who “intermittently served as a contractor for each of McFarland’s businesses.”
More than a dozen civil lawsuits were filed against McFarland after his disastrous, nonexistent Fyre music Festival, which was supposed to occupy two weekends in the Bahamas in 2017. He was sentenced to prison on two counts of wire fraud.
The SEC said, among other things, that McFarland juggled the books to show investors he had personal stock holdings worth more than $2.5 million, when in fact, his account held less than $1,500.
He skimmed lavishly from the money he raised, according to the civil and criminal cases.
“McFarland gained the trust of investors by falsely portraying himself as a skilled entrepreneur running a series of successful media companies, SEC associate enforcement director Melissa Hodgman said in a statement Monday. “But this false picture of business success was built on fake brokerage statements and stolen investor funds.”
The SEC statement added: “McFarland used investor funds to bankroll a lavish lifestyle including living in a Manhattan penthouse apartment, partying with celebrities, and traveling by private plane and chauffeured luxury cars.”
Margolin was fined $35,000 and agreed to an officer and director bar for 7 years; and Simon agreed to pay $15,000 in penalties and disgorgement, and a 3-year officer-director bar.