Tuesday, May 16, 2017

The organizers of the doomed Fyre Festival are now facing a lawsuit from lenders who allege they’re missing millions

fyre festival

In the days and weeks leading up to the spectacular disaster that was Fyre Festival, organizers Billy McFarland and Ja Rule allegedly borrowed up to $7 million as they scrambled to get the event set up in time, according to a new report by Bloomberg.

Ezra Birnbaum, who is associated with lender EHL Funding LLC, is now suing the pair of organizers for defaulting on a $3 million loan. The complaint alleges that Birnbaum’s firm was supposed to be reimbursed in part after Fyre Media received credit-card payments from festivalgoers who had loaded funds onto their “Fyrebands.”

These RFID bands were the only method of payment allowed at the “cashless” festival. Attendees were encouraged to have money available on the bands for extra perks they might want to buy while on the festival’s grounds in the Bahamas. The festival sent multiple emails to ticket holders prior to the date the event was supposed to take place, recommending that they each add several hundreds of dollars to their bands.

Fyre Media allegedly received over $700,000 in payments from festivalgoers via their Fyrebands, but it’s not clear what has happened to that money, according to the complaint. Attendees were promised beforehand that unused funds would be returned (minus a $10 “handling fee”), but several subsequent lawsuits have alleged that that hasn’t been the case. As the festival was cancelled as soon as many guests arrived on the island, it’s likely that very little of the cash on the bands was spent by wearers.

Birnbaum’s suit says that though Fyre did make a payment on the loan, it was not enough.  The promissory note states that 40% of the loan should have been repaid from revenue gained from festivalgoers putting money on their bands, according to Bloomberg.

Fyre Media had also taken out a second, $4 million loan that was connected to Carola Jain, wife of Millennium Management Co-CIO Bob Jain.

McFarland, Ja Rule, and Fyre Media have been named in at least seven lawsuits stemming from the Fyre Festival, with most claiming that the organizers defrauded festivalgoers by promising a luxury premium experience they knew they could not deliver.

SEE ALSO: The organizer of the disastrous Fyre Festival told employees they would no longer be paid but were welcome to stay and ‘help out’

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NOW WATCH: Fyre Festival expectations vs. reality — here’s what attendees thought they were getting when they bought $12,000 tickets

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May 16, 2017 at 03:11AM

from Dennis Green