Anti-money laundering (AML) compliance professionals are taught to read between the lines. The role involves gathering information directly from the source and doing independent research to offer firms a holistic view of clients who may be onboarded. The characteristics of an investigator must be inhabited and as investigators, it is often about following the money. That is why in the wake of the release of two competing documentaries on the Fyre Festival, one on Netflix and another on Hulu, more questions appear than answers.
For those that are unfamiliar with Fyre Festival, it was intended to be a luxury music festival on a private island in the Bahamas. Founders Billy McFarland, Ja Rule and the Fyre Festival team leveraged the power of social media and celebrity status to promote the festival, which was set to take place in April 2017. The caveat was that the team started planning the music festival less than six months before the date of the event.
With celebrities like Kendall Jenner, Bella Hadid and Hailey Baldwin being paid to post content about the festival and the promise of a glamourous party with the best food, art, music and adventure, it became a viral sensation among millennial festivalgoers. Packages ran upwards to $250,000 offering private jets and luxury accommodations. The Fyre Festival team did an exceptional job creating the perception of the hottest event since Burning Man and Coachella.
However, the festival turned out to be quite the opposite of what was advertised. Luxury accommodations were actually rain-soaked Federal Emergency Management Agency tents, the best food they could offer were cheese slices on bread, and the adventure became thousands of dollars in ticket sales that were lost and mismanaged, while festival attendees were stranded on an island without flights to return home.
What is better than chaos? Documented chaos to showcase the catastrophe and create more social media buzz. As the festival crashed and burned, McFarland found time to call on Michael Swaigen to grab footage of the catastrophe. Swaigen was the cinematographer who had shot the viral commercial for Fyre Festival, as well as behind-the-scenes footage that was used in the Netflix documentary.
It must not go without mentioning who else was behind both documentaries, as this is pertinent not only to the validity of the documentaries but it also opens up questions about the missing information. The Netflix documentary, Fyre, was in large part produced by companies contracted by Fyre Festival. One of these was Jerry Media, which ironically underwent a rebrand from its well-known social media account F***Jerry to a full-fledged media “studio” post-Fyre-Festival fiasco when it decided Fyre would be its first project.
The Hulu documentary, Fyre Fraud, was directed by Jenner Furst and Julia Willoughby Nason, both documentarians. They offered their main subject, McFarland himself, a reported $250,000 for a unique interview after his arrest by the FBI for fraudulent activity surrounding Fyre Festival and other ticket scams performed while he was in jail. Unfortunately, their documentary and the media coverage surrounding the reported payment neglects to offer any explanation as to why this documentary team paid McFarland for the interview.
However, Hulu’s Fyre Fraud explained more thoroughly the high-profile business failures of McFarland prior to kicking off his Fyre Festival idea. Most notably, the main investor in McFarland’s first company Magnises, Aubrey McClendon, former CEO of Chesapeake Energy. In 2016, McClendon died in a car accident right after being indicted by the U.S. Department of Justice for conspiring with another oil and gas company to rig bids for prospective acreage in Oklahoma. Considering that McClendon was named by Forbes as “America’s Most Reckless Billionaire,” a compliance officer running across such an article on McFarland’s main investor would be right to proceed with enhanced due diligence.
With all of this information in mind, it is easy to understand why both documentaries only skim through the surface of the criminal activity surrounding McFarland and his business endeavors. It would take a great deal to point out further inconsistencies from each individual documentary. This article will focus on broader questions that are not addressed in either of them.
First and foremost, what responsibility do the financial institutions have in knowing their customers in this particular case? A quick search online would have offered a view of the inconsistencies surrounding Fyre Festival and McFarland. The Wall Street Journal reported they suspected Billy McFarland and Ja Rule’s festival to be a scam around the same time Vogue reported it to be the event of the year. Should these financial institutions be held responsible for enabling fraudulence in the McFarland case?
Furthermore, both documentaries neglected to emphasize the role Ja Rule had in the fraudulent festival. They pin nearly all of the blame on McFarland, yet Ja Rule has been discussing with media outlets attempting a second Fyre Festival under a different brand. With whom might Ja Rule be banking and is this financial institution aware of his ties to McFarland?
Why did the documentarians neglect to interview Carola Jain and other investors to understand why they invested in the Fyre Festival brand? And why might McFarland have been so quick to wire $250,000 to Kendall Jenner and other celebrities involved, yet neglect to pay his vendors and investors back in a timely manner?
Lastly, should Jerry Media be held accountable for false advertising when it chose to flood social media with buzz about Fyre Festival, knowing it might be an impossible endeavor to achieve in under six months?
AML compliance officers must take a critical eye to individuals, companies and information that is sent their way. It is easy to consume the two documentaries on Fyre Festival and focus on the flawed judgments made by each party, the abuse of social media and the hilarity of the situation as a joke on millennial festivalgoers everywhere.
However, by still focusing on McFarland’s fraudulent activity during Fyre Festival, people are being blindsided by the continued fraudulent tactics used by the Fyre Festival team in the first place. It must not be forgotten that this was entirely about creating media hype, and oddly enough, it continues today. Fraudulent activity never occurs in a linear fashion, rather it occurs in a chaotic approach, meant to confuse and distract from the real source. Hence the need for further explanation to the questions listed above—questions neither documentary addresses.