Australian travel agency Flight Centre has been dragged into the fallout of the fraudulent Bahamas music festival Fyre.
A trustee for Fyre Festival’s failed entity has taken Brisbane-based Flight Centre’s US subsidiary to a New York bankruptcy court, seeking to reclaim $US121,400 ($A179,000), according to documents obtained by The Australian Financial Review.
The money was allegedly transferred to Flight Centre for shuttling musicians to the April-May 2017 festival, who were slated to include rockers Blink-182.
Flight Centre plans to defend the lawsuit. “We were asked to provide services and were paid for those services,” a Flight Centre spokesman told the Financial Review.
Fyre was a music festival promoted by entrepreneur Billy McFarland and hip hop artist Ja Rule, also known as Jeffrey Atkins.
It used Instagram influencers such as Kendall Jenner and supermodels such as Emily Ratajkowski to promote the upcoming festival to hordes of Millennials. “Get tix now … VIP access for my followers,” Ms Jenner wrote on her Instagram feed.
The court documents allege she was paid $275,000 for the post.
The event was initially slated to be held on a private Bahamas island that was advertised in a promotion video as having been “once owned by [Colombian cocaine baron] Pablo Escobar”.
Musicians named in the line-up included rapper Tyga, while guests were told they could travel via private jet and relax in VIP accommodation.
Attendance would cost between $1200 and $100,000 per ticket or ticket package, court documents state, and McFarland raised and spent at least $16 million for the festival.
But it collapsed in chaos. “The luxury accommodations promised to festival attendees were actually … disaster relief tents with plastic mattresses, which, regardless of quality, were grossly insufficient in number to house the number of attendees,” the court documents state.
Acts such as Blink-182 cancelled and the whole event was eventually cancelled on April 28, with attendees struggling to return home.
In the washout, McFarland pled guilty to fraud charges and was sentenced to six years’ jail. That included, according to the US Attorney’s Office, wire fraud linked to Fyre Media and its subsidiary Fyre Festival LLC. He had overstated the gig’s receivables, which were used as collateral when he obtained investor funds to cover festival expenses, prosecutors said.
Ja Rule was not charged and maintained, via Twitter in January, he too had been “hustled, scammed, bamboozled”.
Late last week, Fyre Festival LLC’s bankruptcy trustee Gregory Messer – the Australian equivalent of a liquidator – sued various people and businesses to recover funds, including Ms Ratajkowski for $299,999.
Among those caught up include Flight Centre’s New Jersey-based subsidiary. The company’s Americas division boasts more than 2600 sales staff and was declared at earnings results to be a “$100m-per-year profit engine”.
Flight Centre received $30,629 on April 12, 2017, and $90,800 on April 26, 2017, to “provide flights for the various music acts that were supposed to perform”, the lawsuit said.
“The flight services … were never provided,” it alleged.
The trustee initiated several legal prongs of attack to reclaim the money.
One is that because the flights “never occurred”, the festival was “entitled to a return” of the money.
Another claim is based on the transfer being fraudulent. While there is no suggestion Flight Centre knew of scurrilous action, the trustee argued the transfer of funds for the flights was part of McFarland’s “scheme to defraud investors, lenders and ticket purchasers”.
A final tactic is claiming the money was a “preferential transfer”, as funds were transferred to Flight Centre while the festival was insolvent and so can be recouped.
This article was first published by The Australian Financial Review. Read the original here.
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