Billy McFarland, the entrepreneur behind the Fyre Festival, which was sold as an ultraluxurious music event in the Bahamas but collapsed spectacularly in April, leaving behind angry ticket buyers, investors and workers, was arrested by federal agents at his home in Manhattan on Friday and charged with one count of wire fraud.
Federal prosecutors announced the charge involves a scheme to defraud investors, which included misrepresenting financial information about Mr. McFarland’s company, Fyre Media. His representatives were not immediately available for comment.
Joon H. Kim, the acting United States attorney for the Southern District of New York, said in a statement: “McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival.” If convicted, Mr. McFarland could face a maximum of 20 years in prison, but is likely to receive a lesser sentence.
In addition to the federal charges, Mr. McFarland, and Ja Rule, his partner in the venture, face more than a dozen lawsuits. Some included accusations that the men and Fyre Media had included fictitious financial information on documents given to prospective investors.
Stacey Richman, a lawyer for Ja Rule, whose real name is Jeffrey Atkins, said that he had not been arrested. “Mr. Atkins is not under arrest and we don’t perceive him to be a subject of this investigation,” Ms. Richman said.
A criminal complaint unsealed on Friday detailed the case, which relies heavily on misrepresentations of financial information to people who invested in Fyre Media — whose main business was a website that let people book celebrities for special events — and a subsidiary, Fyre Festival LLC.
According to the complaint, sworn to by Brandon Racz, a special agent with the F.B.I., at least two people invested about $1.2 million in the two companies, and in communications with these investors in 2016 and 2017, Mr. McFarland repeatedly overstated Fyre Media’s revenue from bookings and his own wealth.
He said Fyre Media had earned millions of dollars from thousands of bookings this year and last. But in reality, the complaint said, his company had taken in only $57,443.
And in one communication with an investor, Mr. McFarland supplied a Scottrade statement that he had altered to inflate his ownership of a particular company’s stock. According to the complaint, the fake document showed that Mr. McFarland owned $2.5 million in shares, when in reality his position was worth $1,500.
Michael Quinn, a lawyer for Oleg Itkin, one investor who filed a civil suit against Mr. McFarland and his companies, called the arrest “another step toward addressing the damage he has caused to our client and all of the other victims.”
It was the collapse of the Fyre Festival that led to his arrest. Pitched as a high-end outing for millennials in the Bahamas, and hyped by supermodels on Instagram, the festival advertised appearances by stars like Blink-182, and ticket packages as high as $400,000.
But when guests arrived, they found only makeshift tents and a chaotic scene on a dark beach. The festival was quickly canceled, and images of Fyre’s breakdown — empty concierge stations, decidedly nongourmet meals — filled social media.
The organizers cited rough weather as one of the factors that doomed Fyre, but in a statement on the festival’s website also admitted, “We were simply in over our heads.”