On Fyre: You Know Fraud When you see it
Everybody wants to be a part of the next best thing—whether it’s by being the first to attend the next Coachella or to be the first person to invest in the next Facebook. When Billy McFarland developed the Fyre Festival and Fyre Media, he preyed on our basic human desires to be included and to be the first. His ventures were the perfect storm for a good fraudulent scandal: emotional appeal, endorsements by famous people, investors believed to be knowledgeable, and documentation that looked real enough to trick people. These factors made people completely ignore the obvious red flags. By going just slightly below the surface, and asking some common sense questions, Fyre Festival attendees and Fyre Festival Media Investors could have avoided a loss that exceeds $25MM.
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- Good governance matters. Never invest in companies without experts, audited documents, and structure.
- When investing, be wary of unregistered securities and unregistered brokers. Conduct additional diligence before investing.
- Your identity and social media presence are your intellectual property. Don’t give away your data and property for free because of FOMO.
Carliss Chatman, Assistant Professor, Washington and Lee University School Of Law