Fyre Fest Bankruptcy Trustee Issues Subpoenas for Hulu, Netflix, Stubhub & Billy McFarland's Mom
The latest round of legal demands are looking into more than $2 million in payments.
A federal trustee overseeing the Fyre Festival bankruptcy wants to know how filmmakers from competing Netflix and Hulu documentaries obtained "insider" footage and determine how much the failed event's now-jailed founder, Billy McFarland, was paid for his involvement in the projects.
Gregory Messer also wants to know more about a $464,283 transfer to ticket resale company StubHub, a $453,423 payment to reseller Vivid Seats and a $275,000 transfer at the end of 2016 to McFarland's mother, Irene McFarland. The subpoenas represent more $2.1 million in payments to nine individuals and companies, including $220,000 to Fyre investor Carola Jain and her husband, Robert Jain, a former managing director at Credit Suisse.
Since January, Messer has issued six rounds of subpeonas representing $13.5 million in wire transfers, a little more than half of the $26 million he is trying to recover for Fyre Festival's senior creditors. His latest round came Tuesday night and was partially approved by United States bankruptcy judge Martin Glenn earlier Wednesday (April 17). The Hulu and Netflix subpeonas are still pending.
"In order to create the documentaries, both Hulu and Netflix used unique behind-the-scenes footage of the festival," wrote lawyer Fred Stevens who is serving as special litigation counsel to the trustee overseeing the chapter seven bankruptcy. McFarland kept almost no financial records making it "impossible for the trustee to determine where the footage came from and whether such footage was an asset of the debtor’s estate," Stevens writes.
The subpeonas to Netflix and Hulu for their Fyre documentaries -- Fyre: The Greatest Party That Never Happened and Fyre Fraud, respectively -- come three months after each film's release. Netflix director Chris Smith had previously acused Hulu of paying McFarland for his interview in the rival project, which was executive produced by Cinemart, Mic.com and Billboard, and co-directed by Jenner Furst and Julia Willoughby Nason.
A representative for Fyre Fraud told Billboard the money paid to McFarland for his participation in the film and footage he had licensed to filmakers went into a recovery fund for investors who lost millions of dollars on the disastrous 2017 festival on Grand Exuma in the Bahamas.
Netflix's project also came under scrutiny for the way it covered advertising company Jerry Media's role promoting Fyre on social media. Jerry Media was an executive producer for the film and a month after its release emails surfaced showing CEO Mick Purzycki telling a filmmaker that he had "final cut” priveleges for the documentary, according to a February report in the New Republic. Netflix issued a statement saying that only the director had final cut, but Purzycki's email only further fueled debate about whether Jerry Meida pressured the filmmaker to minimize the company's relationship with McFarland, who is serving a six year prison sentence for fraud.
Purzycki also later admited that McFarland was offered his own financial deal to participate in the Netflix deal, even though it didn't end up happening. Elliot Tebele, founder of the Fuck Jerry Instagram account, claimed his company had been financially hurt by McFarland and had only received $30,000 for months of work promoting Fyre; but a subpeona issued by Messer on Jan. 25 showed that Jerry Media had actually recieved a $90,000 payment from McFarland in March 2017. Attorneys of Tebele disputed the claim and said they were unaware how the trustee determined the $90,000 amount.
Stevens said neither film asked the trustee or Fyre estate for permission to use insider footage and the subpeona is seeking documentation detailing where many of the behind the scenes clips originated. Both streaming services have 14 days to respond.
"In order to gain a full understanding on whether the footage was an asset of the estate and in order to determine if the use of the footage constituted an unauthorized transfer of an asset of the estate, it is critical for the trustee to investigate both (Netflix and Hulu)," Stevens writes.
Stevens and Messer are also seeking information on nine wire transfers between October 2015 and April 2017. It's unclear why McFarland was paying such large ammounts to StubHub and Vivid Seats -- McFarland had also operated a credit card company called Maginses that included offers to buy up exclusive tickets, which one former employees said was a way for McFarland to quickly raise cash.
Newly released wire records also show a $198,000 transfer to a former landlord and a $235,000 payment to a firm called Suforia, a New York-based “bespoke staffing, social media, public relations and concierge company providing VIP services to an invited clientele,” according to its website.
Messer also found a $121,429 wire to travel company FC USA and a $160,000 transfer to YachtLife Technologies. It's unclear how some of the wire transfers orginated and Messer doesn't share any details about the six-figure transfer to McFarland's mother, one of nine of McFarland's relatives to write letters to judge Naomi Reice Buchwald in the Southern District of New York, prior to his sentencing and after new charges emerged that he had launched a second fraudelent scheme to sell fake concert tickets months after being arrested for defrauding Fyre Festival's investors.
More than 50 subpeonas connected to Fyre have been issued since the beginning of the year, including for models Bella Hadid, Hailey Bieber, Emily Ratajkowski and Kendall Jenner, rappers Soulja Boy and Waka Flocka Flame and talent agencies Paradigm, UTA and ICM Partners, among others.