How a Well-Connected New York Investor Got Duped Into Funding the Fyre Festival
As people arrived in the Bahamas for Fyre Festival in April 2017, it became apparent their promised weekend of luxury entertainment would be anything but. Accommodations billed as villas turned out to be hurricane tents, "fine dining" consisted of slices of bread, and drinking water was scarce.
Within hours, the hashtag #FyreFraud began to trend, exposing the festival as a poorly organized, deceptive sham. New York businesswoman Carola Jain watched the company she'd sunk time, energy, and money in quickly dissolve into an ugly disgrace, and a viral online joke.
Jain, a prominent Fyre investor, features in both Netflix and Hulu's recently-released documentaries about the festival, which expose the disaster in excruciating detail. She's portrayed as a big supporter of Billy McFarland, the deceitful mastermind of Fyre.
Despite initial reports that Jain would take legal action against McFarland, Town & Country has learned she has no current plans to pursue claims, and will move on from the bad investment. She has not spoken publicly about the debacle since the documentaries were released, and declined our interview requests, as did several of her colleagues and acquaintances.
But how exactly did the savvy businesswoman and wife of prominent hedge fund manager Bobby Jain got caught up in Fyre?
Before the Fyre fiasco, Jain was a regular on the New York City social circuit. She attended charity events in the Hamptons Real Housewives; she counted the infamously divorced art billionaire David Mugrabi and his wife Libbie as friends; and she sat front row at fashion shows. But those who know her say she's more passionate about business and investing than in attending society events.
Earlier this month, she was a guest speaker at the Consumer Technology Association conference in Las Vegas to talk sponsorship and fan engagement on behalf of Spartan, the obstacle-race company where she's chief marketing officer. She's been there just over a year, and, before that, spent 16 years as a senior director at brand consultant agency Interbrand, working with clients like American Express, L'Oréal, and J.P. Morgan.
She's also invested in several successful start-ups, including the now $75 million company Juice Press, and popular women's group the Wing.
Like many, she saw promise in the young McFarland. Jain was "a big believer in Billy," from the start, says Jerry Media CEO Mick Purzycki in the Netflix documentary. "She had always been around, always supporting this kid, always believing in his ability to become the next big entrepreneur."
In fact, Jain was backing McFarland long before Fyre was even a concept. According to a report, she was an early investor in McFarland’s first company Magnises, which he launched in 2014 at the age of 24. Magnises offered an exclusive credit card experience, similar to the invitation-only AmEx black card, to millennials. Known clients include Julia Moshy, who runs in Tiffany Trump's social circle, and former Lindsay Lohan flame and Polo model Morgan O’Connor.
Members paid a $250 fee for the thin, metal card linked to their bank or credit card and granted access to fêtes at the company's HQ, a West Village townhouse at 22 Greenwich Avenue. With a flash of your card, you also got into private networking events at spots like Hotel on Rivington and the Gansevoort, where it wasn't unusual to rub elbows with music industry bigwigs.
Users frequented private music events with big-name rappers like French Montana, Wale, Ty Dolla $ign, and Rick Ross. Of course, Ja Rule himself eventually became a celebrity ambassador for the company and, later, the co-founder of Fyre Fest.
When the company needed a posh place to host their 2016 holiday party, Jain offered up her Upper East Side townhouse, according to a Bloomberg article.
The credit card company expanded to offer discounts on hard-to-come-by tickets to Broadway shows and concerts. But when orders started going unfulfilled with no explanation, members became irked. According to the Better Business Bureau, people complained about bad tickets, over-billing, delivery practices, and poor customer service. "Many complainants allegedly cannot get a response from the company to refund requests for the cancelled tickets," BBB states on their site. "The company has no public telephone number, so consumers must reach out to the company via email."
Despite the eventual failure of Magnises, Jain put her faith in McFarland again in 2016, when he pitched the idea of Fyre Media, a digital booking app that would allow talent to deny or approve a request by swiping left or right on a Tinder-like interface.
Jain was an original seed investor alongside Sam Yagan, a co-founder of OkCupid and vice chairman of Match. (Yagan committed to a “small seed investment” in Fyre’s app, his spokesperson told Bloomberg.)
Jain was part of a group of investors who loaned McFarland a total of $4 million.
McFarland got the idea to promote Fyre with a lavish concert attended by social media influencers. He'd call it Fyre Festival and it would take place on Pablo Escobar's private island in the Bahamas. It was going to be a highly-exclusive escape to paradise with headlining acts like Blink 182, Tyga, Pusha T, and Major Lazer. The promo video featured famous supermodels like Emily Ratajkowski and Hailey Bieber dancing on yachts.
As seen in the Netflix documentary, Jain took meetings with McFarland to talk about how they could get attendees to spend more money. McFarland is captured on camera telling Jain they could charge people to party on yachts with celebrities like Kendall Jenner.
WATCH THE PREVIEW OF THE NETFLIX Documentary
The festival started getting bad press around March 2017, when Twitter account @FyreFraud called out the festival for its major lack of infrastructure. Shortly after, The Wall Street Journal reported that talent hadn't yet been paid and guests were growing frustrated with the lack of information being made available to them.
The dinner that @fyrefestival promised us was catered by Steven Starr is literally bread, cheese, and salad with dressing. #fyrefestival pic.twitter.com/I8d0UlSNbd
- Trevor DeHaas (@trev4president) April 28, 2017
According to the Netflix documentary, Jain was kept in the dark about some of this. Music festival consultant Marc Weinstein even says McFarland told him to "stop telling Carola about the housing situation because they were trying to get more money from her and my emails were alarming her and outright told me to be dishonest.” Weinstein did not immediately return Town & Country's request for comment.
Seven months after the festival fiasco, Jain started her job at Spartan Race, where she now serves as CMO, while McFarland is currently serving a six-year prison sentence for fraud charges relating to the festival and to a separate ticket selling scam he started after Fyre. He reportedly said in court: "I made decisions that were a slap in the face to everything my family tried to teach me."
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