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Fyre Festival Looks for Crisis Management Miracle, but With More Lawsuits Filed, Is It Too Late?

Fyre Festival co-founder Billy McFarland has initiated talks with a crisis management team at FTI Consulting about managing his battered public image, which took another hit Thursday with a sixth class action suit filed in New York. That brings the total number of claims against the Bahamian music fest to ten. Between that pricey gambit and the need for legal representation it appears thwarted festival goers may wind up footing their antagonist’s costly tactical response with coin from ticket purchases.

Although reports of missed payments to vendors and staff are rampant, and McFarland looks to be on shaky financial footing, as a reputation manager at a competing firm put it, “They sold several thousand tickets at $500 to $2,000 each. Somebody has some money.” Although Fyre never issued a figure for tickets sold, the Wall Street Journal reported that 7,000 people were expected to attend. At a median price of $1,250 per ticket, that’s $8.75 million.

They will need every cent they can get their hands on; services such as FTI’s don’t come cheap. With nearly 5,000 employees in 29 countries, they have a combat-readiness up to and including defcon 1, “nuclear war imminent.”  The best crisis client is someone who “is not getting a fair shake, or needs help getting their side of the story out,” an exec at a competing firm says. The worst? “Someone who actually has screwed up badly. In that case, the only thing to do is apologize and make good to everyone hurt. Between the comments in Rolling Stone and Ja Rule tweeting out ‘I’m not responsible,’ the ‘Fyre team’ as they tout themselves in their sizzle deck, don’t seem ready to do that,” this observer notes.

Reputation Management Consultants CEO Eric Schiffer advises “the best path is the truth. Brand yourself with transparency. The public can be forgiving when you’re accountable and show what you’ve learned.”  Screwing up is one thing. Intentional double-dealing, as alleged in the ten lawsuits, is quite another.  Plaintiffs accuse the Fyre principals of deliberately concealing the deteriorating state of things. Andrew Petrozziello’s May 3 suit says ticket prices increased as the fest approached, even as it became clear things were falling apart. Litigants Kenneth and Emily Reel noticed changes to the website as early as March 28:  “No longer were the terms ‘private flights’ to be found as they were replaced with the words ‘complimentary round trip ticket.’”

Right now, all complaints are civil, but credible allegations of large-scale consumer fraud open the door to an FBI investigation and, potentially, criminal charges and an indictment. Knowledgeable observers say that given the monies in question and the visibility of the case, it’s a foregone conclusion the feds will eventually check in. “The FBI and the U.S. Attorney’s office have considerable discretion as to who and what to prosecute. They will gather the evidence, they will evaluate it, and then they will decide whether there’s merit to bringing the charges,” says Nathan Hochman, a former federal prosecutor and partner at the international law firm Morgan Lewis & Bockius.

It’s unknown whether McFarland has secured an attorney (attempts to reach him have been unsuccessful), but lawyers and image management firms alike will be concerned about whether and how he will pay. “Typically, when you have defendants like this, who are likely to file bankruptcy, anyone who works with them will want their money upfront,” says a knowledgeable source.

The latest class action lawsuit was filed Thursday in a Manhattan federal court by Ritu Jutla, who purchased a $1,940 ticket and put $600 on her currency wrist-band in addition to spending $930 on round trip airfare to Florida.

When the plaintiff arrived on Fyre Island on April 27, she was distressed that rather than luxury accommodations, she and other guests found hundreds of tents that could “barely protect them from the wind and rain.” Jutla’s suit goes on to describe something that sounds like indigents with their noses against the glass at a Skull and Bones frat party: “The tents were all arranged around a huge villa filled with what appeared to be wealthy white men, possibly organizers of the Festival, who would not help Plaintiff or any of the other scared and confused Fyre Festival attendees.”

As an image, it is almost as iconic as the cafeteria sandwich picture that went viral. “The thing everybody’s going to remember is those two sad pieces of cheese in the Styrofoam box. That and the thatched-roof concierge desk,” LiveStyle CEO Randy Phillips tells Variety. He helped launch Coachella during his days as chief executive at AEG and now produces some of the most lavish and successful dance music festivals in the world. Phillips says the first thing he thought when he heard about the Fyre debacle was, “Why would anyone want to fly to see Ja Rule and Blink-182? Blink is a fun band, but you can see them in your home town.”

Schiffer said the event was only incidentally about the music, that it was more stagecraft conjured by McFarland, who “understood the mindset of a striving millennial that wants to reach a certain level of self-regard. In promoting this event, he painted a picture that allowed them to think they would get there.” Ja Rule, the celebrity in his circle, “gave him credibility.”

Although from 2011 to 2013, Ja Rule served a three years concurrent prison sentence for tax evasion and gun possession, Schiffer sees him as an unwitting dupe in this situation. “I suspect he was seduced, and thought it would all get handled, because he’s certainly not an operations guy. His role, theoretically, was to promote and be part of it and enjoy it. I doubt he expected it to be apocalyptic.”

Whether or not McFarland did is something that will have to be proven in court. “He had T-Rex-sized arrogance, you start with that,” Schiffer said. “He was reckless with promises and the inability to deliver.”

On Friday, TMZ and the New York Post both reported two additional suits. One was filed by Oleg Itkin who claims to have lent the Fyre founders $700,000 between January and April based on a balance sheet documenting $31 million in assets as of January, which he attached to his complaint. The second, from EHL Funding, states a loan of $3 million was made on April 18. Of that, $900,000 was reported returned in weekly installments, as agreed, before Fyre failed to make payments beginning April 21.

“Was this systematic fraud or a guy who didn’t take his medication? A guy who truly believed he was going to pull it all off and became unhinged?  In any of those scenarios his reputation is in cinders,” Schiffer said. “In some ways trying to be a Bill Graham Productions, and in other ways a Gatsby, the difference being Gatsby had the bank account. This guy didn’t.”

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