The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Customs Comptroller yesterday said that while $10 million worth of sound stage equipment had been released, his department was holding other goods seized from the ill-fated Fyre Festival for auction.

Charles Turner was unable to provide a valuation for all Fyre Festival-related products and equipment still in Customs’ possession, but said whatever remains will be sold at a public auction to recoup outstanding import duties owed by the organisers.

He explained, though, that all equipment leased by William McFarland and his hop artist partner, Ja Rule, had been returned to their rightful owners because it was never intended to remain in the Bahamas.

Speaking to Tribune Business, Mr Turner said: “I can say we would have seized the goods. With respect to the equipment that had been leased and brought in by some sub-contractors for the Festival, that was returned to the rightful owners. They were only brought in temporarily, and were not intended to stay in the Bahamas.

“There were consumable goods, however, drinks, water, and some other items like tents, which we seized since the duty was not paid on those items. Once we seize them the owner has the right to claim them within a month, otherwise we sell them at public auction or tender.”

Luca Sabatini, the co-owner of Unreal Systems, the Miami-based production company that supplied Fyre Festival with $10 million in stage, lighting and sound equipment, had expressed concerns in May that the Government might auction off his gear to recover the outstanding Customs duties.

Unreal-Systems pegged the Customs duties owed by Ja Rule and William McFarland at $390,000, saying it was as much a victim as the attendees and Bahamian vendors.

The fact that Customs is still holding Fyre Festival assets is likely to interest the project’s Bahamian creditors, particularly those Exuma-based contractors, vendors and individuals who are owed five and six-figure sums by McFarland and his company.

Given that McFarland has been charged with fraudulent misrepresentation, based on false declarations of both his personal assets and Fyre Media’s, prospects of recovery from that source appear slim to non-existent for Bahamian creditors.

While the assets held by Customs are unlikely to be sufficient to make all Bahamian creditors ‘whole’, let alone the taxes owed to the Department, their auction could at least enable them to recover ‘cents on the dollar’.

However, Mr Turner made clear that the auction will only generate proceeds for Customs. Employees, and the Government with its taxes, typically rank ahead of all other unsecured creditors.

Pedro Rolle, the Exuma Chamber of Commerce’s president, suggested on Wednesday that this protocol be ‘waived’ to ensure that Bahamian vendors and others received at least some compensation.

He repeated the call yesterday, saying: “That would be the best case. We understand we’re not going to recoup everything, but a token amount would be appreciated.”

Mr Rolle acknowledged that the Government would likely say all relationships with the Fyre Festival organisers were commercial ventures, where Bahamian entrepreneurs knew they were taking a risk.

However, he argued that it was not the private sector’s job to vet organisers of such festivals coming into the Bahamas - arguing that this was the Government’s responsibility. And he suggested that the Ministry of Tourism’s role would have provided Exuma businesses “with a level of confidence” to provide products and services.

The Tribune reported earlier this week that agents from the US’ Federal Bureau of Investigation (FBI) have received a permit from the Government to conduct a probe in Exuma over the botched Fyre Festival.

McFarland has been charged in the US with wire fraud charge in connection with the ill-fated festival, which was supposed to take place on Exuma over two weekends in April and May.

The Fyre Festival was billed as an ultra-luxurious event with headliners including rockers Blink-182 and the hip-hop act, Migos. But performers bowed out and organisers were forced to cancel the show.

Acting US attorney, Joon Kim, said McFarland presented fake documents to induce investors to put more than $1 million into his company and the failed festival. He added that McFarland “promised a ‘life changing’ music festival, but in actuality delivered a disaster.”

McFarland and Ja Rule already face more than a dozen lawsuits filed by ticket buyers and investors. A lawsuit filed in May in Los Angeles said the festival was “nothing more than a get-rich-quick scam” akin to a Ponzi scheme. Ja Rule, whose real name is Jeffrey Atkins, has not been arrested.