Atty For Fyre Festival Organizer Drops Case For Nonpayment
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Law360, New York (July 26, 2017, 6:38 PM EDT) -- Ill-fated entrepreneur Billy McFarland is being dropped by his lawyer for nonpayment in a New York state lawsuit over nearly $1 million in unpaid loans connected to Fyre Festival, a move that comes just weeks after McFarland was indicted and arrested for his role in the doomed production.

McFarland’s attorney, Michael Levine of Levine and Associates PC, told New York Supreme Court Justice Saliann Scarpulla at a hearing on Wednesday that he’d file a formal request to wash his hands of the case by the end of the week, saying he couldn’t continue to represent a client that wasn’t paying him.

The case has been stayed until September, pending appointment of a new attorney for McFarland or his co-defendants, Fyre Media Inc. and Fyre Festival LLC.

Levine declined to comment further on the case, which is one of roughly a dozen lawsuits to be filed against McFarland in the wake of the “luxury” music festival that spiraled into an utter debacle in April.

Investor Oleg Itkin filed his suit in May claiming he’d put $705,000 into both companies under false pretenses, and is now owed $805,000 that he hasn’t seen a dime of yet.

“The central question at issue in this case is whether defendants were required to repay plaintiff on his loans,” Itkin wrote in one memo. “A plain reading of the relevant documents reveals that the answer is clearly ‘yes.’”

The two companies produced the now-infamous Fyre Festival, a musical event on a private island in the Bahamas originally billed as the “cultural experience of the decade” that quickly collapsed due to lack of planning, as stunned attendees circulated bizarre images of FEMA-tent lodgings, trash-strewn beaches and soggy bread-and-cheese sandwiches.

Fyre Media was also an app that aimed to connect big-name musicians directly to talent buyers. Documents distributed to potential investors claimed artists like Drake, Kendrick Lamar and 2 Chainz, among others, had booked millions of dollars in performances through the platform.

Federal prosecutors say the number was more like $60,000 however, in a criminal case against McFarland that references Itkin as “Victim 1.”

In his own state court suit Itkin says McFarland drastically misrepresented the financial health of the companies to tease an investment out of him. Itkin was shown falsified documents that said Fyre Festival owned the $8.4 million island in the Exumas where the event would take place and had brought in $21 million just for the month of December 2016, among other things.

“Needless to say, defendant’s business appeared very enticing in early 2017,” Itkin wrote, in a memo asking Judge Scarpulla to place an injunction and restraining order on McFarland.

Those demands were dropped in mid-May, in exchange for McFarland agreeing to place $240,000 in a segregated account held by his attorney before Levine, Michael Quinn of Caitlin Robin & Associates PLLC.

It’s unclear if any of that money was ever deposited however, and roughly a month later Quinn left the case and handed it over to Levine.

Quinn did not respond to repeated requests for comment on Wednesday.

The two Fyre companies were hit with a petition seeking to force them into Chapter 7 bankruptcy earlier this month, also filed by investors who’d been burned after the festival went belly-up. If the case goes forward, it’s likely Itkin’s own claims would be rolled into the bankruptcy as well.

A response to that petition is due by July 28.

Robert Knuts of Sher Tremonte LLP, counsel for the plaintiffs in the Chapter 7 case, told Law360 no one has contacted him on behalf of the Fyre companies thus far.

Itkin is represented by Michael Quinn of Caitlin Robin & Associates PLLC.

McFarland and the Fyre companies are represented by Michael Levine of Levine and Associates PC.

The case is Oleg Itkin v. Fyre Media Inc., et al., case number 652570/2017, in the New York Supreme Court.

--Editing by Joe Phalon.