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“There will be no payroll”

Exclusive audio: Fyre Festival founders reveal to employees nobody's getting paid

Exclusive audio: Fyre Festival founders reveal to employees nobody’s getting paid

Last Friday, Billy McFarland, the 25-year-old founder of the disastrous Fyre Festival, told his shell-shocked employees that their paychecks covering the past two weeks would not be coming. Nor would he be firing them, a prerequisite for unemployment benefits in most states. Instead, McFarland offered to let his dozen-or-so employees stay on in unpaid roles, where they could work to grow the business to a place where they might get paid again.

The meeting, audio of which was obtained by VICE News, wrapped up weeks of uncertainty for the employees of Fyre Media, the company behind Fyre Festival, whose primary job had been building a celebrity and talent booking app the festival was intended to promote. Rapper and Fyre Media co-founder Ja Rule was on the grim conference call, but his role was that of a listener.

“I’m on the phone, but I can barely hear you all because of this fucking hum,” Ja Rule said.

McFarland kicked off the meeting by cutting to the chase: Nobody would be getting paid, but they were free to keep working regardless. “After conferring with our counsel and all financial people, unfortunately we are not able to proceed with payroll,” McFarland said. “We’re not firing anyone; we’re just letting you know that there will be no payroll in the short term.”

VICE News edited the audio to protect the identities of some of the participants.

“I’m on the phone, but I can barely hear you all because of this fucking hum.” —Ja Rule

The festival imploded in a spectacular fashion at the end of April when thousands of ticket holders arrived in the Bahamas for the luxury vacation they had been promised by glitzy marketing materials and models who had been paid to promote the event. But instead of high-end lodges and villas, they found wet mattresses, porta-potties and the type of tents used by FEMA for disaster relief efforts. Some attendees who attempted to leave on their own were locked in an airport overnight with no access to food or water.

“There will be no payroll in the short term.” —Billy McFarland

Since then, Fyre Media has been the target of at least seven lawsuits, including one class action seeking $100 million in damages. Another investor, EHL Funding, filed suit Thursday alleging the company had defaulted on a $3 million loan issued April 10. Others involved in the festival, including investors and models like Kendall Jenner, Bella Hadid, and Hailey Baldwin, who promoted the event but did not disclose they were being paid, have been referenced in separate suits.

McFarland started the call ominously, by saying everyone should have received an emailed “preservation notice” warning them not to delete or remove any files related to several multimillion-dollar lawsuits filed against the company in the past month.

“I understand this is not an ideal situation for everybody.” —Billy McFarland

Nevertheless, McFarland urged those who still believed in the idea of the company to stick around and help build the talent-booking service without pay.

“I understand that this is not an ideal situation for everybody, and this will likely cause a lot of you to resign, which we totally get and understand,” he said. “That said, if you want to stick with us, we’d love to have you and we’d love to work together and hunker down and get back to a place where everything resumes to business as usual.”

VICE News made numerous attempts to contact McFarland, but he did not return messages seeking comment.

“We have not closed a Series A round, and that’s as much as I can say.” —Billy McFarland

McFarland responded to accusations that he had misled his employees into believing Comcast had invested money when it had not. Bloomberg reported that Comcast had a term sheet in March to invest $10.5 million in Fyre Media, valuing the company at about $100 million.

“We have not closed a Series A round, and that’s as much as I can say,” McFarland said on the call, prompting several employees to interject that he had initially claimed otherwise.

During the call, employees asked why they weren’t being fired so they could collect unemployment benefits. “If that impacts you, you can email me,” he McFarland said.

“Do you have any record of us working for Fyre?” —Fyre employee

One employee, who had been paid in cash, asked if there was any record of her being an employee at all. Payroll in the office abruptly stopped last October, after which time employees were paid by wire transfer or in cash, a former employee said.

McFarland promised to address the pay stub issue in an email “today,” but another former employee says the email was never sent.

Repeatedly referring to future paychecks as “obligations,” McFarland said that although the company would not be able to fulfill those “obligations” going forward, he was committed to growing the booking platform for celebrity talent that Fyre Media was founded around.

“Should we be concerned about the FBI, Billy?” —Fyre employee

Ominously, one employee said she heard another had been contacted by the FBI and wondered what she should do if she was called.  “Should we be concerned about the FBI, Billy?” another asked.

“That’s really more of an individual thing,” McFarland said, before offering to connect anyone contacted by the FBI to Fyre Media’s lawyers.

“That’s really more of an individual thing.” —Billy McFarland

The FBI declined to say whether it had opened an investigation into Fyre Media.

Many of the Fyre Media employees hired to build the platform, including a team in Portland, were not involved in the festival or its planning. They were preparing to launch the app when the festival imploded April 27.

Instead, most of the remaining Fyre Media employees quit en masse over the weekend and on Monday. Soon after, their access to their company email was shut off.

M-F 7:30PM HBO