The Fyre Festival Fraud Case

The Fyre Festival Fraud Case

Question 1

The Fyre Festiva financial fraud is one of the unique frauds that took place in the Bahamas. Around 5000 people categorically spent thousands of dollars for the tickets to what they could have anticipated being an experience of a lifetime: enjoying a world music festival in what is considered to be the idyllic tropical setting on a private island in the Bahamas. There was a massive promotion that was made regarding the much-hyped event, which was known as Fyre Festival. The invitation critically unplugs, connects, and essentially hunted for something bigger. In this case, the Festival-goers were ideally promised what is regarded to be a real-life fantasy which was associated with gourmet food, luxury accommodation, and an ideal chance of partying with the world celebrities such as Ja Rule, world models such as Bella Hadid, and Kendall Jenner. But the entire process was a disaster in waiting for the fans that spent thousands of dollars on such hype. The attendees arrived in the Bahamas only to find disorganization while the festival-goers initially scrambled to claim the limited number of tents contrary to the luxury villas that were promised.

It is alleged that the organizer of the event reportedly defrauded the investors’ millions of dollars. It is stated that the key champion of events, Mr Billy McFarland made more than 100 out of 2.4 million dollars. It is argued that the financial statement was forged and it did not reflect the realities of the financial capabilities. Furthermore, Billy took the initiative of doctoring his statement of income and took the action of inflating the overall value of his stock holding. In the previous years, there have been a series of cases lodged against Billy by different vendors and also the marketing organization which extensively helped him in the promotion of the inexistence festival. Later on, Billy McFarland was ideally found guilty of fraud charges against him, and in the process, he was jailed in the prison.

Question 2

This case was professionally aired by Hulu and Netflix documentaries that proved as a part of evidence how this fraud was planned and executed. The documentary by Netflix showed how Billy was able to dupe the investors who in turn pumped huge sums of money into the planned event. He also convinced different shareholders like the marketing companies into publicizing the non-existent event.

The process of auditing could easily prove financial fraud. It only needed the verified statements of income and expenditures of Billy to pin him down. The audit could also prove the true value of Mr McFarland’s stock holdings.

Question 3

As a certified public accountant, you can easily locate fraud by analyzing the financial statements of an individual or an organization. On several occasions, any unauthorized alterations in the financial statements may indicate fraud. Hence, it is prudent to always check in detail and verify the financial statements to detect fraud cases. The financial statement red flags usually signal the potential of different kinds of fraudulent practices. As an accountant, during the process of spotting red flags, it is essential to incorporate vertical analysis which involves the process of taking each item in the income statement as the percentages of revenue and making the comparison of the year tends that could ideally be a potential flag cause of the concern (Rengganis et al., 2019). Another similar approach is through the use of a balance sheet which involves the use of a balance sheet and the use of the overall total assets as the comparison benchmark which is essential in monitoring the significant deviations from the normal activity.

Question 4

The evidence possessed can be carefully kept either digitally or in analogue form as follows:

Written notes

Written notes are kept as a form of hard evidence for future reference. It is an analogue form of documentation. During the process of keeping written notes, it is necessary to make all the documentation of the key facts which will promote accuracy.


This involves capturing the evidence in a picture format and storing it digitally in storage media. The photo should always be relevant and must always be clear for the sole purpose of being presented in a court of law. In the situation through which the photo does not give a clear demonstration of whether the crime was conducted or not, then there would be no real reason of introducing such photos in the court. Finally, the photos should always be original and authentic.

Video capture

This format is not so different from photography, only that the evidence is documented in form of a digital video. The video is expected to uncover the series of scenes of what transpired. The video should cover key details regarding the occurrence of events that are necessary for ensuring that the facts are presented.

Recorded audio

The evidence can also be recorded in an audio format and stored for future reference. The clarity of the audio should be enhanced to ensure that the evidence is not tempered. The audio should also justify the information that was being recorded to ensure that it qualifies to be used in an evidence case.

Question 5

Forensic account reports are useful documents that in many circumstances are used as evidence and are usually presented to the parties seeking forensic accounting services. The forensic accounts reports tend to present key facts regarding the forensic account of a given case. The forensic account evidence is organized and presented as follows:

  1. Tabulating the executive summary report

This is a summary of the report to help the reader get a clear understanding of the report. This part holds the findings of the report in which the reader is interested. It should include the scope of the service, the objective of the service, and the investigation approach. The executive summary is always expected to be brief and to the point.

  1. Including scope of works

The scope of the work aids the accountant to prevent and protect their liabilities in case of occurrence of any situation or problem. The scope of work also lays out comprehensive information on what will be done, who will engage in doing such work, when such work will be done, and the dynamic parameters through which such work will be comprehensively evaluated Sanad & Al-Sartawi, 2021). As such, forensic account reports should include the scope of work to highlight all the above-mentioned issues during the drafting of the report.

  • Stating the findings in the report

Findings hold the errors, weaknesses, and fraud detected in your work. The findings should be stated clearly and concisely as they contain route causes and their impacts. The findings become the backbone of the report as it will analyze all the essential issues of what has been documented in the report.

  1. Providing the conclusion of the report

Here, a vivid conclusion of all the works is done. A summary is made to wrap the report professionally. The conclusion should always be brief and cover the key issue of what was covered in the entire report. Summarizing the key concepts of what was covered in the report is the basis of the conclusion when drafting a forensic account report.

Question 6

This case is about financial fraud crimes. It entails the forgery of financial statements to coax unsuspecting potential investors into funding non-existence projects. It is also similar to extortion with pretense which is prohibited by law. It entails the idea of duping the clients to believe the services that do not exist for the key purpose of conning them. This financial fraud crime has been influenced by the essence of manipulating financial statement fraud. Research shows that financial statement fraud is one of the major categories of fraud that occurs in the corporate world, and it essentially accounts for 10% of the cases that are defected. However, whenever it occurs, it has been noted that it remains to be the most costly type of crime out there which results in the loss of thousands of dollars. The majority of these crimes as has been indicated in our case usually are the result of insufficient internal controls. These internal controls involve the essence of manipulating internal information for the benefit of financial fraudsters.


Rengganis, R. M. Y. D., Sari, M. M. R., Budiasih, I. G. A. N., Wirajaya, I. G. A., & Suprasto, H. B. (2019). The fraud diamond: element in detecting financial statement of       fraud. International research journal of management, IT and social sciences6(3), 1-10.

Sanad, Z., & Al-Sartawi, A. (2021, March). Financial statements fraud and data mining: a            review. In European, Asian, Middle Eastern, North African Conference on Management    & Information Systems (pp. 407-414). Springer, Cham.



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