Tablelist said it has laid off 40 percent of its employees after the organizers of the canceled Fyre Festival event in the Bahamas failed to refund the Boston-based startup for the $3.5 million it sold in tickets.
"Tablelist – and our customers – are victims of a fraud."
The company said it has filed a lawsuit in Suffolk County Superior Court against the organizers of the Fyre Festival, which includes rapper Ja Rule and Fyre Media, a startup founded by entrepreneur Billy McFarland. In the suit, the company accuses the organizers of breach of contract, as well as fraudulently deceiving Tablelist and ticket purchasers, and it's asking the court to award damages, which includes the $3.5 million, for the impact to its business.
Tablelist did not immediately respond to a request for comment. Contact information for Fyre Festival's organizers was not immediately apparent. An email sent to an address on Fyre Media's website bounced.
The organizers of the Fyre Festival have been embroiled in controversy since attendees learned upon arriving at the Bahamian island of Great Exuma in late April that the festival wasn't an"exclusive, luxury event" as advertised. A number of problems were reported, including poor food quality, disaster relief tents with dirt floors that were advertised as "luxury" amenities and a general disorganization that led to the event's abrupt cancellation on April 28.
Since then, several lawsuits have been filed against Fyre Festival's organizers, claiming deception, negligent misrepresentation, fraud and breach of contract, among other allegations.
“Like so many other companies, investors and endorsers, Tablelist – and our customers – are victims of a fraud,” Tablelist CEO Julian Jung said in a press release on Tuesday. Wayne Chang, founder of Boston startup Crashlytics and a Tablelist investor, said on Twitter that the festival's organizers "defrauded one of my companies."
According to the complaint, "Fyre organizers conducted a fraudulent, highly orchestrated scheme to convince Tablelist to provide ticketing-processing services for the festival," the company said in the release. Tabelist said it was presented with multiple assurances that the festival would be adequately organized and funded. This included high-profile celebrity endorsements, significant sponsorship deals and a competitive bid process for the ticket sales vendor role.
"Fyre Festival organizers completely left us hanging out to dry."
The company said it sold more than $3.5 million in ticket sales and VIP packages based on those assurances. Almost of all of the money from the ticket sales flowed to the festival's organizers, with Tablelist only retaining 10 percent to hold for potential credit card chargebacks and refunds, as well as a transaction service fee.
Tablelist claims Fyre Media never returned the $3.5 million in money made through ticket sales after the organizer promised that customers would be fully refunded following the event's cancellation. The company said ticket purchasers are now trying to get refunds through their credit card companies, which would exceed the amount of money Tablelist had held.
In the company's press release, Tablelist said it has had to lay off 40 percent of its employees on the consumer side of the business to focus on litigation "since the Fyre Festival's spectacular failure."
"Fyre Festival organizers completely left us hanging out to dry as the middleman between this disastrous event and our ticketholders," Jung said in a statement.
