U.S. markets closed
  • S&P 500

    4,166.45
    -55.41 (-1.31%)
     
  • Dow 30

    33,290.08
    -533.37 (-1.58%)
     
  • Nasdaq

    14,030.38
    -130.97 (-0.92%)
     
  • Russell 2000

    2,237.75
    -49.71 (-2.17%)
     
  • Crude Oil

    71.55
    +0.51 (+0.72%)
     
  • Gold

    1,763.30
    -11.50 (-0.65%)
     
  • Silver

    25.84
    -0.01 (-0.04%)
     
  • EUR/USD

    1.1865
    -0.0045 (-0.38%)
     
  • 10-Yr Bond

    1.4500
    -0.0610 (-4.04%)
     
  • GBP/USD

    1.3792
    -0.0132 (-0.95%)
     
  • USD/JPY

    110.1970
    -0.0340 (-0.03%)
     
  • BTC-USD

    35,451.55
    -2,222.34 (-5.90%)
     
  • CMC Crypto 200

    879.48
    -60.46 (-6.43%)
     
  • FTSE 100

    7,017.47
    -135.96 (-1.90%)
     
  • Nikkei 225

    28,964.08
    -54.25 (-0.19%)
     

Anna Delvey and the Fyre Festival: How scams go mainstream in the social media age

·Associate Editor
This content is not available due to your privacy preferences.
Update your settings here to see it.

Listen on Apple Podcasts | Google Podcasts

This is part 2 of Yahoo Finance’s Illegal Tender podcast about socialite turned scammer, Anna Delvey. Listen to the series here. | Read part 1 here

In May 2017, now-convicted socialite scammer Anna Delvey (real name Anna Sorokin) set out on a trip to Marrakech with her friends in tow. The intention was to create a documentary about the development of an inspiration behind the supposedly forthcoming Anna Delvey Foundation.

The trip was already off to a rocky start when Anna’s credit cards were declined while attempting to purchase the plane tickets. Anna’s friend Rachel DeLoache Williams ended up putting the tickets — around $4,000 — on her credit card. It was the first of a number of concessions she would make to Anna when pressed to help tie up the loose financial ends of the trip.

Once the group — Anna, Rachel, the celebrity trainer Kacy Duke, and Rachel’s videographer friend Jesse Hawk — arrived in Morocco, Anna’s financial issues seemed to pile on. During a trip to a local marketplace, Rachel said Anna’s cards were again declined, this time when attempting to purchase nearly $1,300 of clothing.

Anna Sorokin better known as Anna Delvey, the 28-year-old German national, whose family moved there in 2007 from Russia, is seen in the courtroom  during her trial at New York State Supreme Court in New York on April 11, 2019. - The self-styled German heiress has been charged with grand larceny and theft of services charges alleging she swindled various people and businesses. (Photo by TIMOTHY A. CLARY / AFP)        (Photo credit should read TIMOTHY A. CLARY/AFP via Getty Images)
Anna Sorokin better known as Anna Delvey, the 28-year-old German national, whose family moved there in 2007 from Russia, is seen in the courtroom during her trial at New York State Supreme Court in New York on April 11, 2019. (Photo: TIMOTHY A. CLARY / AFP)

“I think it's cause she hasn't told her bank she's traveling, which again here I am making excuses for her before she even has to,” DeLoache Williams told Yahoo Finance. “And since she already owed me money, it’s sort of like a snowball effect where it was one more thing on top of that. And then the meals outside of the hotel when her cards continued to not work. ... That stuff added up.”

DeLoache Williams ended up putting about $62,000 in charges on her accounts, paying for essentially the whole of the Marrakech trip. It was the beginning of the end of DeLoache Williams’ friendship with Anna, as she began to realize that the supposed heiress wasn’t entirely all she made herself out to be.

To understand a little more about why people engage with people or experiences that haven’t been vetted well and could appear to be at least somewhat scammy, Yahoo Finance sat down with Emily Balcetis, an associate professor of psychology at NYU and the author of the forthcoming book “Clearer, Closer, Better: How Successful People See the World.”

The rise of scammers in the social media age

Anna’s scamming coincided with a precipitous rise in opportunists who leveraged social media to build a persona as she did. Social platforms encourage users to share what they’re doing for nearly every waking moment and invite the opportunity for pushing idealized — and often falsified — versions of people’s everyday lives.

The idea that your persona on social media is always, on some level, fake is so normalized that influencers now take to their platforms to dispel the perception that their lives are perfect.

But not everyone wants to pull back that facade. The past three years have shown a precipitous rise in the idea that you can accomplish anything as long as you have a shiny Instagram grid and a couple hundred thousand followers.

Google Trends shows a spike in searches for the word “scam” in early May 2017. It was around this time that thousands of would-be festival-goers found themselves trapped on an island in the Bahamas without proper lodging, facilities, or food. And no guarantee they’d get back to the States.

NEW YORK, NY - MARCH 6: Billy McFarland attends ONE.1 Hosts Dinner to Celebrate the Opening of the Magnises Townhouse at Magnises, 22 Greenwich Ave on March 6, 2014 in New York City. (Photo by Patrick McMullan/Patrick McMullan via Getty Images)
Billy McFarland attends ONE.1 Hosts Dinner to Celebrate the Opening of the Magnises Townhouse at Magnises, 22 Greenwich Ave on March 6, 2014 in New York City. (Photo: Patrick McMullan/Patrick McMullan via Getty Images)

The Fyre Festival promised ticket buyers the experience of a lifetime. They would spend a weekend at a music festival featuring top-tier talent on an island that had supposedly been owned by Pablo Escobar in what the festival’s promoters were calling “luxury villas” with “gourmet food.”

Acts on the lineup included Blink 182, Migos, Pusha T, Disclosure, and more than 30 others. The festival enlisted a slate of influencers to do guerrilla-style marketing. Kendall Jenner, Bella Hadid, Emily Ratajkowski were among those who were paid to promote the event on social media. In Jenner’s case, her compensation clocked in around $250,000.

The influencer marketing campaign was released on December 12, 2016, and in 24 hours, posts that used the hashtag #FyreFest received 300 million impressions.

“When we see what might seem like a totally out there, crazy new opportunity, like the Fyre Fest, that might be appealing to some people who might feel they're striving for something that's unique,” Balcetis said. “But they're striving for the same thing that's unique just like everyone else who's striving to be a part of that same social scene.”

From a marketing standpoint, Fyre Fest was a wildly successful. Thousands of tickets were sold, some of which had a pricetag of $12,000. But with less than a year to plan the festival, the event itself was set up to fail. Attendees were welcomed to an island set up more like a disaster-relief site than that of a music festival, and headlining acts pulled out hours before the event was set to kick off.

McFarland pleaded guilty wire fraud charges related to the festival and was sentenced to six years in prison.

And much like McFarland, Anna Delvey operated under the guise of building a lifestyle and a brand. Instead of an idyllic and celebrity-filled music festival, Anna’s lifestyle involved flashy charity work and a certain level of exclusivity. Her scamming was found out only a few months after Fyre, and similarly, Anna was selling a version of herself, that never actually existed in the first place.

William 'Billy' McFarland, organizer of the Fyre Festival, exits the U.S. Federal Court in Manhattan following his presentment on wire fraud charges in New York City, U.S., July 1, 2017. REUTERS/Brendan McDermid
William 'Billy' McFarland, organizer of the Fyre Festival, exits the U.S. Federal Court in Manhattan following his presentment on wire fraud charges in New York City, U.S., July 1, 2017. REUTERS/Brendan McDermid

Listen on Apple Podcasts | Google Podcasts

Transcript of the episode below:

Katie Krzaczek: Perhaps the best way to understand how much of a mess this Marrakech trip was is to hear it from Rachel herself.

Rachel Williams: Should I start with the fact that I had to purchase the tickets.

Katie Krzaczek : Sure, yeah.

Rachel Williams: I think being a photo producer and dealing with logistics and putting things like travel and studios and cars, and God knows what else, for work on my credit cards and waiting to be reimbursed. I was oddly more vulnerable I think to this particular con, because there are some red flags I think other people might have balked at that I could rationalize or see as normal because the day we were supposed to leave for our trip, the tickets weren't booked. And I was thrown into or jumped into to help with that. But having booked travel for busy professional people who have moving schedules and whatever else, I was used to that and plans changing.

Rachel Williams: So it didn't strike me as that bizarre given that Anna said she didn't know what time she's going to get out of meetings. And she was hung up in meetings, and she didn't care about how much the flights costs. So I guess that's why you book early and to ensure you get a seat and there was plenty of availability on the flight. I can explain why I thought that as clearly it was a mistake. So the morning of the trip, the flight hadn't been booked. She asked for my help finalizing the booking. I asked her with what credit card, she sent me her credit card that of course didn't go through. And then I ended up having to put the flights for four travelers on my card. I offered and she said, "As long as it's okay for you I'll wire you on Monday." So that's how it started. And then we get to-

Illegal Tender by Yahoo Finance is a podcast that goes inside mysteries in the business world. Listen to all of season two: Anna Delvey: Socialite turned scammer

Katie Krzaczek: Rachel put the costs of the plane tickets about $4,000 on her credit card. It was the first of a number of concessions she would make to Anna when pressed to help tie up the loose financial ends of the trade.

Rachel Williams: And then we get to Marrakesh and everything seems fine at first. It's me, a videographer and the personal trainer came as well. We get to the hotel where everything seems to be fine. We take a tour, it's the most ridiculously opulent hotel I've ever been to. There's the big main building with four restaurants and three bars, and then you walk through the sprawling gardens and we have a private Villa that has a Butler and a little pool, and it was a lot. It was a lot of a lot. And everything seems okay until the first time we leave to go to the marketplace and Anna wants to buy some caftans, some dresses and she goes to pay. She's picked out $1,300 worth of clothing and her card doesn't go through.

Anna Sorokin better known as Anna Delvey, the 28-year-old German national, whose family moved there in 2007 from Russia, is seen in the courtroom  during her trial at New York State Supreme Court in New York on April 11, 2019. - The self-styled German heiress has been charged with grand larceny and theft of services charges alleging she swindled various people and businesses. (Photo by TIMOTHY A. CLARY / AFP)        (Photo credit should read TIMOTHY A. CLARY/AFP via Getty Images)
Anna Sorokin, better known as Anna Delvey, the 28-year-old German national, whose family moved there in 2007 from Russia, is seen in the courtroom during her trial at New York State Supreme Court in New York on April 11, 2019. (Photo: TIMOTHY A. CLARY/AFP via Getty Images)

Rachel Williams: And I think it's because she hasn't told her bank she's traveling, which again here I am making excuses for her before she even has to. And since she already owed me money, it was a snowball effect where it was one more thing on top of that. And then the meals outside of the hotel when her cards continued to not work, and that stuff added up. I now having read books about how con confidence games can work. I think that is a technique where you start small and build on to that. It's in for a penny in for a pound. But the way that the hotel situation unfolded was different. She created the situation that involved a lot of urgency. And I think when you're in a stressful situation, you don't always think rationally, but I couldn't see another way out of the situation.

Rachel Williams: So it was my last full day in Marrakesh. I woke up, the trainer was sick, needed to go home, was asking for my help, booking a flight. I had fallen into the role of involuntary producer booking everyone's travel and figuring out what the plans were for every day and running around. Just like putting out fires because it's my nature and my job and, I don't know. Yeah. So it was the perfect storm. The videographer had woken up and left to film Anna who had signed up for private tennis lessons every morning. And then of course half the time or less showed up the rest of the time just didn't tell anybody and left this guy standing there waiting for her. So the videographer was out waiting for her, realize she wasn't coming and then was waiting by the breakfast buffet where I was going to meet him before we started our day.

Rachel Williams: So he's out of the Villa, the trainer is sick, needs to get to the airport. I'm calling the concierge for an urgent car because there's a flight at 12:15 or something. But she needs to leave immediately to make it. So that I think is what set off alarm bells because I think the hotel thought we were fleeing and the credit card Anna had given them before we arrived didn't work, which I didn't know until it was a little too late. So these two managers appear instead of the car for the trainer, I have to go wake up Anna to deal with the managers. I'm trying to get the trainer out into a car. She leaves, I go to my bedroom thinking Anna's out there dealing with the managers, it's going to be fine. Her bank should be open this can be resolved. She just needs to focus on this being a serious problem.

Rachel Williams: I come out from the room to go meet the videographer for breakfast and Anna's just sitting there and the two managers standing there and Anna's phone is on the table. She's not doing anything, she's not using it. It just was this unbearable standoff and the men turns and say, "Do you have a card? It's for the temporary hold, we are required to have before you check in and she'll have to settle the final vote before she checks out." And Anna's like, "Can we just use your card for now?"

Rachel Williams: So I just buckled under the pressure. I didn't see a way out and I thought it was temporary. I think I made myself think it was going to be okay because they didn't know what else to do. Her detachment was really alarming that she was just sitting there and didn't seem to to understand the urgency and the seriousness of the situation. These men weren't friendly, they weren't smiling, they weren't making jokes. They were there to collect what they needed and they were very stern.

Katie Krzaczek: What was the total amount?

Rachel Williams: I can't remember the exact total amount of the hotel boat, but by the time I left Marrakesh Anna owed me $62,000 which was more than I made in a year.

Illegal Tender by Yahoo Finance is a podcast that goes inside mysteries in the business world. Listen to all of season two: Anna Delvey: Socialite turned scammer

Katie Krzaczek: The rise of scamming in the social media age was inevitable. As platforms encourage users to share what they're doing for nearly every waking moment, so to do they invite the opportunity for pushing idealized and often falsified versions of people's everyday lives. The idea that your persona on social media is always on some level fake is so normalized that influencers now take to their platforms to dispel the perception that their lives are perfect. Sharing their personal mental health struggles or giving a behind the scenes look at how exhausting it really is to be a new mom. But not everyone wants to pull back that facade. And the past three years have shown a precipitous rise in the idea that you can accomplish anything as long as you have a shiny Instagram grid and a couple hundred thousand followers. Google trends shows a spike in searches for the word “scam.” In early May 2017, it was around this time that thousands of would be festival goers found themselves trapped on an Island in The Bahamas without proper lodging facilities or food, and no guarantee that they would get back to this state.

So wrong, the Fyre Festival was built as a luxury destination music experience with beach side parties, fancy bungalows and food from celebrity chefs, but instead, this is what the-

Katie Krzaczek: The Fyre Festival promised ticket buyers the experience of a lifetime. They would spend a weekend at a music festival featuring top tier talent on an Island that it's supposedly been owned by Pablo Escobar. In what the festivals promoters were calling luxury villas with gourmet food, acts on the lineup included blink-182, Migos, Pusha T, Disclosure, and more than 30 others. The festival enlisted a slate of influencers to do guerrilla style marketing. Kendall Jenner, Bella Hadid, Emily Ratajkowski. They were among those who were paid to promote the event on social media. In Jenner's case, her compensation clocked in around $250,000. The influencer marketing campaign was released on December 12th, 2016. And in 24 hours, posts that use the hashtag Fyre Fest received 300 million impressions. From a marketing standpoint, Fyre Fest was wildly successful.

Thousands of tickets were sold, some of which had a price tag of $12,000. But with less than a year to plan the festival, the event itself was set up to fail. Upon arrival on April 27th, 2017 attendees were brought to a beach party with no signs that a large scale music festival was set to take place that weekend. Instead, they were corralled into an area that many liken to a disaster relief site. The only lodging were UNICEF style tents with rain soaked mattresses that the festival goers had to fight each other to claim.

William 'Billy' McFarland, organizer of the Fyre Festival, exits the U.S. Federal Court in Manhattan following his presentment on wire fraud charges in New York City, U.S., July 1, 2017. REUTERS/Brendan McDermid
William 'Billy' McFarland, organizer of the Fyre Festival, exits the U.S. Federal Court in Manhattan following his presentment on wire fraud charges in New York City, U.S., July 1, 2017. (Photo: REUTERS/Brendan McDermid)

Emily Balcetis: My name is Emily Balcetis, I'm an associate professor of psychology at New York university. So they'll never be one simple answer for why do these crazy stories come to be, and why are we fascinated by them? So it's really multifaceted and one idea that came to my mind, again as a fundamental motivation that we might call finding that optimal balance. We have two competing drives, one to feel like we're connected, but also another to feel that we're unique. And those are in conflict with one another. And so from any point in our life or from any situation to the next, we might be striving to find that balance between both being connected to others socially, but also finding our own unique place in life.

And so when we see what might seem like a totally out there, crazy new opportunity, like the Fyre Fest, that might be appealing to some people who might feel they're striving for something that's unique. But they're striving for the same thing that's unique just like everyone else who's striving to be a part of that same social scene. And so what's interesting about that particular opportunity to be a part of the Fyre Fest would be that it might be actually tapping into or finding a way to resolve this incompatibility between finding something that is unique, but also being part of a social circle. And when we see opportunities like that, it might be like killing two birds with one stone.

Illegal Tender by Yahoo Finance is a podcast that goes inside mysteries in the business world. Listen to all of season two: Anna Delvey: Socialite turned scammer

So what's interesting is that people want to be a part of this really exclusive thing, but they wouldn't want to do it if they were the only one showing up on the Island. So that's the unique thing about this is that there is something that seems special indifferent and the appeal is that you're going to be doing it with some of your closest friends and maybe others that are as into this as you are, but nobody wants to do that kind of thing alone.

Katie Krzaczek: Eventually, the attendees made it back to the U.S. That's when the lawsuits began. The festival's founder, millennial wannabe entrepreneur, Billy McFarland and rapper Ja Rule, who had helped to organize Fyre face charges of defrauding ticket buyers. One suit sought $100 million in damages. When McFarland was out on bail, he re-targeted individuals who had purchased Fyre tickets, promising access to exclusive events through a company called NYC VIP Access. But the company pushing the tickets was a fraud. And even some of the events it was promoting were fake.

In her book Trick Mirror, the writer, JIA Tolentino sums up Fyre Fest and its aftermath. She writes, when I read that detail, she's talking about the NYC VIP Access scheme. "I thought about how in the midst of the real time social media frenzy, Ja Rule had tweeted that Fyre Fest was not a scam. The phrase function like a ribbon cutting ceremony, it announced McFarland whom the New York times described as, Gaspe run through an Instagram filter. As the scammer of his generation and Fyre Fest as not just a scam, but the definitive one. America's first major all millennial scam event. Tolentino continues, Fyre Fest sailed down scam mountain with all the accumulating force and velocity of a cultural shift that had over the previous decade subtly but permanently changed the character of the Nation. Making scamming the abuse of trust for profit seems simply the way things were going to be.

All of that's to say the grift is having a moment. Merriam Webster defines a grifter as a pickpocket, a crooked gambler or a confidence man, any criminal who relied on a skill and wits rather than physical violence. Grifters are looking for financial benefit. Some gain through winning someone's trust and pulling the wool over their eyes while jewelry goes missing or a wallet gets snatched or their bank account gets drained. Charles Ponzi was so famous for running get-rich-quick schemes, they literally named the practice after him. Frank Abignail Jr was notoriously hard to catch during his run of check forging among other scams in the 1960s. Bernie Madoff once again brought the grift into the limelight in the early 2000s running the largest Ponzi scheme the world had ever seen, and the largest financial fraud in US history.

Here's where Anna Delvey fits in. She was a socialite, she was an heiress, she was a philanthropist, she was also 100% made up. Delvey operated under the guise of building a lifestyle and a brand. One that involved flashy charity work, and one that maintained a certain level of exclusivity. Her scamming was found out only a few months after Fyre. And much like Billy McFarland's idyllic but unrealized music festival. Anna was selling a version of herself that never actually existed in the first place. Marrakesh was the beginning of the end for Anna Delvey, but Rachael was also dealing with the aftermath of a trip gone wrong, including the approximately $62,000 that Anna owed her for covering the flights and hotel charges.

Illegal Tender by Yahoo Finance is a podcast that goes inside mysteries in the business world. Listen to all of season two: Anna Delvey: Socialite turned scammer

Rachel Williams: So as that summer after Marrakech unfolded, it was over the crisis of a little over two months that I had tried so hard to be reimbursed by Anna. It's not like she just disappeared, she kept stringing me along every day. It was by far the hardest period of my life I've ever been through. It felt like abuse, and not to diminish anybody, I know that's a relative thing, and I certainly don't want to equate my experience with someone who's had a longterm toxic relationship or has suffered. But in my life relatively it was cruel the way that she kept moving the goalpost and just not caring, not seeming to understand how hard that was.

So anyway, the months unfolded, I'm having panic attacks, my hair's falling out, I don't even have the energy to really fully tell people. I've just shriveling up and trying to keep moving forward. And I find my way first to lawyers and got patronizing unhelpful responses there, and the same with the police when I first approached them. And finally I made it to the DA's office where I realized that Anna was a subject of an investigation at which point, that was worst case scenario for me to discover she was a con artist and didn't have any money that we knew of. But it was also the first solid piece of information that explained the past hellish few months I had been going through. So I actively worked with them in the investigation, feeling I had particular insight having spent the two months with her that I did, and the way that she'd confided in me with names and what she was trying to do.

It seems to me that when she was happy with whatever court look had been picked for her, she really enjoyed the attention. She would look over her shoulder to see how many people were in the room, what the turnout was like. She seemed very detached from the risk that she may be going to jail. When I had to sit in the box and identify her as the defendant, I looked up and she was staring at me and smirking. I mean, she's a narcissist, she's sociopathic narcissist and it was on full display. She, she certainly didn't seem remorseful.

Katie Krzaczek: Illegal Tender is made by Yahoo Finance at our studios in New York city. This episode was written and hosted by me Katie Krzaczek. Illegal Tender was created, edited, and produced by Alex Sug. Thank you to Rachel DeLoache Williams and Emily Balcetis for contributing to this story. If you enjoyed this podcast, head over to Apple podcasts and leave us a five star rating and review it for the show. Until next time, thank you for listening to Illegal Tender.

Listen on Apple Podcasts | Google Podcasts

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.