WASHINGTON, D.C. — The founder of the Frye Festival and Frye Media, Inc., along with several others, have agreed to settle charges by the federal government of selling fraudulent investments that raised at least $27.4 million.
According to the U.S. Securities and Exchange Commission (SEC), New York entrepreneur William McFarland, a former senior executive and a former contractor allegedly persuaded investors to turn over tens of millions of dollars by inflating key operational, financial measures of success. The SEC alleges McFarland doctored his brokerage statements to show $2.5 million in stock holdings when his holdings actually amounted to $1,500. He then allegedly used the investor funds to pay for a lavish lifestyle including a Manhattan penthouse, traveling, a private plane and a chauffeur.
“McFarland gained the trust of investors by falsely portraying himself as a skilled entrepreneur running a series of successful media companies," SEC Enforcement Division associate director Melissa Hodgman said in a statement. "But this false picture of business success was built on fake brokerage statements and stolen investor funds.”
The settlement, pending court approval, includes a disgorgement of $27.4 million, a seven-year director-and-officer bar to pay a $35,000 penalty and a three-year director-and-officer bar to pay more than $15,000 in disgorgement and penalty, the SEC said.