Frye Fraud Case
ISSUES IN ACCOUNTING EDUCATION American Accounting Association Vol. 37, No. 3 DOI: 10.2308/ISSUES-2020-035 August 2022 pp. 125–140
The Fyre Fraud: A Case Exploring the Dark Triad Personality
Megan F. Hess Washington and Lee University
ABSTRACT: This case introduces students to the concept of the ‘‘dark triad,’’ a combination of Machiavellianism,
narcissism, and psychopathic personality traits that have been associated with people who commit fraud. Students
learn about this personality disorder by studying the events and the people associated with the Fyre Festival fraud.
The case is designed to help auditing and forensic accounting students to: (1) recognize dark triad personality traits;
(2) describe the fraud risks associated with this personality disorder; (3) analyze information in order to identify the
red flags of fraud; and (4) recall the methods used by auditors and forensic accountants to identify and address the
increased risk of fraud associated with a dark triad personality. In a post-case learning assessment, students
reported significant improvement in their knowledge, comprehension, and application of these learning objectives.
Keywords: dark triad personality; fraud; Machiavellianism; narcissism; psychopathy; fraud diamond.
I. INTRODUCTION
T he 2017 Fyre Festival is known as ‘‘the greatest party that never happened,’’ (Netflix 2019). Organized by founder
William ‘‘Billy’’ McFarland and musician Ja Rule, the Fyre Festival was supposed to help promote their new company,
Fyre Media, and cement their reputation as important influencers with Millennial-aged consumers. Instead, the Fyre
Festival bankrupted Fyre Media and ultimately landed its founder in prison. This case draws upon publicly available
information about the Fyre Festival and privately obtained information from a Fyre Media investor to help students understand
the role that the ‘‘dark triad’’—a combination of Machiavellianism, narcissism, and psychopathy personality traits—may have
played in the downfall of Billy McFarland and his company.
Understanding the Dark Triad Personality
Research suggests that people with ‘‘dark triad’’ personalities can pose a significant fraud risk to organizations (Furnham,
Richards, and Paulhus 2013; Paulhus and Williams 2002). The dark triad is composed of three personality traits—
Machiavellianism, narcissism, and psychopathy—that together are associated with a range of socially aversive behaviors. In the
section below, I describe each of these three personality traits in more detail, explore the consequences for others when these
personality traits interact, and discuss the ways in which psychologists diagnose this personality disorder.
Machiavellianism
Machiavellianism is named for Niccolò Machiavelli, an influential figure in the Renaissance period and the author of The Prince (Machiavelli 1513). Like the characters in this story, people with Machiavellian personalities are described as cold,
callous, and cynical (Christie and Geis 1970; Jones and Paulhus 2009). Perhaps the most distinguishing characteristic of a
Machiavellian personality, however, is the complete disregard for principles and morality. Machiavellians are willing to
deceive and manipulate others to reach their goals (e.g., power, money). Machiavellians also excel at strategic long-term
planning and can be cunning impression managers when it serves their own ends (Rauthmann and Kolar 2012).
Megan F. Hess, Washington and Lee University, Williams School of Commerce, Economics, and Politics, Lexington, VA, USA.
Supplemental materials can be accessed by clicking the links in Appendix A.
Editor’s note: Accepted by Elizabeth Dreike Almer.
Submitted: May 2020 Accepted: February 2022
Published Online: March 2022
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Narcissism
Narcissists experience feelings of grandiosity, entitlement, dominance, and superiority at significantly higher levels than
the general population (Corry, Merritt, Mrug, and Pamp 2008; Raskin and Hall 1981). Narcissists tend to display an overly
enhanced view of themselves while devaluing the importance of others (Morf and Rhodewalt 1993, 2001). In addition,
narcissism is often accompanied by other behaviors such as extreme vanity, self-absorption, and arrogance (Raskin and Terry
1988). Narcissists are also drawn to positions of power and may engage in conspicuous displays of consumption and
materialistic pursuits to impress others (Lee and Ashton 2014).
Psychopathy
The hallmark of a psychopathic personality is a lack of empathy or remorse (Hare 2003). People with psychopathy also
exhibit more impulsivity and thrill-seeking behavior than the average person. They also appear to tolerate stress better and have
lower anxiety levels than others (Hare 1985; Lilienfeld and Andrews 1996). Perhaps for these reasons, psychopaths tend to do
well and get their way in work environments (Babiak, Hare, and McLaren 2006; Boddy 2006). However, psychopaths also
show destructive tendencies toward alcohol consumption, violence, misconduct, and even criminal behavior, which often make
their successes short-lived (Neumann and Hare 2008; Williams, Paulhus, and Hare 2007).
Fraud Risks and the Dark Triad Personality
When these three personality traits intersect, the consequences for others can be devastating. Persons with dark triad
personalities are distinguished by their ability to lie, deceive, and manipulate others to get what they want, apparently without
remorse (Furnham et al. 2013). Students with dark triad personalities are more likely to cheat, plagiarize, and take credit for
work that is not their own (Williams, Nathanson, and Paulhus 2010). In their personal lives, dark triad personalities are prone to
seek out multiple sexual partners and form short- rather than long-term relationships (Jonason et al. 2010). People with dark
triad personalities are also more likely to commit acts of fraud, theft, abuse, and sabotage (O’Boyle, Forsyth, Banks, and
McDaniel 2012; Giacalone and Knouse 1990; Harrison, Summers and Mennecke 2018; Jones 2014; Modic, Palomäki,
Drosinou, and Laakasuo 2018). The fraud risks associated with a dark triad personality include the propensity to mislead
investors by overstating revenues, inflating asset valuations, hiding liabilities, and exploiting related-party transactions to give
the business (and its leader) the appearance of success.
Identifying a Dark Triad Personality
Diagnosing someone as having a dark triad personality disorder is challenging, especially since most methods of assessing
personality traits rely on self-report survey measures that are subject to information bias. One of the most commonly used
survey-based assessments of the dark triad is the 12-item ‘‘Dirty Dozen’’ rating scale developed by Dr. Jonason and Dr.
Webster, which is reproduced in Table 1. Participants rate their agreement with how well each statement describes them
TABLE 1
Jonason and Webster’s (2010) ‘‘Dirty Dozen’’ Inventory for the Dark Triad Personality
1. I tend to manipulate others to get my way.
2. I have used deceit or lied to get my way.
3. I have used flattery to get my way.
4. I tend to exploit others toward my own end.
5. I tend to lack remorse.
6. I tend to be unconcerned with morality or the morality of my actions.
7. I tend to be callous or insensitive.
8. I tend to be cynical.
9. I tend to want others to admire me.
10. I tend to want others to pay attention to me.
11. I tend to seek prestige or status.
12. I tend to expect special favors from others.
Watch the full promotional video here: https://www.youtube.com/watch?v¼mz5kY3RsmKo
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personally on a scale of 1 (strongly disagree) to 7 (strongly agree). Items 1–4 measure Machiavellianism, items 5–8 measure
psychopathy, and items 9–12 measure narcissism.
In large-scale validation studies of the Dirty Dozen rating scale conducted among college students (Jonason and Webster
2010; Webster and Jonason 2013), participants score an average of 36 points on the Dirty Dozen, with most people scoring
between 33 and 39. Scores above 45 indicate a dark triad personality. In general, men score significantly higher than women on
the items related to narcissism and psychopathy. Men also score higher on the Machiavellianism items, but the difference has
not always been found to be statistically significant (Jonason, Li, and Buss 2010).
While the Dirty Dozen rating scale has proved to be reliable in numerous validation studies (e.g., Jonason and Luévano
2013; Maples, Lamkin, and Miller 2014; Rauthmann and Kolar 2012; Webster and Jonason 2013), it has been critiqued by
some psychologists for being too short and easily manipulated by subjects who can guess the ‘‘correct’’ (more socially
acceptable) rating for each survey item (Jones and Paulhus 2014). To overcome these sources of information bias,
psychologists have developed other, more subtle ways to assess dark triad traits. For instance, psychopathy (the darkest of the
three dark triad traits) has been tested by measuring heart rate levels while subjects are watching an unpleasant movie
(psychopaths maintain steadier heart rate levels), by testing a subject’s ability to detect and discriminate the facial expression of
fear (psychopaths score lower on this test), and by measuring the speed of a blink response to a startle (psychopaths have
slower and less emotional responses to aversive stimuli ) (Gao and Raine 2010).
While it might seem easy to spot these ‘‘toxic’’ qualities in the people with whom we socialize or work, we should
remember that elements of the dark triad personality have both beneficial and detrimental aspects, thus making it particularly
difficult to identify people with this personality disorder. As noted by Rauthmann and Kolar (2012) in their study of the relative
‘‘darkness’’ of the different elements of the dark triad, Western cultures generally view some narcissistic behaviors favorably,
such as boldness and seeking status, Likewise, people may judge self-protective Machiavellian behaviors less harshly than
acquisitive behaviors. Additionally—and despite their tendency toward malevolent behavior—psychopaths and Machiavellians
may be perceived by others to be charismatic and charming. In fact, they are often promoted into leadership positions due to
their intelligence and cool decisiveness under pressure (Boddy 2006).
The actual prevalence of the dark triad personality within society is not definitively known, but it is likely to be very
low. Psychologists estimate that approximately 0.6–1 percent of the general population (Coid, Yang, Ullrich, Roberts,
and Hare 2009; Hare 2003) and 1–3.5 percent of the business world (Babiak et al. 2006; Boddy 2015) can be described
as psychopathic (Gao and Raine 2010). Of course, the dark triad personality assumes more than just the presence of
psychopathy. It also includes narcissism and Machiavellianism, so the addition of these two traits would reduce the
prevalence of this personality disorder even further. Nonetheless, while the risk of encountering a dark triad personality is
small, the amount of damage that these individuals can inflict on others is extremely large, making this an important area
of study.
Background on Billy McFarland
Only a trained medical professional can diagnose someone as having a personality disorder, but there is a good deal of
evidence in the public record to suggest that Billy McFarland may have a dark triad personality. Even as a young child,
McFarland did not believe that the rules applied to him. McFarland started his first business, a broken crayon repair service, in
second grade. To market this new business, McFarland hacked into the school’s computer system, changed the password, and
then told teachers to see him to get the password in exchange for their broken crayons (Hulu 2019). By fifth grade, McFarland
was running a technology company completely staffed by workers in India. He would give orders to these workers using a fake
deep voice so that they would think he was an adult (Hulu 2019).
After briefly attending then dropping out of Bucknell University, McFarland moved to New York City and founded
Magnises, a venture that marketed a fancy looking metal substitute for a basic debit or credit card that also came with access to
exclusive events and a townhouse. Not only did Magnises make a name for McFarland and connect him with the venture
capital world, but it also helped him fulfill his dreams of living the lifestyle of the rich and famous. McFarland reportedly used
his earnings from Magnises to buy a Maserati sports car and to book flights on private jets (Netflix 2019). Below is a picture of
Billy taken in 2014 by photographer Ian Moran.
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Source: https://commons.wikimedia.org/wiki/File:Billy_McFarland_Entrepreneur_2014_(cropped).jpg
The success of Magnises was short-lived, however. When the business model began to show signs of weakness and cash
was running short, McFarland started using Magnises customer lists to sell tickets to the hottest shows in town—Beyonce, J Lo,
the stage play ‘‘Hamilton’’ —even though he did not actually have tickets to these events. According to one former Magnises
employee, McFarland would use the money he got marketing next week’s hottest show to satisfy demand for that day’s
customers by buying tickets from scalpers (Emily Boehm, as quoted in Hulu 2019). It was a classic pyramid scheme1 that
McFarland would return to time and again when he needed to raise money in a hurry.
Background on Fyre Media and the Fyre Festival
The idea for Fyre Media reportedly came from the difficulties McFarland encountered trying to book hip hop artist Ja Rule
for a Magnises event. Rather than go through so many different middlemen to arrange a performance, McFarland dreamed of an
Uber-style app that connected musicians and other performers with event venues that were looking for talent (Hulu 2019). With
this one great idea, Fyre Media was born. McFarland gave Ja Rule the title of co-founder of Fyre Media so that he could
leverage Ja Rule’s music connections, and the pair quickly bonded over their shared love of ‘‘living large.’’ In footage from the
Netflix (2019) documentary about Fyre, the two can be seen bragging about how their talents mirror the powerhouse basketball
dynasty of Magic Johnson and Larry Bird from the 1980s.
1 Also known as ‘‘robbing Peter to pay Paul,’’ a pyramid scheme uses the sales or investments from new recruits to fulfill the obligations owed to previous business partners, which cannot be met through normal business operations.
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According to reports, the original plans for the Fyre Festival were quite modest. McFarland wanted to build a creative
center for artists in the Bahamas that would host a music festival for about 100 guests (Hulu 2019). However, plans for the
festival quickly grew in scale and scope. For instance, McFarland spent several million dollars to bring the world’s top
supermodels to Norman’s Cay in the Bahamas to film a commercial for the event (see the image below), and insiders say that
the budget for the Fyre Festival may have grown to as much as $38 million in U.S. dollars (USD) (Netflix 2019). Fyre Festival
promoters marketed the event as a ‘‘Coachella in the Bahamas’’ and promised an exclusive, luxury experience for those who
were lucky enough to attend.2 The event was announced through a clever Instagram campaign that paid hundreds of social
media influencers like Kendall Jenner, Bella Hadid, Hailey Baldwin, and Emily Ratajkowski to promote the event.
This advertising campaign resonated with millennials who were eager to connect with these influencers and to be part of
the Fyre experience. From the beginning, McFarland seemed cynical about the appeal of the festival. As McFarland described it
at the time, they were ‘‘selling a pipe dream to your average loser’’ (Netflix 2019). Unfortunately for these festival goers, some
of whom paid as much as $100,000 USD to attend the event, the Fyre Festival failed to live up to the hype (Baggs 2019). When
ticket holders arrived in the Bahamas for their luxury experience, what they found instead was chaos—no musicians, no luxury
villas, no gourmet dining, no supermodels, only water-logged disaster relief tents, cheese sandwiches, and an abundance of
booze.3 Initially, McFarland blamed the festival failure on bad weather, not having enough resources, and the poor
infrastructure available to them in the Bahamas (TMZ 2017). He promised to refund everyone’s money and to host a free
version of the festival in the United States the next year. He even appeared charitable, saying that he would donate $1 USD to
the Bahamian Red Cross for every attendee at Fyre Festival 2018. These promises, like so many others McFarland made, were
never honored.
After the Fyre Festival disaster, both the FBI and the Securities and Exchange Commission (SEC) launched investigations.
Defrauded customers and investors also sued McFarland and other Fyre leaders, seeking more than $100 million USD in
damages. In an especially shocking turn of events and while out on bail for these charges, McFarland started a new company
called NYC VIP Access and he directed others working for this company to try to fleece Fyre Festival ticket holders out of even
more money using his old ticket-selling pyramid scheme—all of which is documented on film thanks to McFarland’s insistence
that his life be recorded ‘‘around the clock’’ as if he were a reality television star (Netflix 2019).
At his sentencing in the U.S. Southern District Court in Manhattan, Judge Naomi Reice Buchwald called McFarland a
‘‘serial fraudster’’ and remarked that the audacity of his crimes was ‘‘unique in this court’s memory,’’ and called attention to the
fact that Billy had started running the NYC VIP Access scheme while awaiting trial and by mistakenly ‘‘thinking he could talk
his way out [of it]’’ (Flanagan 2018). McFarland’s attorney urged the judge to be lenient and cited a psychological report that
suggested that McFarland had a bipolar-related disorder and was prone to ‘‘delusional beliefs of having special and unique
talents that will lead to fame and fortune’’ (Associated Press 2018). McFarland ultimately pleaded guilty, agreed to pay more
than $26 million USD in restitution, and was sentenced to six years in prison (Chambers 2019). Even so, the scale and sheer
audacity of the fraud left a lot of people wondering—how could so many customers and investors be conned into giving
McFarland so much money, and why didn’t Fyre insiders do something to stop the festival before it was too late?
2 Watch the promotional video here: https://www.youtube.com/watch?v¼mz5kY3RsmKo 3 For more information on the Fyre Festival disaster and the events leading up to it, watch Netflix’s 2019 documentary, ‘‘Fyre: The Greatest Party That
Never Happened,’’ Hulu’s 2019 documentary, ‘‘Fyre Fraud,’’ or CNBC’s American Greed episode S13 E192 (08/19/19).
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Understanding Fyre’s Appeal
In hindsight, it seems obvious that no one could have put together a festival like the one Fyre was promoting without years of
planning and a much, much larger budget (Netflix 2019). To understand why so many people were conned into believing in Fyre
requires a deeper understanding of the complex psychology at work in this case. In her book, The Confidence Game: Why We Fall for It . . . Every Time, Konnikova (2016) dispels common myths about fraudsters. She argues that successful con artists do not
necessarily prey on weak targets, nor do they present themselves as especially trustworthy figures. Rather, these fraudsters are
successful because the stories they tell are so irresistible. Their promises give purpose and meaning to people’s lives and resonate
with how people want to see themselves. In other words, people believed in Fyre, because they wanted it to be true.
One journalist argues that the Fyre Festival promotional campaign worked particularly well because it connected with people
through social media (Brockes 2019). She explains: ‘‘While traditional advertising is at a remove [sic] from everyday life, a
personal photostream in which every shot is carefully curated has an ‘integrity’ that broader branding can’t reach. In this scenario,
the enjoyment of an experience is secondary to that of selling of it down the chain to one’s own followers, with the subsequent
admiration and envy it’s hoped to cause’’ (Brockes 2019). Even if the idea of the Fyre Festival sounded too good to be true, the
fear of missing out on an experience of a lifetime proved too tempting for thousands who purchased tickets for the event.
While the Fyre Festival experience was understandably appealing to those who were not privy to the logistical chaos
leading up to the event, the loyalty of Fyre insiders who knew that there was simply not enough time or resources to pull it off
reveals just how manipulative the dark triad personality can be. When interviewed by Netflix and Hulu for their respective
documentaries about the festival, several Bahamian workers explained their willingness to keep working for Fyre even when
they had not been paid for their labor by referencing the culture of hospitality in the Bahamas. Helping others have a good time
is part of their way of life, and it gives purpose and meaning to their work. These Bahamians also believed that McFarland was
rich, and they trusted his promises that he would make good on what he owed them (Maryann Rolle, as quotes in Netflix 2019;
Delroy Jackson, as quoted in Hulu 2019). Another insider reflected that it was hard to accept reality, because so much time and
money had been spent on the idea: ‘‘There’s so much momentum . . . it’s like, this train’s not stopping’’ (Oren Aks, as quoted in
Hulu 2019). Above all, the promise of the once-in-a-lifetime experience and the allure of being on the frontlines of the world’s
greatest party seemed to overwhelm any doubts that insiders had about the event. As one contractor put it, ‘‘The draw, the
appeal was to be part of creating something that was special. And that desire overcame my inner wisdom, which was like, this
is a mess’’ (Marc Weinstein, as quoted in Netflix 2019).
Another factor at play was McFarland’s unflappable positivity. When employees raised their doubts about the feasibility of
the festival, McFarland was quick to remind them that they were ‘‘not a problems-focused group’’ and that they simply needed
to focus on solutions (Netflix 2019). McFarland seemed to have a gift for seeing every setback as an opportunity, with hard-
earned success just around the corner. Even now, when the scale of the Fyre Festival disaster has become legendary and he has
been sentenced to prison for his crimes, McFarland remains positive. In the Hulu (2019) documentary, McFarland stated: ‘‘I think it’s really easy to play at Monday morning quarterback for myself right now saying I should have done this, I should have
done that. And I certainly made a lot of mistakes, and there’s no question about that. But, before we had the worst luck, I think
we had the best luck. And it sounds crazy, but so many things had to go right to make it this big of a failure.’’
McFarland also kept most people in the dark about the financial drain the festival was putting on Fyre Media. He
reportedly handled all the financial matters himself and covered up the company’s cash flow problems by creating the
appearance of miraculous fundraising powers. As one insider described it, ‘‘Billy would get on a jet, fly to New York, and he’d
come back and somehow have another $3 million’’ (Andy King, as quoted in Netflix 2019). Indeed, McFarland managed to
convince more than 100 investors to hand over $27.4 million USD to the new venture (Securities and Exchange Commission v. William Z. (‘‘Billy’’) McFarland 2018). According to the SEC’s investigation and evidence shared in investor lawsuits against
McFarland, he enticed investors by appealing to their desire for quick returns and the lure of celebrity connections. Specifically,
McFarland offered investors a revenue share agreement of either a 120 percent return on investment or 5 percent of revenues
from the Fyre Festival, whichever was greater—a promise that proved too good to be true. This return was guaranteed in its
entirety by stock that McFarland claimed he owned. To support these claims, McFarland included a forged copy of his
Scottrade account statement showing a $2,565,079.18 USD balance (see Exhibit 1 for a copy of this forged statement as
published on DailyMail.com [Spargo 2019]). In reality, McFarland’s stock was worth only $1,499.68 (Securities and Exchange Commission v. William Z. (‘‘Billy’’) McFarland 2018).
The breezy tone and lack of substance in the Fyre Media investor pitch deck should have raised suspicions (see Exhibit 2
for selections from the presentation as published in Vanity Fair by Bilton [2017]). One analyst described the pitch as ‘‘an
amalgamation of a Miami Beach spa package with selfies you might find saved on a teenager’s smartphone’’ (Bilton 2017).
McFarland also presented investors with hastily prepared, unaudited financial statements to support a $90—$105 million USD
valuation for Fyre Media. Even a cursory examination of this information should have raised red flags for investors. These
statements were full of typos, missing information, did not reconcile in several key areas, and claimed that this start-up
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EXHIBIT 1 McFarland’s Forged Account Statement (Spargo 2019)
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EXHIBIT 2 Selections from the Fyre Media Pitch Deck (Bilton 2017)
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company was already making millions in bookings and had net assets of nearly $16 million USD (see Exhibit 3 and the
supplemental material listed in Appendix A). When one investor asked for more details about how they were achieving such
impressive sales growth, McFarland sent him a booking sheet that listed receipts of more than $13 million USD from famous
artists including Drake, Kendrick Lamar, and Lil Wayne (Bluestone 2017).
In truth, Fyre Media had few, if any, assets, it never made more than $57,000 USD in sales, and the famous celebrities it
promised access to were never part of its bookings (Securities and Exchange Commission v. William Z. (‘‘Billy’’) McFarland 2018). Even a modest amount of due diligence by investors would have uncovered these falsehoods. Why was it that investors
did not verify McFarland’s claims or see these red flags? Perhaps they, too, had a fear of missing out—not on the festival
experience, but rather on the opportunity to do business with the next Mark Zuckerberg, the young and wildly successful
founder of Facebook with whom McFarland often compared himself. Perhaps it was that they, like so many others, were
blinded by McFarland’s personality.
McFarland’s ability to manipulate and deceive is perhaps best revealed by the shocked and even incredulous responses
from people after the fraud had been revealed. One former employee said, ‘‘I know McFarland, but like, I never knew he was
capable of doing something like that. This guy really made me feel like he was a part of my family’’ (Samuel Krost, as quoted
in Netflix 2019). Others still refuse to believe that McFarland is guilty. Many people provided character witness testimony
during his court trial, with one calling him ‘‘the most inspiring and motivating person I have ever met aside from my mother’’ (Hulu 2019). Other victims of McFarland’s deceptions are less sanguine about their experiences. ‘‘He really leveraged your
existing emotional investment in this team and in this product to extort you to investing even more. This is Billy’s charm,’’ said
a former employee (Shiyuan Deng, as quoted in Netflix 2019). Another insider confessed that McFarland had the gall to ask
him to perform a sexual act on a customs agent in order to get their water order released for the festival. With nervous laughter,
he reflected, ‘‘Can you imagine, that in my 30 years of a career, that this is what I was going to do? I was going to do that,
honestly, to save the festival’’ (Andy King, as quoted in Netflix 2019). Such is the power of a dark triad personality’s ability to
deceive and manipulate others to achieve their own ends.
Dark Triad Personality and Fraud Risk Assessment
Understanding the characteristics and behaviors associated with dark triad personalities marks an important first step
toward improving fraud risk assessments so that cases like Fyre do not happen again (Ramamoorti 2008). However, auditors
and forensic investigators may face additional challenges in detecting this personality type. For one, the popular ‘‘fraud
triangle’’ risk assessment tool developed by Cressey (1953)—which argues that fraud risk is highest where there are incentives
or pressures, opportunities, and rationalizations to commit fraud—does not consider the possibility of a dark triad personality
who is motivated to commit fraud based on opportunity alone (Ramamoorti and Epstein 2016). Another challenge is that dark
triad personalities excel at deception, which makes their fraudulent activity exceedingly difficult to detect.
To address both of these challenges, scholars have recommended that auditors and investigators update their fraud risk
assessment models to consider the ‘‘fraud diamond’’ (Wolfe and Hermanson 2004). The fraud diamond can be used as a
complement to the fraud triangle in that it adds a fourth dimension that addresses capability; that is, the personality traits and
abilities that enable a fraudster to carry out his or her crimes when opportunities are present. In addition to the dark triad
personality traits described above, the capabilities that increase fraud risk include: creativity and intelligence, access to
information, knowledge of internal control weaknesses, and the power to exploit vulnerabilities in the company’s system of
checks and balances. The originators of the fraud diamond concept encourage auditors to run background checks on key
executives to identify a history of suspicious behavior. They also recommend expanding the scope of inquiries beyond the
usual territory of financial transactions to include questions about key executives’ personalities and behavior.
Because they are so difficult to detect, another way for auditors and investigators to identify the potential presence of a dark
triad personality in a client is to look for signs of the damage that this personality type inflicts on others (Boddy 2006). The
most obvious sign is an increased incidence of fraud or other illegal activity. A more subtle signal might be a history of frequent
and/or large-scale employee layoffs. Since dark triad personalities lack empathy or remorse, they will not hesitate to fire
workers in order to cut costs. Employees working for a dark triad personality may also appear disheartened and complain of
being exploited. Even worse, they may report that they have been bullied or humiliated in the workplace. Due to these harsh
working conditions and the efforts of the dark triad personality to eliminate anyone who stands in their way, organizations may
experience ‘‘brain drain’’ and see a marked decline in staff expertise. Leaders who have dark triad personalities may also go on
spending sprees, advocating for an increased number of corporate acquisitions. These activities make the organization larger,
which feeds the dark triad personality’s ego. Frequent merger and acquisition activity also makes the organization more
complex, which can make it more difficult for auditors to detect fraudulent behavior. Finally, dark triad personalities are less
likely than other leaders to demonstrate a commitment to corporate social and environmental responsibility, so cuts in these
programs or cynicism about the value of these activities may be another red flag.
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In sum, the Fyre fraud case reminds us that dark triad personalities pose a significant threat to the financial and emotional
well-being of an organization’s stakeholders. Their charm and intelligence combined with a willingness to lie, cheat, and
deceive make for a toxic combination that can cause real harm to the organizations and the people with whom they interact.
Understanding the characteristics and behaviors associated with a dark triad personality may help auditors and forensic
investigators respond to this threat and improve their fraud risk assessment efforts.
II. CASE REQUIREMENT QUESTIONS
(1) Identify the ways in which Billy McFarland exhibited the behaviors and characteristics of a dark triad personality by
providing at least two examples for each of the dark triad elements.
(2) What are the fraud risks that are associated with dark triad personalities?
(3) Analyze the Fyre information McFarland shared with investors (see the exhibits and case supplemental materials).
What red flags of fraud do you note in this information? What due diligence steps would you recommend to protect a
potential investor from being defrauded?
(4) How can auditors and forensic investigators identify and address the increased risk of fraud associated with a dark triad
personality?
EXHIBIT 3 Summary of Fyre Media Financial Statements
Originals obtained by the author from a private investor in Fyre Media.
(continued on next page)
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EXHIBIT 3 (continued)
Summary of Fyre Media Financial Statements (Continued)
Originals obtained by the author from a private investor in Fyre Media. Also published in Spargo (2019).
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APPENDIX A
ISSUES-2020-035_Fyre Complete KLCPA: http://dx.doi.org/10.2308/ISSUES-2020-035.s01
ISSUES-2020-035_ Fyre Monthly Engagement-Sheet 1: http://dx.doi.org/10.2308/ISSUES-2020-035.s02
ISSUES-2020-035_ Fyre Media Inc. Balance Sheet: http://dx.doi.org/10.2308/ISSUES-2020-035.s03
ISSUES-2020-035_ Fyre Festival Sales Data: http://dx.doi.org/10.2308/ISSUES-2020-035.s04
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