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As if Backstreet Boys/NSync Weren't Bad Enough...
Published Tuesday, June 5, 2007
TARNISHED PEARL Music Producer Lou Pearlman Waits for Word of Possible Charges By HELEN HUNTLEY St. Petersburg Times
Music producer Lou Pearlman celebrates his 53rd birthday this month, but he may not throw much of a party. The one-time king of boy bands waits in self-imposed foreign exile for word on whether he'll be indicted for running one of the largest investment frauds in Florida history. Friends and relatives he betrayed still shake their heads in disgust and astonishment. They no longer hear from the man who once greeted them with hugs, remembered their birthdays and faithfully returned their calls no matter where he was on the globe. Instead, they file their claims in bankruptcy court with little hope of any significant recovery. "He was the best salesman I've ever known," said David Mathis, a former Chicago freight company owner Pearlman took for $2.8 million. "He told us he had 412 airplanes, the company had a value of $1.8 billion and the IPO was coming out at $17.50 a share. It was totally convincing." Mathis said Pearlman treated him to lunch with Britney Spears, introduced him to Sylvester Stallone and Hulk Hogan and took him for a ride on the Budweiser blimp. "He could have sold anything," he said. In fact, Pearlman sold lots of things. He sold lemonade as an 8-year-old and newspapers as a 10-year-old in the Flushing, N.Y. neighborhood where he grew up. The son of a dry cleaner, Pearlman imagined his future as an entrepreneur and the older he got, the bigger he dreamed. While still at Queens College, he put together a business plan for a helicopter commuter service. Next came a charter airline and aircraft leasing business, then a blimp advertising business. The blimps and planes brought Pearlman to Orlando, where he encountered the New Kids on the Block on one of his charter flights and decided he could get rich by replicating their success. He had played in bands growing up and admired the career of first cousin Art Garfunkel - as in Simon and Garfunkel - but Pearlman had something much bigger in mind. As his aviation businesses failed, he reinvented himself as an entertainment mastermind. He didn't discover bands; he made them up from scratch, auditioning prospects to put together the right sound and a carefully calculated mix of clean-cut teen heartthrobs. And for a time, he was wildly successful. The Backstreet Boys and NSync sold 58 million records in the United States and millions more in Europe. Billboard says NSync's album No Strings Attached still holds the record for sales in one week at 2.4 million copies, a feat accomplished in 2000. However, none of Pearlman's other groups rose to similar stardom. As the boy band sound began fading in popularity, Pearlman created one new group after another and branched out into movies and TV shows, sometimes playing himself. "Anybody that came in with an idea, he'd throw money at it," said Jerry McHale, the receiver the state placed in charge of Pearlman's crumbling empire last February. "I have the distinct impression there was not a businessman in that whole building." As his empire grew, Pearlman created corporations by the dozen, but didn't bother with niceties like standard accounting. McHale said Pearlman freely transferred money from one company to another and paid bills without regard to which company owed the money. A former accounting student at Queens College, Pearlman used phony financial statements from a nonexistent accounting firm to convince bankers and potential investors that he and his main company, Trans Continental Airlines, were prospering. He owes more than $150 million to lenders, some of whom hold worthless Trans Continental stock as collateral. The Backstreet Boys and NSync sued Pearlman, claiming they had been cheated. Both settled, paying Pearlman to get out of their contracts. "Between the Backstreet Boys and NSync, we recovered close to $60 million for him," said Cheney Mason, one of the Orlando lawyers who represented him on contingency. Pearlman never paid the bill and the court judgment the lawyers got against him has grown to about $19 million, Cheney said. "Every lawyer he's had since then, he has stiffed by large numbers," he said. Now Pearlman can't find a lawyer in Orlando to represent him, according to a recent bankruptcy court filing purporting to be from him. The portly Pearlman loved the limelight, even recording a short video about his lifestyle, "Lou Pearlman Living Large," which he often popped into the VCR in his opulent office when investors visited. It features a Lou-guided tour of his Mediterranean mansion outside Orlando in suburban Windemere, with boats and jet skis docked out back on Lake Butler. He shows off his fleet of luxury cars and diamond-studded Rolex watch with matching ring and cuff links that he claims are worth $425,000. Pearlman, who never married and didn't drink, loved entertaining lavishly at his home, restaurants and even a skybox at Raymond James Stadium. He contributed heavily to Republican politicians and bought a small interest in the Orlando Predators arena football team. He dispensed business advice in a 2003 book, "Bands, Brands & Bills: My Top 10 Rules for Making Any Business Go Platinum." Many investors have autographed copies. Although Pearlman bragged of having a doctorate in business, he didn't often mention that it came from online Century University, which lacks recognized accreditation. Pearlman's purchase of the Church Street Station complex in downtown Orlando in 2003 brought him praise and $1.5 million in an economic development loan from the city. But what propped up Pearlman's businesses and ultimately brought his downfall was the sale of worthless stock and bogus savings accounts to the tune of more than $300 million. He owes money to about 1,800 investors, primarily from Florida and New York, including cousins and childhood friends. Nearly 800 are from the Tampa Bay area, out a collective $78 million. Some knew Pearlman personally, while others invested through his of agents. The investments date to the 1980s. Some people bought stock, expecting to get in on a forthcoming stock offering and earn hefty dividends in the meantime. However, most of Pearlman's investors thought they were getting an FDIC-insured high-yield savings account that would be a safe place for their retirement savings. A fake insurance certificate and a glowing Dun & Bradstreet report based on false financials helped convince them of its safety. |
Wait wait wait...
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LOL! He must be the character Chris Farley stole!
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Wow.
Actually, if you were to build a model of the Capitalist ideal, this guy doesn't miss the mark by much. |
They found the bastard!
FBI: Boy-band mogul allegedly used fake accountants for loans By TRAVIS REED Associated Press Writer ORLANDO, Fla. (AP) -- Federal authorities allege the creator of the Backstreet Boys and 'N Sync defrauded a bank by securing nearly $20 million in personal and business loans with fake documents from a made-up accounting firm. Lou Pearlman was found in Indonesia and expelled from the country Thursday. Authorities there handed him to the FBI, who took Pearlman to the U.S. territory of Guam to appear before a federal judge on a bank fraud charge. He was held over on Friday for another hearing next week. In a criminal complaint filed in March and unsealed after Pearlman's arrest, an FBI investigator said Pearlman used an accounting firm named "Cohen & Siegel" to prepare documents for lenders and investors. Authorities said the firm appears to be nonexistent, and was created by Pearlman or his associates. Similar allegations have been raised in a lawsuit and a lengthy state complaint accusing him of operating a long-running, multimillion-dollar scam. The firm was tied to a Coral Gables address and telephone number. However, there were allegedly no accountants at that location, only an answering service with a dedicated line. Workers there answered the phone "Cohen & Siegel," and sent all bills and correspondence addressed to them to Pearlman, according to the complaint. Integra Bank officials told investigators they relied on the Cohen & Siegel documents as a "clean opinion" in approving and monitoring four loans: two in 2004 for $19 million to Pearlman's Trans Continental Airlines and two in 2006 to him totaling just under $1 million. The documents included two airline company tax returns from 2003 and 2004 prepared by Cohen & Siegel that were never filed, the complaint said. Investigators did not find any licensed, state-registered accountants for the firm. Before he disappeared or faced criminal charges, Pearlman told The Associated Press in a lengthy October 2006 interview that Cohen & Siegel was based in Germany and had only a small presence in Florida. At that time, the allegations were part of a lawsuit filed by the estate of a deceased Pearlman investor. Pearlman denied paying the Coral Gables answering service, despite cleared checks in the court record and a deposition from an answering service employee to the contrary. "I don't pay anything. I don't know what they're talking about," Pearlman said. "And even if I did, what does that have to do with anything, anyway?" An FBI attache in Germany could find no proof the accounting firm ever existed there, according to the complaint. Federal authorities also allege Pearlman promised lenders payments from a large account in "German Savings," an entity which also doesn't exist. Banks told federal authorities the payments never arrived. Pearlman refused to answer questions Friday about his financial assets to determine if he would be granted a public defender. U.S. Chief District Judge Frances Tydincgo-Gatewood then halted the proceedings until Monday, and Pearlman was being held at the federal detention area of the Guam prison. Pearlman had been sought for months, and was finally found at a hotel on the resort island of Bali, the FBI said Thursday. Officials hope Pearlman's arrest will help clarify his puzzling financial picture. They still don't know how deep the debt goes or how many assets are left. So far, few have been discovered. Besides boy bands and airplane charters, Pearlman was also involved in talent scouting, restaurant and other ventures. Pearlman stopped paying bank loans months before he allegedly went into hiding, and lost control of several companies in February when a judge appointed a receiver to take over. He faces several lawsuits from individual investors and two involuntary bankruptcy proceedings. He hadn't responded to court subpoenas and doesn't have an attorney in either of the bankruptcy cases. The state receiver says it appears Pearlman has defrauded more than 1,000 investors out of more than $315 million in a long-running Ponzi scheme. Banks, including Integra, are also hounding Pearlman and his many companies for more than $120 million, according to bankruptcy court documents. |
Personally, I think he warrants the death penalty for the boy band thing alone. All this other stuff is just gravy....
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His frauds and swindles have been know for some time now (like 3 years). I had to re-read in order to get why this is news now and saw that they are finally trying to extradict him to the US?
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I blame this asshole for breaking up NSync....my favorite boy band.
.....and for taking Lance Bass's anal virginity. |
...and the end.
ORLANDO, Fla. (AP) - entertainmentminute The man who created the Backstreet Boys and 'N Sync has been sentenced to 25 years in prison on four federal charges. But Judge G. Kendall Sharp in Orlando, Florida, said Wednesday he would reduce the sentence by one month for every $1 million that Lou Pearlman returned to the investors he stole from. Pearlman pleaded guilty in March to two counts of conspiracy, money laundering and using false statements in a bankruptcy proceeding. He is most famous for creating "boy bands" that sold millions of records. But prosecutors alleged he bilked thousands of people out of millions of dollars in a decades-long investment scam. |
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Pretty creative sentence there by the judge to try to get back some of the assets. He reportedly defrauded people of $315 million. If this guy invested his money properly, he can pay $300 million for his immediate freedom and pocket the rest of it. I'm going to go out on a limb and guess that he's not getting out early. |
Not really related... but I heard a new New Kids on the Block song the other day. Seriously.
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How much does Lou Pearlman pay for a wookie.
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LOL! I'm in Orlando right now, and they just did a story on Pearlman's sentencing on the local Fox channel. They interviewed one of his victims who said, "I want them to turn him into a woman in prison." Oh man, times like this I actually miss Florida.
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He needs to eat more things with gravy on it.
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Is that possible?
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I'm hoping he creates another amazing scheme to raise the 300 million to buy his way out of prison.
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