Lou Pearlman
From Wikipedia, the free encyclopedia
| Louis J. Pearlman | |
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 Lou Pearlman's police mugshot after being charged with fraud (He was later convicted and is serving 25 years imprisonment)
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| Background information | |
| Birth name | Louis Jay Pearlman |
| Also known as | Big Poppa[1] Incognito Johnson.[2] |
| Born | June 19, 1954 Flushing, Queens, NY, U.S. |
| Genre(s) | Dance-pop Boy band |
| Occupation(s) | Producer Manager confidence trickster (convicted) |
| Years active | 1993-2006 |
| Label(s) | Trans Continental |
| Associated acts | Backstreet Boys 'N Sync, O-Town LFO Take 5 Natural US5, Jordan Knight Aaron Carter Smilez and Southstar C-Note |
Louis Jay Pearlman (born June 19, 1954) is the former American manager of boy bands the Backstreet Boys, 'N Sync.[3] In March 2008 he pled guilty to conspiracy, money laundering, and making false statements during a bankruptcy proceeding. [4][5][6] Pearlman was sentenced to 25 years in prison for perpetrating a $300 million Ponzi scheme.[7][8]
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[edit] Early Life and Career
Pearlman was born and raised in Flushing, Queens. He is the only child of Hy, who ran a dry cleaning business and Reenie Pearlman, who was a school lunchroom aide. Pearlman is the first cousin of Art Garfunkel, their mothers being sisters. His home at Mitchell Gardens Apartments was located across from Flushing Airport where he and childhood friend Alan Gross watched blimps take off and land. According to Pearlman's autobiography Bands, Brands and Billions it was during this period that he used his position on his school newspaper to earn credentials and get his first ride in a blimp. This version of events is refuted by Gross, who claims he was the school reporter, and allowed Pearlman to tag along.[9][10]
His cousin's fame and wealth helped to spark Pearlman's own interest in the music business. As a teenager, he managed a band, but when success in music proved elusive, he turned his attention to aviation. By the late 1970s, Pearlman had started a helicopter commuter service that consisted of one helicopter. He convinced German blimp tycoon Theodor Wüllenkemper to train him on blimps, and consequently spent some time at Wüllenkemper's facilities in Germany learning about the airships. Pearlman returned to America and formed Airship Enterprises Ltd. and leased a blimp to Jordache before actually owning one. He used the funds from Jordache to construct a blimp, but it promptly crashed. The two parties sued each other, and Pearlman was awarded $2.5 million in damages. On the advice of a friend, Pearlman started a new company, Airship International and promptly took it public to raise the $3 million he needed to purchase a blimp. He leased the blimp to McDonald's for advertising.[11][10]
Pearlman relocated Airship International to Orlando in July 1991 and signed MetLife and Sea World as clients for his blimps. Airship International suffered when one of its clients left, and three of the aircraft crashed. The company's stock, once valued at $6 a share dropped to 3 cents and the company was shut down.[12]
[edit] Music Industry Career
After receiving an airplane charter request from New Kids on the Block, Pearlman became fascinated with the fact that the band had made hundreds of millions of dollars in record, tour and merchandise sales. Thus he started Trans Continental Records. After a massive search (costing $3 million),[13] Pearlman founded the Backstreet Boys, a group of five unknown performers, who were signed to his label as its first act. Management duties were assigned to a former New Kids on the Block manager, Johnny Wright and his wife Donna. [14] The Backstreet Boys went on to sell 100 million records worldwide,[15] hitting gold and platinum in 45 different countries. Pearlman and the Wrights repeated this formula with the band *NSync, which sold over 56 million records globally.
With two major successes under his belt, Pearlman became a music mogul. Other boy bands managed by Pearlman were O-Town (created during the ABC–MTV reality TV series Making the Band), LFO, Take 5, and Natural. Other artists on the Trans Continental label included Aaron Carter, Jordan Knight, Smilez & Southstar and C-Note. Pearlman owned an entertainment complex in Orlando, including a recording studio he called Trans Continental Studios, a dance studio by Disney World named "O-Town".[16]
[edit] Band Lawsuits
Except for US5, all of the musical acts who have worked with Pearlman have sued him in Federal Court for misrepresentation and fraud. All cases against Pearlman have either been won by those who have brought lawsuits against him, or have been settled out of court. All cases have also ended with a confidentiality agreement, meaning none of the parties are allowed to discuss Pearlman's practices in depth. [10]
The members of Backstreet Boys were the first to file a lawsuit against Pearlman because they felt their contract, under which Pearlman collected as both manager and producer, was unfair - Pearlman was also paid as a sixth member of the Backstreet Boys. It began when member Brian Littrell hired a lawyer to determine why the group only received $300,000 for all of their work, while Pearlman and his record company were making millions. Fellow boy band *NSYNC had similar issues with Pearlman, and its members soon followed suit. [10]
At the age of 14, teenage pop star Aaron Carter filed a lawsuit in 2002 that accused Pearlman and Trans Continental Records of cheating him out of hundreds of thousands of dollars and of racketeering for a deliberate pattern of criminal activity. The suit was later settled out of court. [17]
[edit] Allegations of inappropriate conduct
The November 2007 issue of Vanity Fair magazine investigated claims of inappropriate conduct made by several former band members and employees. No charges were ever filed.[10]
[edit] Criminal activity
In 2006 investigators discovered Pearlman had perpetrated a long running Ponzi scheme that defrauded investors out of $300 million. For more than 20 years Pearlman enticed individuals and banks to invest in Trans Continental Airlines Travel Services Inc. and Trans Continental Airlines Inc., both of which existed only on paper.[18] Pearlman used falsified FDIC, AIG and Lloyd's of London documents to win investors' confidence in his "Employee Investment Savings Account" (E.I.S.A.) program and he used fake financial statements created by a fictitious accounting firm Cohen and Siegel to secure bank loans.[10]
[edit] Investigation
In February 2007, Florida regulators announced that Pearlman's Trans Continental Savings Program was indeed a massive fraud and the state took possession of the company.[19] Most of the at least $95 million which was collected from investors was gone. Orange County Circuit Judge Renee Roche ordered Pearlman and two of his associates, Robert Fischetti and Michael Crudelle, to bring back to the United States "any assets taken abroad which were derived from illegal transactions." [20]
[edit] Arrest
Following a brief flight from officials, Pearlman was arrested in Indonesia on June 14, 2007 after being spotted by a German tourist couple.[21] Pearlman was then indicted by a federal grand jury on June 27, 2007.[22] Specifically Pearlman is charged with three counts of bank fraud, one count of mail fraud and one count of wire fraud. On July 11, 2007 at a bond hearing, the Judge set a September 4, 2007 trial date in Federal Court for Pearlman on the bank fraud charges.[23] Pearlman requested, and was granted, a delay in the start of his trial. Pearlman's trial was then scheduled to begin on March 3, 2008.[24]
[edit] Conviction and Sentencing
On May 21, 2008, Pearlman was sentenced to 25 years in federal prison, after pleading guilty to charges of conspiracy, money laundering, and making false statements during a bankruptcy proceeding. U.S. District Judge G. Kendall Sharp gave Pearlman the chance to cut his prison time, by offering to reduce the sentence by one month for every million dollars he helps a bankruptcy trustee recover. He also ordered individual investors are to be paid before institutions in distributing eventual assets.[25][26]
[edit] References
- ^ Time Magazine Big Poppa's Bubble Gum Machine
- ^ USA Today Lou Pearlman appears at hearing in Guam
- ^ Time Magazine Big Poppa’s Bubble Gum Machine
- ^ tampabay.com Unraveling a transcontinental fraud
- ^ The Orlando Sentinel Pearlman faces new federal charges as he changes plea to guilty
- ^ [1] Boy band found to plead guilty in $300M suit
- ^ The Orlando Sentinel Lou Pearlman fall from life of glitz to 25-year sentence
- ^ Reuters Boy band mogul Pearlman sentenced to 25 years
- ^ St. Petersburg Times By Helen Huntley, October 21, 2007 In humble Queens, Lou Pearlman was king
- ^ a b c d e f Mad About Boys
- ^ St. Petersburg Times By Helen Huntley, October 21, 2007 In humble Queens, Lou Pearlman was king
- ^ Orlando Sentinel April 1, 2007 A world out of sync
- ^ Tyler Gray, The Fat Man Sings in Radar Magazine October 7 Issue, p. 91
- ^ St. Petersburg TimesThe starmaker
- ^ Backstreet Boys, Lucy Love
- ^ Orlando Sentinel April 1, 2007 A world out of sync
- ^ St. Petersburg Times June 25, 2002. Lawsuit: Pop star's manager a racketeer
- ^ USDOJ press release March 4, 2008 LOU PEARLMAN SIGNS PLEA AGREEMENT THAT INCLUDES ADDITIONAL CHARGES THAT HE DEFRAUDED INVESTORS
- ^ www.wftv.com February 2, 2007 State Takes Over Lou Pearlman's Embattled Orlando Company
- ^ St. Petersburg Times Blog: Money Talk February 2, 2007 State: Trans Continental Savings Program a Fraud
- ^ Lou Pearlman Taken Into Custody In Indonesia
- ^ Tampa Bay's WTSP 10 News Pearlman indicted on fraud charges
- ^ Central Florida 13 News Pearlman Trial Date Set for September 4
- ^ WFTV.com News Pearlman Trial Scheduled To Start In March 2008
- ^ MSNBC.com
- ^ Reuters Boy band mogul Pearlman sentenced to 25 years
[edit] External links
- Trans Continental Companies. Former Lou Pearlman company website, now the State investigation website.
- Lou Pearlman case
- St. Petersburg Times editor Helen Huntley's Money Talk Blog covering the History of Pearlman's Bankruptcy
- Page Six Story on Pearlman
- Vanity Fair Article About Pearlman
- ScammedByPearlman.com A resource site for those scammed by Lou Pearlman
- Orlando Sentinal Story Gallery for Lou Pearlman
- Yahoo.com OMG!, May 21, 2008 Producer Lou Pearlman gets a 25 year federal prison sentence, and the Judge says he will reduce the term by one month for every million dollars Pearlman pays of the money he owes investors.
[edit] Additional Reading
- The Hit Charade: Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History by Tyler Gray. Harper Collins. 320 Pages. ISBN-10: 0061579661
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