Background information
Birth name Louis Jay Pearlman
Also known as Big Poppa[1], A. Incognito Johnson[2], Fat Louie,
Svengali [3]
Born June 19, 1954 (1954-06-19) (age 53)
Flushing, Queens, NY
Genre(s) Dance-pop, Boy band
Occupation(s) Producer, Manager
Years active 1993-2006
Label(s) Trans Continental (USA, now in receivership)
Associated
acts Backstreet Boys, 'N Sync,
O-Town, Lyte Funky Ones,
Take 5, Natural, US5,
Aaron Carter, Jordan Knight,
Smilez & Southstar
C-Note
Louis Jay Pearlman (born June 19 1954) was an American manager for several
boy bands including the Backstreet Boys, 'N Sync and US5. He is now being
held on charges of running one of the biggest Ponzi schemes in United States
history. He was arrested in Indonesia in June 2007.[4]
Contents
[hide]
a.. 1 Early Years and Music Industry Career
b.. 2 Controversies
a.. 2.1 Boy Band Scandals
b.. 2.2 Allegations of Pedophilia and Inappropriate Conduct
c.. 2.3 Talent Scouting Scandal
d.. 2.4 Ponzi Scheme
c.. 3 References
d.. 4 External links
[edit] Early Years and Music Industry Career
Pearlman is an only child, born to Reenie and Hy Pearlman, who ran a dry
cleaning business. He was born and raised in New York City before moving to
Orlando, FL.
Pearlman idolized his famous first cousin Art Garfunkel. As a teenager Lou
managed a band, but when success in music proved elusive, he turned his
attention to aviation. He spent a lot of time hanging around with the
Goodyear blimp crew at Flushing Airport, where a friend had a job. By the
late 1970s, he forged a partnership with German blimp tycoon Theodor
Wüllenkemper. Early 1980s he started a helicopter commuter service. Next
came a blimp advertising company, which suffered several controversies in
and of itself including the crash of his Jordache blimp and claims of
insurance fraud.[5][6]
After moving to Orlando came claims of a travel agency called Trans
Continental Travel Services, an aircraft leasing business and a charter
airline, 'Trans Continental Airlines' though both mainly existed in name
only. Pearlman was to some "the best salesman ever known" [7][8][9]
As his aviation businesses failed, Pearlman found other ways to make money.
In the middle 1980s, he started his allegedly fraudulent Trans Continental
Airlines savings program. Pearlman also had associations with penny-stock
swindlers, and it has been reported that he earned his first big bucks as a
beneficiary of one of the longest-running pump-and-dump schemes of the
1990s. [10]
As a side product Pearlman became involved with owning the Chippendales
dancers. That, combined with New Kids on the Block, inspired his boy band
ideas. "I got involved with Chippendales before Backstreet and it's
Chippendales and New Kids on the Block that gave me the idea to pursue
Backstreet."[11].
After receiving a 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 and $3 million dollars spent
[12] Pearlman created the Backstreet Boys, who immediately were signed to
his label as his first act. Backstreet Boys went on to sell 100 million
records worldwide [1][2] , hitting gold and platinum in 45 different
countries. Pearlman repeated this apparent success with the band *NSync,
which sold over 56 million records globally.
With these two major successes under his belt, Pearlman became the ultimate
boy band mogul. Other bands were eager to sign with Pearlman as a label and
as a manager. 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, C Note, and Smilez & Southstar. 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,"
and Church Street Station, which, under his ownership, became a virtual
ghost town. But whatever Pearlman threw into it, he never found himself
another Johnny Wright, and his two major boy band successes were never
repeated.
Lou's final musical project was the RTL reality TV show "Big in America" in
Germany.[13] Boy band US5 was assembled on the show. They were represented
as being 'Big in America' despite the fact of only releasing one single in
the United States, which did not chart well. It appears that US5's
management, Berlin-based company Triple M Music [3], is the only running
business that Pearlman was still actively involved in right up until
December 2006 when his Ponzi scheme became known. Before his arrest, his
last sighting was at an award show where the band received an award. US5
appear to still be under contract with Lou, though their final fate is
unknown. Currently it has been arranged that they are allowed to tour while
money is put in escrow until the case is settled.[14]
[edit] Controversies
[edit] Boy Band Scandals
There is no standard musical percentage in the music industry, though the
average figures run about 25% to the record label, between 15% and 25% for
management and another possible 15% to an agent. Musicians usually get 8 to
10 cents on the dollar, writing credit, and performing credit, and
merchandise and tour sales are usually their own to split with a
promoter.[15]
Pearlman was paid as a sixth member of the Backstreet Boys.[16][17]
All musical acts (US5 is currently the only exception) 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 law
suits against him, or have been settled out of court. But no matter how they
have been settled, all cases have also ended with a confidentiality
agreement, meaning none of the parties are allowed to discuss Pearlman's
practices in depth. "They find talented kids, sign them, watch them get
successful, don't pay them, wait for them to sue and then settle the cases,"
Yanger said. "It is not an isolated case."
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. Fellow boy band *NSYNC had similar
issues with Pearlman, and its members soon followed suit. According to VH1's
100 Most Shocking Rock & Roll Moments, Pearlman and BMG claimed nearly all
of the $300 million dollars *NSYNC had made from record, tour, and
merchandise sales. This left only $7 million dollars for the five members of
the band. Frustrated, *NSYNC attempted to leave RCA and sign with competitor
Jive Records, a migration which Pearlman tried to prevent with legal action.
Both BMG's and Pearlman's lawsuit and the countersuit filed by *NSYNC were
settled out of court.
Looking back at those days, *NSYNC star Justin Timberlake said, during a
September 2006 interview with Rolling Stone: "I was being monetarily raped
by a Svengali."[18]
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.
Carter once again took Pearlman to court in 2006; as of November 1, 2007,
according to TMZ.com, Carter had won his bid to emancipate himself from
Pearlman. The bankruptcy judge ruled in favor of Carter, ordering that his
management and recording agreements were no longer in effect. As to who
owned Carter's TransContinental Recordings, the judge had not yet ruled as
of November 10, 2007.[19]
[edit] Allegations of Pedophilia and Inappropriate Conduct
For years rumors swirled that Pearlman initiated inappropriate relationships
with the boys he worked with; both underage and of age. The November 2007
issue of Vanity Fair Magazine investigated the claims and found allegations
of such conduct made by several former boy band members, including Rich
Cronin, 13-year-old members of Take 5, an early member of the Backstreet
Boys, and Nick Carter.[20] Despite the innuendo and rumors that dogged him
for years, Pearlman was only threatened with going public a few times. At
one point an unidentified male singer or singers (it is unknown how many)
threatened Pearlman with going public. J. Cheney Mason, Pearlman's long time
attorney, confirmed that the situation was turned over to the FBI for
investigation as a possible extortion. No charges were ever filed, however,
and the boy or boys never went public. It is unclear if any future charges
may be filed in relation to the claims.[20]
[edit] Talent Scouting Scandal
In September 2002 Pearlman purchased the Internet oriented talent scouting
company Options Talent which would go through several names including Trans
Continental Talent, TCT, Wilhelmina Scouting Network, WSN, and finally the
Web Style Network before disbanding. Pearlman then started another similar
scheme this time with the names Fashion Rock, and Talent Rock. Options
Talent had been started as eModel (later Studio 58 and other names) by Ayman
Ahmed El-Difrawi who had a criminal record, spent nearly four years in
prison for fraud, and is banned from doing business in Illinois.
[21][22][23][24][25] Additionally, court documents show that prosecutors
found El-Difrawi (variously known as Alec, Alex, Michael - Defrawy or
Difrawi) had used multiple aliases to further his fraudulent activities
including Michael Chandler, Michael Jensen and David Mellon.[26][22]
Originally Pearlman downplayed El-Difrawi's part in the business stating
that he was "just the computer guy." Later, when Pearlman tried to distance
himself from the criminals in the organization, he admitted that El-Difrawi
was a principal in the organization that, "he set the whole thing up; he was
the one that really developed the business."[27] The former director of the
company's Atlanta office said, "It's Alec, He runs the whole thing."[28]
The SEC noted that Trans Continental had issued shares and paid monies to
trusts which, in turn, owned consulting companies that employed El-Difrawi,
Ralph Edward Bell, Cortes Randell, and Jason Hoffman. These consulting
arrangement kept these individuals' names off most paperwork, nonetheless
the SEC forced Trans Continental to disclose the felony records of
El-Difrawi and Randell, and that the FTC had sought permanent injunction
against Bell and Hoffman for using deceptive practices in another modeling
business.[29]
Regardless of the name, all incarnations of the Talent Scouting networks
were nothing more than a website which young hopefuls paid money (usually
around $2,000 dollars) to have their pictures and some information posted on
the site in promises that 'A&R' would scout the site and the young talent
may be discovered. Models, Musicians, Dancers, and Singers were all
'promised' a chance to sign up. No such promotion of the talent seemed to
occur and no talent appears to have been 'discovered' via the costly
site.[30] Agencies Ford and Elite asked to have their names removed from the
company's web site and said they have never used models from the
company.[31] Other agencies had problems with the modeling company's use of
their name in reference and Bill Ford of Ford Models said, "They say they
work with us. We do not work with them. They're not reputable people."[32]
As early as 2001, local and national media in many of the major cities where
the talent agency set up shop independently declared the company a scam that
took people's money and didn't live up to promises. Many news outlets did
hidden camera investigations. The allegations in the media, begun before
Pearlman bought the company, continued throughout his ownership
.[33][34][35][36][37]
In September of 2002, Pearlman purchased a major share of Orlando's 'Karma
magazine' which he then renamed 'Industry Magazine' and turned the
publication into a franchised celebrity magazine while using it as an
in-house promotional piece for Transcontinental Talent.[38] Industry was
founded by TCT's Ayman Ahmed El-Difrawy (aka Alec Defrawy, Dufrawy), ralph
Edward Bell, and Armand Kulpa (Trans Continental Talent's VP of Sales and
Marketing).[39][40][41] Notably, Ralph Edward Bell (Along with TCT's Jason
Hoffman) had already been in troble with the FTC regarding another modeling
agency scandal.[42] (The other websites that are hosted on the same server
as industrymagazine.com and the used attorney in the trademark case (Alex
Finch), show Defrawy's current involvement with 'Toospoiled', 'Good Grades
Now' and 'Ask America', owned by Internet Solutions Corp.[43][44])
The New York State Consumer Protection Board did issue a consumer alert
about the then named WSN/TCT due to many consumer complaints.[45] The CBP
issued a statement in 2003 that this was the largest example they had found
of a photo mill scam. In the same statement, State Senator Charles Fuschillo
Jr. said, "By targeting the young, hopeful and innocent of our state, these
'agencies' try to make a quick, dishonest dollar and that is
unacceptable..."[46]
In 2003, the San Francisco labor Commissioner declared that the company was
acting as a talent agency and that it's practice of collecting money
up-front was a violation of California law. The San Francisco District
Attorney's office along with agencies in Florida, Hawaii, and Massachusetts
were reported to be investigating. [47]
Also in 2003, a walkout of key firm members El-Difrawi and Ralph Edward Bell
led to the theft of some credit card numbers of the company's customers.
Although it is unclear who took the numbers, charges started appearing which
were traced to Eyemodel, a new modeling company started by Bell and
El-Difrawi.[48]
In Florida about 2,000 complaints were filed with the then Attorney General
Charlie Crist and the Better Business Bureau. A lawsuit was in preparation
by Assistant AG Jacqueline (Jackie) Dowd, as a result of a two year
investigation. The case never made it to court. A few months after Dowd's
unexplained replacement by John MacGregor, the inquiry was discontinued
because in MacGregor's opinion the probe was unable to find quote, "any
substantial violations," and the company was bankrupt - leaving no deep
pockets to collect damages from."[49][50]
After WSN's questionable bankruptcy, a civil case was filed in which
Pearlman was accused of conspiracy and bankruptcy fraud. "Plaintiff is
informed and believes that defendant Fashion Rock was created . . . for the
avoidance of certain liabilities, including liability to plaintiff."
In 2004 Pearlman started an aggressive campaign against some websites that
contained criticism (both facts and opinions) of his companies methods of
talent scouting. To "attack critics" more than a dozen sites were erected by
then Fashion Rock CEO Mark Tolner [4] and by Fashion Rock business model
creator Alec Defrawy ("The Bureau of Ethical Internet Commerce" [5].
[51][52]
By June 2004 Fashion Rock, LLC filed a civil suit for defamation against a
number of individuals and companies (the alleged "group of criminals").
According to the Orlando Business journal this was done after Orlando City
Council member, Vicki Vargo questioned TCT's practices and whether the city
should award Pearlman incentives to move his business to Church Street
Station.[53] No evidence was ever presented by Fashion Rock. Defendants
alleged the suit was frivolous, and only meant to harass and to hurt them
financially. The cases against co-defendants Bill Rosenberger, Les
Henderson, and Roberto Villasenor were dismissed. Consequently the whole
case was closed. No reasons for the dismissal were revealed by the Court.
[54][55][56]
Canadian anti-consumer-fraud expert Les Henderson filed a libel lawsuit
against Pearlman, Tolner, El-Difrawi, Rene Chamberlain (Pearlman's Attorney)
and several others. The suit is in progress.[57][58] Henderson is the author
of the book "Under Investigation" about the talent scouting scandals and the
questionable way the now current Florida Governor Charlie Crist and his
office handled the case.[59][60]
Fashion Rock, LLC lived on until February 2, 2007 when Bank of America filed
a suit against the business.[61] The state shut the company down not more
than a week later.[62] In March the assets of Fashion Rock were sold to
Californian Alan Joelson company Camino Ventures[63] Their daughter company
Talent Rock Holdings, LLC continues to run talent scouting event Talent Rock
and its websites since April 2007. In October Talent Rock still used
"legendary music manager Lou Pearlman's multi-Billion dollar Trans
Continental conglomerate" as a point of sales.[64].
[edit] Ponzi Scheme
On November 14, 2006, WFTV.com reported that Frank Vazquez, Vice President
of Operations for the Trans Continental Companies, had taken his own life.
The article mentioned Florida state investigating a savings program offered
by the company. [65]
On December 17, 2006, the St. Petersburg Times wrote the savings program was
offering "high yield at no risk," and was presented as a way to participate
in a special deal for Trans Continental Airlines employees. Investors were
notified by Trans Continental Airlines that it stopped processing
withdrawals from its "Employee Investment Savings Account" and the company
wrote in a form letter to "anticipate a resolution soon after the first of
the year."[66] After getting sued by the state Office of Financial
Regulation, the company agreed to halt all sales, while denying the
charges.[67][68][69] The Florida Office of Financial Regulation then filed a
Complaint, alleging Pearlman had been operating a Ponzi scheme, using
falsified FDIC documents to lure investors.[70] Consequently several banks
and groups of private investors filed suits against Lou Pearlman for failing
payments on loans and investments.[71][72][73][74][75][76] In their suit
filed on December 28, 2006 Integra bank called Pearlman a 'deadbeat Ponzi
operator.' "While Pearlman's public persona is that of a man whose life
seems lifted from a Horatio Alger story--a life filled with glamour, glitz
and financial success beyond most peoples' dreams--Integra's recent dealings
with Pearlman and his first company, TCA, would indicate that this outward
mask conceals the fundamental economic instability more common to a Ponzi
scheme."
On January 22, 2007 The Orange County Sheriff's Office seized Pearlman's
1968 Gulfstream jet and turned it over to the First International Bank &
Trust.[77] "Two additional loans--each for $10 million--were to be used to
build an entertainment complex and develop three television shows with MTV,
among other endeavors." On January 27, 2007 some Trans Continental employees
were laid off and office equipment was seen being removed from Trans
Continental headquarters in Downtown Orlando.[78][79]
In February of 2007, Florida regulators announced that Pearlman's Trans
Continental Savings Program was indeed a massive fraud and the state took
possession of the company. 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." The court ordered receivership
froze company assets as the state investigation continued. Pearlman was
reported to be in Germany or Israel.[80][81][82]
Soon after claims have grew to more than $130 million, not including the
previous $33 million judges had recently ordered him to pay on previous
lawsuits. But according to Pearlman's letter to the Orlando Sentinel the
claims of Florida state, the banks and the investors were nothing but
lies.[83] "I know a lot of people come at me, as a deep-pockets theory," he
said then. "The more successful you get the more lawsuits you get,
unfortunately."
By February 6, 2007 there were more than $317 million in claims at that
point.[84] That figure later grew to $500 million [85] Due to Pearlman's
dealings, several banks, as well as individual investors, may be out
millions of dollars. North Dakota banks may lose more than $20 million in
soured loans. At least two banks already have filed lawsuits.[86]
The investigators then took control of Pearlman's Trans Continental company
website and began using it to convey information to investors and media. The
amount of missing money was reported to be one of the largest in Florida, if
not the United States, for a Ponzi Scheme.[87] It was soon revealed,
according to records filed by the Office of Financial Regulation, that many
of Pearlman's misrepresentations had first been brought to the attention of
authorities almost a decade before.[88][89] A federal investigator suspected
as early as 1995 that Lou Pearlman's investor program might not be as secure
as the mogul claimed--and asked Florida officials to investigate. But
despite that and other red flags raised in 1999, 2001 and 2004, government
authorities did not seek to shut down the Orlando-based investment program
until late last year. The local alt weekly Orlando Weekly was not pleased,
having blown the whistle on Pearlman several times in the past years.[90]
"Old news, amigos. We told you three years ago that Pearlman was a corpulent
pusbag who would rip off anybody and anything within reach of his scaly
appendages. But did you listen? No, you did not."
On February 15, 2007, the Federal authorities served a warrant on Pearlman's
companies, conducted by various agencies, the state of Florida, FBI, the
IRS, and the FDIC. Some of Pearlman's attorneys filed a court motion to
withdraw from representing him.[91][92][93][94] "Pearlman's property manager
has stayed on to continue paying utility bills and such, but told Eyewitness
News he has not been paid for three months. He also said that Pearlman's
company intercepted the most recent rent payments from the tenants there and
disappeared with that money." In February, Pearlman's home was put up for
sale[95] Shortly after, Pearlman officially resigned from Trans Continental
Airlines. [96] FF Station LLC, Lou Pearlman's company that owned Church
Street Station, filed for Chapter 11 bankruptcy protection.[97] Ten more of
his former companies were put under the control of a court-appointed
administrator to protect any remaining assets. The receivership now included
Trans Continental Airlines, Trans Continental Airlines Travel Service and
Trans Continental Enterprises, Louis J. Pearlman Enterprises, Trans
Continental Records, Trans Continental Talent, Fashion Rock, Trans
Continental Travel Service, Trans Country music Group, Trans Continental
Studios, Trans Continental Aviation, and Aegis Consulting.[98] Two auctions
selling Lou's assets were later held in July and August of 2007. The small
profits (both about $300,000) were used to begin paying back investors.[99]
On March 27, 2007, Soneet R. Kapila was appointed Chapter 11 Trustee of the
bankruptcy estates of Louis J. Pearlman and Trans Continental Airlines, Inc.
in the United States Bankruptcy Court, Middle District of Florida, Orlando
Division by Felicia S. Turner, United States Trustee, Region 21. The
Bankruptcy Court signed the order on March 30, 2007. [100]
Pearlman was arrested in Indonesia on June 14, 2007 after being spotted by a
German tourist couple.[101] Pearlman was then indicted by a federal grand
jury on June 27, 2007.[102] 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.[103] Pearlman
requested, and was granted, a delay in the start of his trial. Pearlman's
trial is now scheduled to begin on March 3, 2008.[104] Other criminal
indictments are expected to follow. A civil lawsuit currently in progress
also faults Governor Charlie Crist. The suit alleges that he delayed or
interfered with investigations as attorney general at the time.[105]
Radar Magazine obtained a brief exclusive interview with him which they
published in their October 2007 issue. According to the interview, Pearlman
sees himself as unfairly represented in the media (but unable to legally
talk), bragging on past achievements, developing new acts, and still getting
a profit off the Backstreet Boys.[106] "I'm planning on this chapter ending
soon....This is just one of those hurdles in life that you have to get
past....I mean the Backstreet Boys are about to get going again. They had a
band member quit, but they're about to stage a comeback...we are still
entitled to a share of the revenue." Through friends, Pearlman has denied
all allegations and claims to be set up. He promises to find the real
culprits as soon as he can get out of jail on bond.[107]
YEAH, JUST LIKE OJ HAHA
You're missing reading comprehension.
[edit] Controversies
[edit] Boy Band Scandals
There is no standard musical percentage in the music industry, though the
average figures run about 25% to the record label, between 15% and 25% for
management and another possible 15% to an agent. Musicians usually get 8 to
10 cents on the dollar, writing credit, and performing credit, and
merchandise and tour sales are usually their own to split with a
promoter.[15]
Pearlman was paid as a sixth member of the Backstreet Boys.[16][17]
All musical acts (US5 is currently the only exception) who have worked with
>
I guess she didn't realise that 99% of the people up there are not jews lol
It was never my intent to hurt anyone or to spoil
> their holidays. In view of the public outcry, I hereby rescind my
> request." -
Don't worry Bonnie, we'll remember this when those Hasid towns want to bar
non jews from living there while living off gentile taxes, welfare and food
stamps.
We'll also "remind" those Yeshiva farm complexes that they have failed to
pay their property tax for 10 years and then tried to weasel out of paying
:o)
Keep up the good work Bonnie, you're a credit to the jews.
>
> See: Manger Scene Stays In Hyde Park
>
>
>
> CHRIST HATING JEWS are liars. Just look at what Meadow said with her tail
> hanging between her legs: "It was never my intent to hurt anyone or to
> spoil their holidays."
>
> Now that's a lie if I ever saw one! For it was indeed her intent and all
> the Christ-hating Jews' intent to destroy Christianity in whatever form it
> is publicly expressed throughout America.
>
> Do we all see here that the only language these Christ-hating Jews
> understand is the language of force? This is why all of us must be very
> vocal in telling these Christ-hating Jews: "That's enough Jews. Your
> Christ-hating agenda has now come to an end!"
>
> Why do I say that the Christ-hating agenda of the Jews "has now come to an
> end?" Because the Jews simply do not know when to stop their obnoxious,
> obsessive ways.
>
> Have we not all at some point in our lives experienced the pushy Jew? And
> how did we react? But now all of America is experiencing the pushy Jew!
> And how is America going to react? I think we all know the answer.
>
> Brother Nathanael.Street Evan
> go fist your butt buddy ('( ' /' ')
> \
> )
> '\' _.7'
> \ (
> \ \
>