It’s a well-known cliché in music that managers of bands often screw them over. It’s been happening to all performers for hundreds of years. Right back to the 1800s. A rare site is when the manager gets their comeuppance. This is one of those instances where the manager does. This week the Beat Marches On to 5th March 2008 where Lou Pearlman pled guilty to fraud.
Lou Pearlman has been telling lies his whole life. Lies about a newspaper delivery network lies about who he knew, he just couldn’t stop. Perhaps one of the truths of his life is almost unbelievable. The fact that Art Garfunkel half of the 1960s folk duo Simon and Garfunkel is his cousin. This was his only musical connection.
When Pearlman started to con people, he didn’t start in music. He created an Airship company with a childhood friend. Inspired by watching them fly around at the 1964 World’s Fair the two friends were obsessed with Blimps from a young age. Their idea was to let companies advertise with their logos painted on the side of the blimp and fly around big cities. In fact, this advertisement on blimps was the first of its kind. But as we learn throughout this article when Lou Pearlman is involved there usually is some sort of scam.
When the airship company got their first big deal with Jordache jeans there was a problem. Quite a big problem. There was no Blimp to advertise on. Pearlman found a cheap blimp that was a third of the size of the industry standard. The company made some modifications to make it look bigger and painted it with heavy gold paint which was quoted as having actual gold in the paint.
Pearlman who loved being the centre of attention invited all the media outlets to the inaugural journey of their new Blimp. They saw the blimp take off from a park in New Jersey and travel a few hundred feet into some trees. Pearlman took out insurance on the blimp and netted three million dollars.
This mishap however did not stop the airship company, if anything it affected Jordache more than Pearlman’s airship company. They continued to rocket through the skies with deals with Metlife, McDonald’s and SeaWorld. By this time Pearlman had moved down to Orlando, Florida and had started to invest in other ventures.
Continuing in aviation the next venture for Pearlman was to lease private jets. This is as the story goes, remember he likes to tell a tall tale or two, he leased a jet to Boyband New Kids on The Block. He asked the manager “How can these boys afford to lease a jet?” The manager replied “These guys earned $200 million in sales and $800 million in touring” Pearlman replied “I am in the wrong business”
This sparked an idea for another business venture for Pearlman: Boybands. This was difficult to achieve in the USA as the popular music was grunge and alternative music with the likes of Nirvana, Pearl Jam and the Red Hot Chili Peppers. He was in the best place for finding the talent as Orlando and its many theme parks have plenty of wannabe performers who are dressed as Mickey Mouse or Donald Duck.
Pearlman held auditions for his boyband project in one of his airship hangers. These five eventual boys will become the Backstreet Boys. Once the boys were together in 1993, they went over a gruelling three-year schedule of dance routines, singing and touring. They struggled to get any attention in the USA but started to get attention in Germany eventually leading to a gold record in the country.
In 1997 the Backstreet Boys became international superstars, selling out arenas around the world and having multiple number ones. This gave Pearlman another idea. Let’s make a rival for the band.
The logic Pearlman had for creating a rival is similar to McDonald’s vs. Burger King, Coca-Cola vs. Pepsi and Marvel vs. DC. He was just beating others to the punch of creating a rival to the Backstreet Boys. It works in music too as in The Beatles and the Rolling Stones, Oasis and Blur and Take That and East 17 to name just a few.
Using the same audition process for the Backstreet Boys Pearlman found another five boys to become a rival band called, *NSYNC. He put them through the same process that he did with his first band and they rose quickly to fame.
The rivalry worked for Pearlman however Backstreet Boys didn’t like the attention that the new band was getting. Pearlman treated both bands as if they were family treating them to lavish meals out when he was with them and letting them stay in his house. There was one thing missing though. Neither band was getting paid.
After getting just $10,000 in three years of work the members of *NSYNC had a lawyer consult their contracts. The lawyer was frank and said it was one of the worst in pop history. The Backstreet Boys had the same too. It was so bad that it turned out that along with taking more than his fair share from the band he also put himself as the sixth member of each band. The bands took him to court.
Eventually, the two bands settled out of court. This won’t be the last time that former bands managed by Pearlman would sue him. Other bands that were not as successful as the first two such as LFO, C-Note and Take 5 would go on to sue Pearlman due to lack of royalties.
As the Boyband bubble was about to burst, he convinced TV channel MTV to produce a reality TV show called “Making the Band” using the same technique as the Backstreet Boys and *NSYNC with cameras. The result was a band called O-Town which did not affect the charts.
The money-making machine had stopped for Pearlman, but he had a plan. The plan had been set in motion quite a few years previously and it involved the aviation company he had before he even thought of Boybands. Now with the success, he had in the music industry he used this to his advantage to con people out of their hard-earned cash.
Pearlman had bought a lot of different companies with his boyband money. There was the Chippendales, TCPY frozen yoghurt franchises and the start of his downfall the Options talent agency. Later renamed Trans Continental Talents or TCT what Pearlman didn’t realise during his spending splurge was that the company was already under investigation for fraud.
To get rid of the charges Pearlman helped bankroll the next governor in Florida, Charlie Christ, and the charges were miraculously dropped. It started to get heads turning towards Pearlman’s investments.
Using the boyband influence, Pearlman attracted new investors to contribute to Trans Continental Airlines. He guaranteed them 100% returns on the investments. He dazzled them with falsified bank statements and documents from financial companies AIG and Lloyds of London. He made the customers, mostly retirees, feel like they were stupid not to take the deal.
It seemed quiet for a couple of years before some of the investors started to question why they were not seeing any profits. After trying to contact an unresponsive Pearlman the investors were getting suspicious.
After contacting the local newspaper, the St. Petersburg Times (now called the Tampa Bay Times) the investigation started. When the newspaper saw something wasn’t starting to smell right, they contacted the authorities and then the bricks started to fall one by one.
The whole web of lies and deceit had been unravelled. There wasn’t any Trans Continental Airlines. He didn’t own any aircraft. It was all a front. The pictures the victims had seen were of a model held up to the window of an airport. Now the FBI was involved and looking for Pearlman. Once he got wind that the Feds were on his tail, he cleared out his office and fled.
Pearlman was on the run for a few weeks, the trail ran cold for a little while and although they hadn’t given up looking for Pearlman, looking for someone who could escape to anywhere in the world was like looking for a needle in a haystack.
The investigative journalist at the Tampa Bay Times, Helen Huntley, kept getting sightings of Pearlman while searching for the con artist. Most of them led to nothing but there was one sighting in Bali, Indonesia by German tourists. Remember, Germany was where the Backstreet Boys achieved their first number one and of course, back then he wanted everyone to know this band was his creation. The chase was back on.
The Feds got to the hotel in Bali early in the morning. Thinking that being part of the music world and the reputation of people in the industry the agents thought they had time to have some breakfast. The tourists sent a photo to the agent overseeing the investigation back in the USA asking why they hadn’t they arrested him yet. He was sitting at a table alone eating breakfast. The detective looked at the picture and saw on the table next to Pearlman were the agents eating their breakfast! The detective made the call, and the arrest was made.
Lou Pearlman was sentenced to 25 years in prison in May 2008. The judge added a stipulation that for every million dollars he paid back to investors, he would get a month off his prison sentence. He didn’t pay anything back. He would live the rest of his life in prison. He died of a heart attack in 2016. Only 38 of the 2100 victims got any money back and they were only Pennies on the Dollar.
Pearlman stole over $300 million from good hard-working people over the years. To paraphrase one of the Backstreet Boys songs “As Long as You Love Me” It didn’t matter who you are, where you’re from or what you did, as long as you had money you were Pearlman’s best friend. It didn’t matter whether you knew him throughout his childhood or you met him 10 minutes ago.
What the con artist got away with within the music industry happened constantly It feels like every week I write a story involving a manager who tried to get away with conning the artists. But with the industry changing into the streaming age and artists being smarter on the business side of things it could be that Pearlman is one of the last.
The Beat Marches On is a music blog written by Jimmy Whitehead. Jimmy has been blogging for three years specialising in Sports (especially American Football). If you want to follow Jimmy on Twitter: @Jimmy_W1987
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No websites were used for research but there were videos on YouTube:
The Boy Band Con: The Lou Pearlman Story – YouTube
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