90’s Nostalgia The 90s were a magical time filled with mom
jeans, frosted tips, and, of course, boy bands.
The phenomenon took the music industry by storm and dominated pop culture for much of
the decade.
But not many people know about the mastermind behind it all.
His name is Lou Pearlman, and he was responsible for the most iconic boy bands of all time.
But there was an ugly side to the glitz and glam of the boy band craze.
While Pearlman was bringing together groups such as the Backstreet Boys and NSYNC, he
was also engineering the longest-running Ponzi scheme in US history.
Just how did Lou Pearlman keep his billion-dollar crimes hidden for so long?
Lil Pearlman Let's start at the beginning, long before
Pearlman became one of the most influential figures in the '90s music scene.
Lou was an only child growing up in Flushing, New York.
He spent a lot of his time with his childhood best friend, Alan Gross.
The two did everything together, but their favorite activity was watching the blimps
land and take off from Flushing Airport, located across the street from Lou's childhood home.
It was here that Lou's fascination with aviation, and more specifically with blimps, began.
In high school, the two friends took advantage of their position at the school newspaper
to hitch a ride on a blimp for the very first time.
As his early years progressed, another interest entirely started to take shape in Pearlman's
life.
Putting aviation to the side for a bit, he decided to focus on music.
It was only natural for Pearlman to take to the music business, as he just so happened
to be the first cousin of music legend Art Garfunkel, one-half of the iconic folk-rock
duo "Simon & Garfunkel".
His big cousin was a rich and famous musician, and he wanted that for himself, too.
His foray into the music biz started when he was a teenage band manager.
Humble beginnings indeed for the eventual creator of the '90s most legendary pop groups.
But it was far from easy at first.
Pearlman's lack of early success forced him to shift gears back to aviation.
As a freshman at Queens College, Pearlman's class projects involved creating a hypothetical
business plan.
He envisioned a helicopter taxi company that flew people around New York City.
He must have gotten a good grade on that project because he took the idea and ran with it.
He officially started the business in the late '70s with just a single helicopter.
Pearlman was beginning to flex his business muscles at this point.
The helicopter taxi service was a good start, but ever since he was a young kid, it was
blimps that he was most passionate about, and that had not changed.
He befriended a German businessman named Theodor Wüllenkemper and started picking his brain
about the production and operation of blimps.
He even flew out to West Germany to learn in Theodor's blimp facilities firsthand.
Crashing and Burning Pearlman took all the knowledge and expertise
he had absorbed and used it to launch his very first blimp venture.
He started Airship Enterprises Ltd. and planned to lease blimps to various companies to advertise
their brands.
There was just one problem: Pearlman didn't own a blimp.
That didn't stop him from signing a contract with Jordache that leased out Airship Enterprises'
non-existent blimp to the New York-based clothing company.
Pearlman took the money he received from Jordache and used it to build the blimp he had already
leased to them.
Though the order of operations here seems backward, it worked out pretty well for Pearlman.
That is until the blimp crashed shortly after he delivered it to Jordache, and after seven
years of hard-fought lawsuits, Pearlman was awarded $2.5 million in damages.
Indeed a scummy start to Pearlman's business dealings, but it was only just the beginning
of the shadiness that was to come.
Pearlman rebranded, starting a new company called Airship International.
He needed to raise $3 million to purchase a blimp for the business and did so by taking
the company public, claiming to partner directly with his old German friend.
In reality, Theodor had no association with Airship International.
He moved operations down to Orlando, Florida, in 1991, scoring deals with big-time companies
like SeaWorld and MetLife.
The business was thriving; Airship Stock had ballooned up to as much as $6 a share at one
point.
But the good times didn't last long.
One of their major clients ended their partnership, and three of their blimps crashed.
Shortly after, Airship International closed its doors.
It became clear in the years that followed that Pearlman's blimp leasing business wasn't
playing by the rules.
Pearlman grew very close to a stock trader named Jerome Rosen.
Rosen then started trading Airship International's stock when it was on the rise.
That wasn't a coincidence.
You see, Rosen was pumping and dumping shares of Airship stock.
For those who aren't fluent in stock trading, a form of securities fraud called "pump and
dump" entails "pumping" up a company's stock to seem better and more valuable than it actually
is to potential investors.
Once they've gotten people to take the bait, they "dump" the stock by selling it for much
more than they bought it for.
Rosen took part in this sleazy practice on Airship International's behalf for years before
the company ultimately went under.
Pearlman was paying him pretty well, with some accounts describing "tens of thousands
of dollars" per trade winding up in Rosen's pocket.
Lou Kid on the Block With a couple of failed blimp enterprises
under his belt, Pearlman made his return to music.
Inspired by the success of his cousin Art Garfunkle, Pearlman surveyed the landscape
of the music industry and identified one band, in particular, that was making serious 90s
waves.
The Massachusetts-based boy band, New Kids on the Block, had exploded onto the scene
in the '80s and managed to remain extraordinarily popular into the early '90s.
While boy bands had existed for decades by the time New Kids on the Block came around,
they reached heights of commercial success previously unheard of in the genre.
Pearlman took note.
He created his very own record company, Trans Continental Records, with one goal in mind:
duplicate the success that New Kids on the Block had achieved.
Easier said than done, but Pearlman was dedicated, and he struck gold with the label's first
group, the Backstreet Boys, in 1993.
The band was made up of five nobodies that Pearlman discovered after dropping $3 million
on a nationwide talent search.
Pearlman picked former New Kids on the Block manager Johnny Wright and his wife Donna to
manage his brainchild.
The rest, as they say, is music history.
The Backstreet Boys catapulted to new levels of popularity and commercial achievement,
quickly becoming the talk of the music industry and cultural icons in their own right.
To this day, they are the best-selling boy band of all time, and their impact on pop
culture in the '90s is undeniable.
Even today, the Backstreet Boys have managed to remain relevant, and in 2019 they became
the first boy band to top the charts in three different decades.
It seemed like Pearlman caught lightning in a bottle.
In 1995, he did it again.
Pearlman and the Wrights followed the exact formula to create another trendy pop group.
They called this one NSYNC.
The Justin Timberlake-led boy band propelled five more nobodies to the peak of stardom.
The group sold 70 million records internationally before calling it quits in 2002.
Though the band itself was short-lived, a few of the members, including Timberlake and
Lance Bass, went on to enjoy hugely successful careers in entertainment thanks to their time
as part of NSYNC.
Pearlman went on to manage several other successful groups under the Trans Continental umbrella.
These included LFO, Take 5, US5, and the girl groups Solid HarmoniE and Innosense, which
Britney Spears was briefly a part of early on in her career.
None of these groups were as big as Pearlman's two blue-chip boy bands, but they helped solidify
Trans Continental Records as a major player in the music industry.
The label was operating out of an expansive entertainment complex in Orlando that included
a recording studio for their artists.
New BBB - Brands, Bands, and Billions At this point, Pearlman looked like an absolute
genius.
He was the brains behind two of the most viral music sensations of the 1990s and helped many
other successful musicians gain footing in the ultra-competitive industry.
He was raking in the dough through his work at Trans Continental Records, and his lifestyle
resembled that of the rockstars he helped create.
Pearlman would often invite his young proteges over to his house for wild pool parties.
His mansion was otherworldly.
A member of the boy band O-Town, which Pearlman managed, said his estate "was like Disneyland."
A huge pool outfitted with the finest amenities, a private home theater for lavish movie nights,
even a luxurious boat decked out with his very own jet skis.
He would host his boy band apprentices at this massive estate for insane birthday parties
and unbelievably expensive celebrations.
Lou had fully committed to the showy lifestyle of a billion-dollar media mogul.
He was known by the nickname "Big Poppa," and he took a special interest in the young
teenagers that played in his bands.
He would put the kids through something of a "boy band Bootcamp," forcing them to practice
for hours on end in the hot Florida summer until they could perform to his liking.
His pursuit of fame and fortune knew no bounds.
He even presented one of his clients, Sean Van Der Wilt, with a fake gold record for
a song that hadn't even been released, let alone gone gold.
He thought the stunt would help increase sales and had no problem outright lying to an audience
of 10,000 people to bolster his bottom line.
If it hasn't become clear yet, Pearlman was not one to follow the straight and narrow
path.
He was willing to bend the rules and the truth if it meant he and his brand would benefit.
He proved this with his blimp business, and he continued to prove it as his career in
the music industry skyrocketed.
In 2002, he co-wrote an autobiographical get-rich-quick book called "Brands, Bands, and Billions."
Those were the tenets he lived by and the things he valued the absolute most in the
world.
It was a fast and loose way of living, but it was the only way he knew.
But like all who ride like lightning, Pearlman crashed like thunder.
No Strings Attached It seemed like everything was going swimmingly
for Pearlman and the successful boy bands he helped shape.
The Backstreet Boys had exploded up the charts, so too had NSYNC, and the two star-studded
groups were piling up the record sales for Trans Continental Records.
In the late '90s, however, Pearlman got hit with a heap of lawsuits, many of them from
the very bands he created, including the Backstreet Boys and NSYNC.
To the outside world, this was a bit of a shock.
Why would members of these mega-successful bands turn around and sue their manager?
Weren't they bringing in tons of cash off the back of their music sales as it is?
As it turns out, the bands were not being paid what they should have been.
Pearlman had been ripping them off, pocketing disproportionate sums of the bands' profits
and only tossing a few measly crumbs the musicians' way.
The groups Pearlman managed knew something was up.
As the members of NSYNC recounted, Pearlman invited them to a fancy dinner celebration
after the band had been out on the road touring their album for two years.
They received their first check that night.
The amount?
Only $10,000.
That's right.
The teenage musicians' reward for two years of tireless work and endless traveling was
a meager $10,000.
That calculated out to less than minimum wage for two years of labor.
The bands and their families were understandably outraged, and the lawsuits quickly followed.
Pearlman had filled the bands' contracts with complicated language that ultimately siphoned
a large portion of the money that should have rightfully gone to the musicians themselves
but instead was re-routed to Pearlman's bank account.
Except for US5, all of the artists who signed with Pearlman's record label ultimately brought
the pudgy producer to court over their unfair compensation.
Each one of those cases resulted in either the band winning the suit or the dispute being
settled outside of court.
Ponzi Pearlman If being buried in endless lawsuits wasn't
enough of a bummer for Pearlman, his whole music empire came crashing down in 2006.
The FBI had been investigating Pearlman's affairs at Trans Continental Records and the
label's parent company, Trans Continental International, Inc., which Pearlman also ran.
The feds, along with state investigators in Florida, had uncovered a massive Ponzi scheme
that Pearlman had been overseeing for more than two decades, making it the longest-running
such scam in the history of the United States.
How was he able to get away with it for so long?
The flash and glam of the boy bands Pearlman managed blinded the outside world to the shadiness
of Trans Continental's business practices.
It ultimately helped Pearlman run his scheme for over 20 years.
The scheme itself followed the familiar Ponzi formula.
Pearlman convinced outside investors to dump their money into his company by promising
grand returns.
His investor pool, largely made up of Florida retirees, was enticed by Pearlman's ability
to talk a big game.
Once the Backstreet Boys and NSYNC had gone supernova on Pearlman's watch, more and more
investors lined up to line his pockets.
However, what seemed like a once-in-a-lifetime investment opportunity was nothing but lies
and deception.
Shockingly, Pearlman's company didn't actually exist on paper.
He falsified financial documents and insurance contracts to ease investors' worries and even
fabricated an entirely fictitious accounting firm to take out loans from various banks.
Pearlman used new investments to pay existing investors, and the whole cycle went round
and round for years.
It's been estimated that Lou Pearlman defrauded a total of $1 billion from Trans Continental's
funders, and more than 300 million of that sum is still missing today.
Pearlman kept his circle of trust very tight, and many of the day-to-day employees that
worked for him had no idea that their boss was a criminal.
When the FBI came a-knocking, they were coming after Pearlman and two of his closest aides,
Michael Crudelle and Robert Fischetti.
Bye, Bye, Bye But Pearlman wasn't home to answer the door.
Big Poppa was long gone, having caught wind of the FBI's imminent arrival, and fled the
country as quickly as he could.
He first went to Germany to evade his would-be captors.
The FBI ripped apart every inch of his Orlando estate looking for evidence, money, and valuables.
But their search came up empty, and they didn't find a single thing worth using against Pearlman.
The feds then ransacked the Trans Continental offices, and everything started to make sense.
Pearlman's company was a total con on every level.
He had personally overseen every aspect of the large-scale scam, making phony documents
on fake letterhead himself.
Pearlman even took a picture of a model airplane and passed it off as a real one to convince
investors to fund Trans Continental Airlines.
You name it, he lied about it, and the feds now had plenty of material to build a strong
case against him.
They just had to find him.
He had disappeared into the wind, and investigators didn't have a clue where he was.
Fortunately for them, the search for Pearlman had made international headlines.
A German tourist in Indonesia had seen Pearlman's picture in the paper and swore he saw the
fugitive at his hotel.
That tourist eventually got connected with the FBI, and agents on the ground spotted
Lou eating breakfast at the hotel bar.
At the time of his arrest, Pearlman was down to his last $10,000, the same amount he had
once given NSYNC members for two years of touring.
He was running out of money, and he had just run out of time.
The End is Near Lou's company was forced to file for involuntary
bankruptcy shortly before his arrest.
Many of his high-priced possessions and boy band memorabilia were sold at auction to recoup
the money he owed.
He was sentenced to 25 years in federal prison on May 21, 2008.
The charges against him included money laundering and conspiracy.
While in prison, his health steadily declined.
He suffered a stroke in 2010 and was later diagnosed with a heart condition that required
open-heart surgery.
Just a few weeks after his operation, Pearlman went into cardiac arrest and died in federal
custody at 62.
He still had 13 years remaining on his prison sentence.
Pearlman’s Legacy The boy band mogul's legacy has lived on without
him, not only due to the continued success of the musicians he helped create, but also
because of the documentaries about his eventful life.
In 2019, a feature-length doc titled The Boy Band Con premiered on YouTube Premium after
a showing at South By Southwest.
The film takes an all-encompassing look at Lou Pearlman's life and the many scams he
took part in.
It was produced by none other than Lance Bass, a founding member of NSYNC, who also appears
extensively throughout the documentary.
As more and more details continue to be brought to light about Pearlman's unending lies, the
very nature of his work in the music industry has been called into question as well.
Some believe his nickname, "Big Poppa," was more than just an endearing pet name given
to him by friends.
There have been allegations that Lou was inappropriately involved with some of the young musicians
he groomed into superstars and that his grand pool parties were far from innocent get-togethers.
Whatever Pearlman's real motivation was, he was able to keep up the charade for longer
than anyone else in the history of American Ponzi scheming.
His prolific criminal activities have made him something of a legend in the years since
his capture.
The success of his brainchildren continues today, forever cementing the legacy of Lou
Pearlman in entertainment history, no matter how crooked and evil his legacy was.
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