Former American record producer, Lou Pearlman, the manager behind successful 1990s boy bands such as Backstreet Boys (BSB) and NSYNC, died in prison aged 62 last Friday. Pearlman was serving a 25-year sentence for a $300m fraud through a Ponzi scheme.
A Ponzi scheme, also known as Ponzi game, is a form of fraud in which investors are convinced to put money into a nonexistent enterprise. The scheme is named after Charles Ponzi, an Italian businessman and con artist, who became notorious for using the technique in 1920.
In 2006, an investigation unveiled that Pearlman was heading one of the largest and longest-running Ponzi schemes in history. After being arrested, he pleaded guilty to conspiracy, money laundering, and making false statements. He began his prison sentence in 2008, with a projected release date of March 24, 2029.
While incarcerated, he suffered a stroke in 2010 and his health continued to deteriorate since then. He died at the Federal Correctional Institution in Texarkana, Texas, on August 19, 2016. The cause of death is still unknown.
Pearlman entered the music business in 1993
Pearlman, fascinated with the boy band New Kids on the Block, founded a music label called Trans Continental Records to mimic their musical and merchandise success. He launched a $3 million talent search and signed five unknown performers whom he decided to call Backstreet Boys.
The BSB went on to become the best-selling boy band of all time, selling 130 million records including gold, platinum, and diamond certifications in 45 different countries. Pearlman repeated the feat with NSYNC, another very successful boy band which sold over 55 million records globally.
Other boy bands managed by Pearlman were O-Town, LFO, Take 5, Natural and US5. Further artists signed to his Trans label were girl group Innosense, Aaron Carter, Jordan Knight, Smilez & Southstar and C-Note.
Pearlman ripped off investors and musicians alike
All the artists that worked with Lou Pearlman ended up suing him and his company for one reason or another, and they all won.
The BSB were the first to file a lawsuit claiming Pearlman and Trans made millions while they received only $300,000. NSYNC and pop star Aaron Carter soon filed lawsuits for similar complaints. All cases were settled out of court and ended with a confidentiality agreement between both parties.
But Pearlman’s shady business was finally discovered in 2006 when investigators revealed he had conned investors for more than $300 million. He did so through inexistent companies Trans Continental Airlines Travel Services Inc., Trans Continental Airlines Inc., and Trans Continental Savings Program. The former music mogul was serving a 25-year sentence at the time of his death.
Lou Pearlman leaves a bittersweet legacy
In spite of all this, Lou Perlman was the man that gave many famous artists an opportunity in the show business. Lance Bass, a member of NSYNC, said although Pearlman wasn’t a stand-up businessman, without him, he wouldn’t be doing what he loves.
Source: TMZ.com