Louis Jay Pearlman

Louis Jay “Lou” Pearlman is currently serving a 25 year prison sentenced for fleecing investors and lenders out of as much as $300 million in a classic Ponzi scheme using two fictitious companies he promoted, Trans Continental Airlines Travel Services, Inc. and Trans Continental Airlines, Inc. Pearlman’s downfall followed a colorful career that included a sometime successful record label, Trans Continental Records, which developed and promoted such noteworthy and successful bands as Backstreet Boys and *Nsync during the 1990s. However, Pearlman’s music successes were tainted by lawsuits filed by most of the bands he represented for fraud and misrepresentation. He also developed a talent search business, Trans Continental Talent, which ultimately filed for bankruptcy. Similarly, Pearlman’s prior efforts to develop a blimp leasing business, Airship International, also crashed and burned. Meanwhile, Pearlman lived a lavish lifestyle based in his Mediterranean-style mansion outside Orland, Florida. Pearlman’s Ponzi scheme reportedly spanned a 20 year period in which he promoted a “Employee Investment Savings Account" investment program which was backed by phony FDIC, Lloyds and AIG documentation as well as offering phony stock in the companies. Investigators finally caught wind of the fraud in 2006, began investigating and in December 2006, filed suit against him for offering unregistered securities. It turned out that the accountants and bank information he had provided were also phony. In February 2007, Florida regulators took control of his companies, but Pearlman had already fled the country in an effort to avoid facing possible criminal charges. Pearlman and his companies had some $317 million in obligations and virtually nothing in their bank accounts. The companies were forced into bankruptcy in March 2007 and assets were liquidated, including the property for his headquarters, which was sold for $34 million. Pearlman was ultimately arrested in Bali, Indonesia on June 14, 2007 and subsequently indicted on three counts of bank fraud, one count of wire fraud and one count of mail fraud. Pearlman cut a plea agreement deal, pleading guilty to conspiracy, money laundering, and making false statements and was sentenced to 25 years in prison on May 21, 2008. The judge reportedly offered Pearlman to take off one month of his sentence for every $1 million he helps recover. At that time, only $3.5 million of the $300 million had been recovered.