TMCnet News
Mogul _ wherever he is _ watches his carefully crafted empire fall apart(Orlando Sentinel, The (FL) (KRT) Via Thomson Dialog NewsEdge) ORLANDO, Fla. _ Sitting among glitterati such as Pierce Brosnan, Lionel Richie and Nicolas Cage, a stone-faced Lou Pearlman watched his latest and possibly last moment of triumph play out in a recent German awards show. His boy band US5 bounded across the stage of a Berlin theater to receive the Goldene Kamera "Pop International Band" award. Singer Jay Kahn interrupted his German-language acceptance speech to declare, "Lou Pearlman, we love you baby!" It was a shining moment of fame _ the kind his friends say he has chased his entire life. Yet in the seconds that German TV recorded him _ at least as the shots were replayed on the Web site YouTube _ Pearlman didn't even smile. The night was Feb. 1. A day later, an Orlando judge ordered the seizure of his corporate flagship. Within weeks, the FBI swarmed his Lake Butler, Fla., mansion and downtown Orlando offices. His career of blimps, charter planes, real estate and pop music was buried under staggering lawsuit claims and criminal probes. Not long ago, Louis J. Pearlman, 52, was a sought-after Orlando celebrity, known for acts ranging from the Chippendales to the Backstreet Boys. Now investigators allege the entertainment mogul ran an investment scam on the side that drained the life savings from hundreds of people, taking in more than $317 million. A federal grand jury has convened, though no indictments have been announced. "It's a devastatingly tragic series of events," said old friend Frank Sicoli. "Shocked? Absolutely." Others, in disbelief, await a different version of events. "He's done some things that may look completely questionable," said developer Kevin Azzouz, a neighbor. "But I'm not sure what's attributed to him as purposefully fraudulent behavior can actually be attributed to him." Since the Berlin show, Pearlman's whereabouts are a public mystery. He has reportedly been sighted in Panama, Spain, Israel, Switzerland, Belarus and Russia. A lawyer told a judge Pearlman sent paperwork with a Bali, Indonesia, return address. "I wonder all the time what's going through his mind," said cousin Jerry Garfunkel, who recalls annual Passover Seders he spent with Lou. "He was nothing like what he's turning out to be." Pearlman was born to working-class parents in Queens, N.Y., the only child of Herman and Reenie Pearlman. He was a laundryman. She worked in a pet store. As a child, Pearlman was friendly, smart and ambitious, always making money, selling lemonade, delivering papers, baby-sitting, giving guitar lessons. Music was his passion. From a young age he idolized cousin Art Garfunkel, who hit the big time with Paul Simon. Pearlman wanted the same and tried a similar act with friend Bob Curiano. "Lou had dreams, but he wasn't as musically inclined as he'd like to be," Curiano said. "That became his reality check." Pearlman's talent was making business contacts, Curiano said, noting Pearlman always had an entourage. "Lou was a likable guy ... he was able to get people to rally behind him." In the mid-1970s, Pearlman got a bachelor's degree from Queens College in New York, studying accounting. As a boy, he also came to love blimps, watching, from his family's apartment window, the Goodyear blimp tie down at the Flushing Airport. As a teenager, he got a job on the Goodyear blimp crew there. By the late 1970s, he forged a partnership with German dirigible tycoon Theodor Wullenkemper. In the early 1980s, Pearlman founded his own blimp advertising company, along with a travel agency called Trans Continental Travel Services and a charter airline. Seeking better weather, he moved his blimps to Kissimmee by 1985. Soon, he signed McDonald's, MetLife and SeaWorld as clients. Flush with success, he bought a 6,000-square-foot home in 1988, then moved most of his business to Orlando, persuading many New York friends to join him. In the late 1980s, he also began his company's "employee savings investment account" program. It became the conduit for hundreds of millions of dollars from 1,800 investors _ and the main source of Pearlman's current scandal. In the 1990s, his blimp business deflated. Another company lured away MetLife, a windstorm destroyed his Pink Floyd blimp and a Gulf Oil blimp that his company flew crashed. Company stock fell from $6 to about 3 cents. It shut down. By then Pearlman had turned to his other passion: music. He was inspired, friends said, by the band New Kids on the Block, convinced that there was room for a fresh act as that band got older. Pearlman enlisted Gloria Sicoli and other friends in the music business to help him launch boy bands that mixed singing, dancing and good looks to drive young girls wild. Backstreet Boys debuted at SeaWorld in 1993 but fell flat in the U.S. In Europe and Asia, though, they were a hit. When Backstreet returned to the U.S. in 1997, the debut American album sold 14 million copies _ the same as Art Garfunkel's biggest album, "Simon & Garfunkel's Greatest Hits." Four other Backstreet albums went platinum. Two hit No. 1 on Billboard magazine's charts. `N Sync was Pearlman's next ace. "No Strings Attached" sold 2.4 million copies in one week in 2000 _ the only CD to ever top 2 million in a week, said Billboard's director of charts, Geoff Mayfield. The band almost did it again with "Celebrity," in 2001. In 1999, the bachelor, who has no children, traded up for an 11,000-square-foot home on Lake Butler. He also picked up condos near the Mall at Millenia and International Drive, a waterfront condo in Clearwater, a couple of Las Vegas penthouses, a Hollywood bungalow and a New York City apartment. He built state-of-the-art studios in Orlando, attracting more stars, such as Britney Spears, Matchbox 20 and Alicia Keys. He formed production companies to put out television shows such as Making the Band on ABC and movies such as the 2000 flop Longshot. And as he molded teen heartthrobs of boys such as `N Sync's Justin Timberlake, Pearlman made a celebrity of himself. He became "Big Poppa" _ the paternal, portly, unhip-looking "Idol Maker," as "60 Minutes" dubbed him. "When you met him, he came with a smile. He was charming," said Maurice Starr, who created New Kids on the Block. "Whenever I was with him, he was enjoying his life." It was the same charm investors say persuaded them to give Pearlman their money. Despite his celebrity, he always found time to court investors. He would call them, chat up their lives and make them feel special. Like family, many said. "He was such a good salesman. He was so congenial," said James Lee VanFossan, who invested $1.85 million that is now missing. "He really duped me." (EDITORS: BEGIN OPTIONAL TRIM) A one-time Democrat, Pearlman began supporting Republicans for national offices in the late 1990s and became a Republican in 2004. Since 1997, he and his companies contributed $18,850 to Republican congressional campaigns. Since 2004, they gave $22,500 to Republican state campaigns. (END OPTIONAL TRIM) The teen-music boom in the U.S. soured after `N Sync, and the next few acts, including Pearlman's Take 5, innosense and O-Town, saw fair to poor sales, Billboard's Mayfield said. Concerns began to emerge about Pearlman's business. In the late 1990s, his blimp and music companies drew a flurry of breach-of-contract lawsuits. Backstreet Boys and `N Sync sued, complaining they got virtually none of the money the bands made. They settled out of court for undisclosed terms. In interviews, Pearlman called the suits family spats. "In any family, it becomes a little dysfunctional," Pearlman told The Orlando Sentinel in 1998, referring to the bitter Backstreet suit. "It's important to explain to the whole world this is an amicable situation." (EDITORS: BEGIN OPTIONAL TRIM) There were no amicable deals for Pearlman's third band, Take 5. In 2001, Merrily and Mark Goodell, parents of Take 5 singers Ryan and Jeff "Clay" Goodell, and Steffanie Christofore, mother of T.J. Christofore, complained to Florida officials that Pearlman violated child-labor laws. They said Take 5, like Backstreet and `N Sync, made millions of dollars overseas with platinum European album sales, packed shows, merchandise and endorsements. For a couple of years, Merrily Goodell said, "They were on magazine covers all over the world." But all they were ever paid was living expenses and "pocket money," she said. She and Christofore said Pearlman forced the boys to work long and late hours for weeks on end, often put them in unsupervised situations and sometimes did not provide required tutors. Jeff and T.J. were 13 when the band formed. The oldest, Ryan, was 17. The American release of their album sold poorly, and Take 5 broke up in 2001. "I think the man belongs in jail, just based on what he did to Take 5 alone," Merrily Goodell said. "The other groups tried to speak out. Backstreet. `N Sync. All of them tried to say what was going on." In 2002, the state dismissed the child-labor complaints, concluding in a report that the boys were contractors, so Trans Continental "is not subject to the requirements of the child labor law." Jane Carter, mother of Backstreet Boy Nick Carter and solo artist Aaron Carter (also in Pearlman's stable), said the Backstreet Boys had similar experiences. "We didn't know anything about the music industry. We were parents. We were star-struck," she said. "The kids were just happy to have all these fans adore them. He would buy them watches. He would give them a lot of presents. I'd say, `Enough of the ... presents. Let's see some cash _ and some accounting.'" (END OPTIONAL TRIM) Boy-band disputes were not Pearlman's only growing legal problems. In 2002, the Wilhelmina Scouting Network recruited prospective fashion models and entertainers, telling them they had the "look" and Wilhelmina could get them noticed. Clients paid about $1,000 upfront. Hundreds complained of getting no service, so the Florida attorney general, first Bob Butterworth, then his successor, Charlie Crist, explored claims of misrepresentation and deceptive advertising. Pearlman bought the company in the midst of the probe. He then created a new company, Fashion Rock, which bought out Wilhelmina's client lists and began similar services. Wilhelmina then went bankrupt. State investigators simply turned their probe to Fashion Rock. In early 2004, Florida's assistant attorney general overseeing the case abruptly resigned, and the state eventually closed the case. (EDITORS: BEGIN OPTIONAL TRIM) By 2003, Pearlman set his sights on Orlando's Church Street Station, a specter of the tourist mecca that drew visitors in droves in the 1980s. He and partner Robert Kling proposed a $12 million revitalization. The city quickly approved a deal with a $1.5 million city-redevelopment loan, tax rebates and 500 free parking spaces. But within a year, construction slowed, contractors complained about not being paid, and Pearlman and the city traded blame. Though he moved his corporate offices there, much of the Church Street Station complex remained more vacant than revitalized. And Pearlman started looking for money everywhere. (END OPTIONAL TRIM) Starting with a March 2003 loan, he went on a financing binge through banks across the country, according to various lawsuits. He leveraged his companies, his home, his condos, Church Street, his planes, his studio, jewelry, even his royalty interests in the boy bands. He pulled more than $156 million in cash and credit from his properties through at least 13 deals. Now those deals are collapsing. In his absence, foreclosures, court-ordered seizures and court-approved auctions are moving swiftly. Fashion Rock already has been sold. His Rolls-Royce car and Gulfstream jet have been repossessed. Soon, there may be little for Pearlman to come back to claim _ except perhaps his innocence and integrity. "I think Lou's crying somewhere," his friend Curiano speculated. "I don't think he's somewhere laughing with a pile of money." ___ (Orlando Sentinel correspondent Katy Moore contributed to this report.) (EDITORS: STORY CAN END HERE) ___ THE LIFE AND TIMES OF LOU PEARLMAN 1950s Pearlman grows up in a poor neighborhood of Queens and begins forging relationships with neighborhood kids, who later work for his companies. June 19, 1954: Louis J. Pearlman is born to Herman and Reenie Pearlman in New York. 1960s Young Pearlman grows up fascinated by blimps and idolizing his cousin, music legend Art Garfunkel. 1964: Pearlman sees his first blimp, at age 10. 1970s Pearlman goes to Queens College and studies accounting. He tries his hand at music and first enters the blimp business. 1980s Pearlman expands his business empire and brings some of it to Central Florida, including his blimps. His parents, to whom he was deeply devoted, die within several years of each other. 1987: First known investments begin trickling into the Trans Continental Airlines "employee investment savings program." 1990s Pearlman moves most of the rest of his business operations to Orlando. He gets back into the music business as the first red flags start popping up regarding his savings program. Two of Pearlman's bands sue in a contract dispute. 1993: Pearlman launches the Backstreet Boys. 1996: Pearlman launches his second hit band, `N Sync. 2000s State investigates, clears Pearlman's modeling program. Pearlman begins a downtown-revitalization effort in partnership with Orlando. In 2007, with his companies suffocating under debt, lawsuits and criminal probes, Pearlman leaves the country. 2000: Making the Band debuts on ABC, leading to the creation of the band O-Town. 2003: Pearlman arranges a deal to revitalize Church Street Station. February 2007: State persuades a judge to seize Trans Continental Airlines' offices, books and assets. SOURCE: Sentinel research ___ (c) 2007, The Orlando Sentinel (Fla.). Visit the Sentinel on the World Wide Web at http://www.orlandosentinel.com/. Distributed by McClatchy-Tribune Information Services. _____ ARCHIVE PHOTOS on MCT Direct (from MCT Photo Service, 202-383-6099): Lou Pearlman PHOTOS (from MCT Photo Service, 202-383-6099): LOUPEARLMAN For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. Copyright 2007 The Orlando Sentinel |