Lou Pearlman, the manager and music executive who assembled boy bands including the Backstreet Boys, ’N Sync, and O-Town before being convicted of conspiracy and money laundering for running a Ponzi scheme, has died in prison, Billboard reports. He was 62.
Music was Pearlman’s third career: He began in aviation. His first company provided helicopter taxi services; next he founded Airship International, a blimp-leasing business. Pearlman’s first blimp, in the pre–Airship International days, was painted gold and leased to Jordache Enterprises, but the gold paint got too hot and caused the blimp to crash in 1980. Its replacement saw a tour of duty as the McBlimp for client McDonald’s before landing the MetLife contract but eventually ran into a tornado in Texas. “I’ve always just loved blimps,” Pearlman told a reporter in 1987.
The blimp business brought Pearlman to Orlando, Florida, where he secured Sea World and Pink Floyd as clients before more blimp crashes brought the company down. But by then Pearlman had started a second career as a fraudster, embroiling the company in a pump-and-dump scheme, allegedly paying commissions to a Queens-based boiler room that kept the company’s penny stock price high so he could unload it. As the blimp firm went under, Pearlman, inspired by memories of a plane boy band New Kids on the Block had chartered from him, decided to move into the music industry. Starting with a classified ad, he built a boy band empire that started with the Backstreet Boys, crafting a formula designed to appeal to preteen girls. Other Pearlman acts included ’N Sync, Aaron Carter, Innosense, and O-Town—that last group created on MTV’s reality show Making the Band.
But Pearlman’s music career, too, was built on shady foundations, and he was sued by every act he managed except one in the late 1990s. The Backstreet Boys alleged that they’d only made $300,000 on $10 million in revenue—the rest had gone to Pearlman. In 2002, Pearlman purchased online talent agency Options Talent Group, which supposedly maintained a database of models for use by casting companies. Models paid to be included in Pearlman’s “talent scouting” database, which led to fraud investigations, lawsuits, and few, if any, modeling careers.
Things finally collapsed for good in 2006, when Pearlman was charged with bank fraud for running a more-or-less nonexistent company called Transcontinental Airlines. Pearlman secured loans to both the company and himself with forged financial documents from the also nonexistent accounting firm of Cohen and Siegel; instead of the 41 airplanes documents showed, he had only three, none owned by Transcontinental. Simultaneously, investigators discovered Pearlman was running a traditional Ponzi scheme: Transcontinental’s nonexistent employee investment savings account for its nonexistent employees. Outsiders were allowed to invest in the plan, which promised high returns while funneling money to Pearlman. His estimated take was more than $300 million. Pearlman fled to Indonesia before being recognized by a tourist and apprehended. Shortly after his arrest, Vanity Fair published an article outlining his schemes and alleging sexual improprieties with the young men in his boy bands, a charge Pearlman always denied. He pleaded guilty to conspiracy, money laundering, and presenting a false claim in bankruptcy court and was sentenced to 25 years in federal prison. He died there on Friday.
