Pearlman Pleads Guilty To Fraud
Former Boy Band Manager Confesses to Alleged Crimes
Lou Pearlman, the man credited with discovering The Backstreet Boys and 'N Sync, plead guilty on March 13th to conspiracy, money laundering and making false statements.
Guilty Plea, creator of boy bands like ‘N Sync and the Backstreet Boys, is facing up to 25 years in prison and a $1 million fine after pleading guilty to charges of conspiracy, money laundering and making false statements during a bankruptcy proceeding. Pearlman’s plea made in an Orlando courtroom on Thursday, March 13th came after allegations that he swindled over $300 million from investors and banks.
Lou Pearlman
The hearing lasted 50-minutes on Thursday and was presided over by U.S. District Judge G. Kendall Sharp. During that time, Pearlman, after pleading guilty, also confessed to the lies he told his investors in the past. These confessions included owning up to only two airplanes as opposed to the 41 planes he claimed to have. He also acknowledged that he didn’t have the German investment partner he promised who had $50 million in bailout capital. He set up a fake accounting firm to create business documents and tax returns and used the signature of a former associate by the name of Harry Milner, who died in 2003, to push off anyone seeking repayment. He also promised to help prosecutors locate coconspirators and any remaining assets, though he was unable to say where the money that he spent went.
The Arrest
Pearlman was arrested in Indonesia in July 2007, being taken into FBI custody after Indonesian authorities tracked him down. Days before his arrest, $200,000 worth of boy band memorabilia was auctioned off in Florida to help pay back some of the 1,000 investors he‘d swindled. Pearlman had been out of the country since January 2007, promoting his latest boy band, US5 on a European tour.
What Pearlman is Guilty Of
Pearlman mainly scammed his investors by selling stock in companies lacking in assets for over 20 years. He also had an employee investment savings program set up, promising high yields to its investors. The money that came in from these two schemes was then put into one account that Pearlman used on other projects.
Other Financial Troubles
Even worse news for Pearlman is that his lakefront mansion in Orlando will go through foreclosure. After the hearing, the bank decided to foreclose on the $5.8 million mortgage, deciding whether to sell, auction or hold the home until the market improves. The house was put up on auction last weekend, but the highest bid it received was $3.75 million. The U.S. Bankruptcy Court has refused to sell it for no less than $5.2 million. In the meantime, Pearlman’s sentencing date is set for May 21st.
