Financial Felons: Lou Pearlman

Posted Nov 20th 2008 2:10PM by Trey Thoelcke
Filed under: Law, Scandals

This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.

Back in the 1990s, Lou Pearlman was a well-know boy band mogul and talent scout, handling such talent as the BackStreet Boys and 'NSync. But in 2006 it became clear that Pearlman had perpetrated one of the biggest and longest running Ponzi schemes in American history.

It all started with a fake travel agency and grew into a complex enterprise comprised of many entities, funded by millions from banks and investors. The state of Florida, the FBI, the IRS, and the FDIC all took part in investigations. In 2007, Pearlman's attorneys filed suit to withdraw from representing him and Pearlman's assets were seized and his companies put into bankruptcy. Pearlman fled the country but was arrested after being spotted in Indonesia. He was promptly indicted by a federal grand jury on charges of bank fraud, mail fraud, and wire fraud.

With a year like that, he easily made BloggingStocks' list of Money Losers of 2007.

In March of 2008, Pearlman entered a plea of guilty, and in May he was sentenced to 25 years in a federal prison and ordered to repay $300 million to investors. A U.S. District Judge offered to reduce the sentence by a month for every million dollars Pearlman helps a bankruptcy trustee recover, but it's unclear whether any money remains. Pearlman may have spent most of the millions propping up his schemes.

Pearlman has denied all allegations and claims that he was set up. He has also promised to find the real culprits as soon as he is released from jail.

Tags: boy bands, financial felons, Lou Pearlman, Ponzi schemes