Lou Pearlman and Backstreet Boys via Dirty Pop: The Boy Band Scam
Lou Pearlman and Backstreet Boys via Dirty Pop: The Boy Band Scam (Photo Credit: Netflix)

Dirty Pop: How Was Lou Pearlman Caught for Running the Longest Ponzi Scheme?

The docuseries Dirty Pop: The Boy Band Scam was released on Netflix earlier this month. It chronicles the rise and fall of the disgraced American talent manager, Lou Pearlman. He was behind the biggest boy bands in the 1990s including the Backstreet Boys, *NSYNC, O-Town, and more. He also orchestrated one of the largest Ponzi schemes in history. The Netflix docuseries dives into Pearlman’s shocking crimes.

Per People Magazine, multiple lawsuits were filed against Pearlman during the late 1990s by the musical acts he managed, reported Forbes. The Backstreet Boys sued Pearlman in 1998 and alleged that Pearlman made $10 million while the band only received $300,000 since 1993. He was then ousted as the manager of the band. The following year, *NSYNC, too, filed a lawsuit against Pearlman. It resulted in the members of *NSYNC being given the right to control their name as Pearlman was let go as the band’s manager.

In addition to legal issues, Pearlman was also sued by the defense lawyer who represented him in Backstreet Boys and *NSYNC cases, reported Forbes. Cheney Mason claimed the talent manager owed him millions for his services, but the latter insisted he didn’t have the money. Pearlman was then ordered to pay $15 million to his ex-lawyers.

How was conman Lou Pearlman from Netflix’s Dirty Pop caught?

Per ABC News, investigators uncovered Pearlman’s long-running Ponzi scheme in 2006. The talent manager was using the success of the bands to lure investors to put money into his other businesses. Pearlman claimed that the businesses were under his corporation TransContinental. In addition to that, he even launched an investment scheme for the investors. Pearlman promised them substantial returns as he promised them it was a safe investment. He claimed that the plan was FDIC-insured and the insurance companies AIG and Lloyd’s of London backed it, which led to the FBI suspecting it was fraud.

How was Lou Pearlman investigated?

A federal prosecutor in central Florida, Roger Handberg, revealed that Pearlman was taking out enormous sums of money in bank loans, which totaled $190 million, noted ABC News. Pearlman fled the country days after Handberg opened up an investigation. “At that point, he had my total and complete attention,” said Handberg. After Pearlman left his mansion in Windermere, Florida “in a hurry,” the FBI searched through the place. There were suspicions he was hiding diamonds within the walls of the house. However, the authorities didn’t find anything there.

Furthermore, the investigators also raided Pearlman’s TransCon offices. It was then found that the supposed TransContinental Airlines didn’t exist. There were no revenue, employees, or airplanes. From a fake accounting firm to sham financial statements sent to investors, the investigation unraveled the Ponzi scheme. Handberg noted that it reached a point when it “got to be easier for us to think and just assume everything is fraudulent.”

How was Lou Pearlman arrested?

According to People Magazine, Pearlman opened up to Michael Johnson about forging documents during a trip to Bali in 2007. The latter realized the former frequently traveled because he was on a run from the FBI. Eventually, a tip from a tourist in Bali led to Pearlman’s arrest, noted ABC News. In 2008, he pleaded guilty to conspiring to commit bank fraud, money laundering, bankruptcy, and fraud. Pearlman was ordered to pay $310 million in restitution. In addition to that, a $200 million forfeiture judgment. Pearlman was given 25 years in federal prison, reported Forbes. He died in 2016 at the age of 62 while serving his sentence.

Dirty Pop: The Boy Band Scam is available to watch on Netflix.

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