Boy band promoter Lou Pearlman, known for launching groups such as the Backstreet Boys and 'NSync, died in prison Friday while serving a 25-year sentence for one of the largest Ponzi schemes in Florida history, a federal inmate database shows.
Pearlman cashed in on the boy-band craze, building an empire of acts around the globe in the late 1990s and early 2000s. It collapsed in 2006 after he was exposed for running a massive $300 million Ponzi scheme. He declared bankruptcy in 2007 and was convicted of fraud in 2008.
The cause of death for the 62-year-old was not disclosed Saturday. Calls to the Federal Bureau of Prisons were not returned.
The Orlando entrepreneur is credited with starting the '90s boy-band craze and managed huge acts including the Backstreet Boys, 'N Sync, O-Town and the Chippendales before the scheme was uncovered.
Pearlman also had his hands in many local businesses and franchises. He was part of a group that owned the Orlando Predators from 2004 to 2007, co-founded the NYPD Pizza franchise, led a redevelopment project in downtown and even received two keys to the City Beautiful.
After the scheme was uncovered, hundreds of lawsuits were filed in the case, including one by the Backstreet Boys, and some victims were taken for their life savings.
Ponzi schemes are investment scams similar to a pyramid scheme, where investors receive money only when more victims invest. Usually, there is no underlying business activity at all. When they collapse, there is often no money left. In Pearlman's case, he used his notoriety for being a band promoter to attract clients.
The victims unknowingly invested in worthless stock and retirement-account investments through Pearlman's Trans Continental Airlines and Transcontinental Airlines Travel Services.
He pleaded guilty to two federal conspiracy charges, money laundering and making a false statement in a bankruptcy proceeding. His Lake Butler mansion and headquarters at the Church Street Station entertainment complex was searched, vacated, sold off and redeveloped while his companies descended into bankruptcy.
During sentencing, he apologized in court, saying, "I'm truly sorry, Your Honor, to all the people who have been hurt and victimized by my actions. Over the past nine months since my arrest, I've come to realize the harm that has been done. I now want to do whatever I can to help resolve that harm."
Pearlman was caught by FBI agents in Bali, Indonesia while running from creditors and regulators. He was living under the false name, A. Incognito Johnson. He was expelled from the country and arrested in Guam.
'NSync singer Lance Bass posted to Twitter Saturday that Pearlman "might not have been a stand-up businessman, but I wouldn't be doing what I love today (without) his influence. RIP Lou."
Mark NeJame, who along with his partner Paul Byron, represented Pearlman on a slew of civil cases remembered Pearlman Saturday night. NeJame described Pearlman, who was also known as "Big Poppa" by friends, as a "colorful character" that lived separate lives.
"He'd never forget to call you on a holiday or on your birthday," he said. "...but later when you found out all he'd been involved in, it was like a different side of him that he kept from everybody. We all had no earthly idea he was involved with all of that."
NeJame said his firm represented Pearlman on about 10 cases in the years before the scheme was exposed.
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Source: Orlando Sentinel