Boy-band guru Lou Pearlman, the man who foisted 'N Sync and the Backstreet Boys upon the world, is accused of swindling more than a thousand investors out of $317 million, as New York reported last month. Now those swindlees have their own newsletter. Gerard McHale Jr., the court-appointed receiver charged with documenting what some are calling the longest-running Ponzi scheme of all time, published his first "Investor/Creditor Newsletter" this week. (You can read it here as a PDF.) The news isn't good. After the jump, the highlights.
• The number of investors allegedly swindled by Pearlman and his associates has grown to 1,800. Many of the investors are elderly and pledged their life savings and retirement accounts to him.
• Despite owing millions to banks and creditors, Pearlman traveled in style. He currently owes $130,000 on a 2004 Rolls-Royce Phantom (he never made the $6,600 monthly payments), which the government seized last month. Another Rolls-Royce, this one a 1985 model, is missing.
• His mansion is for sale for $12.5 million; the property carries $15 million in debt.
• Not even 'N Sync can pay off the missing money, McHale writes. "Virtually all of [the boy-band] royalties have been pledged as collateral for bank loans. One might ask "what will happen to these royalties after the banks are paid off?" — I wouldn't worry too much, it doesn't look like the banks will ever be paid off."
Pearlman maintains his innocence from Europe, where he's touring with his latest creation, US5. Geoffrey Gray