Lou Pearlman was bragging about taking his boy-band empire public only one month ago, one of his New York investors says. But that’s not happening. Pearlman—or Papa Lou, as the scandal-prone Queens-born manager was known to members of his teen-pop sensations ’N Sync and the Backstreet Boys—had his Orlando headquarters seized by a court-appointed receiver this month. The authorities say that over 1,400 investor accounts (many from retirees) have been lost via Pearlman’s massive Ponzi scheme, which used falsified FDIC documents to lure investors. Missing so far: $317 million and counting. “A lot of it is New York money,” says receiver Gerard McHale, “especially the significant investments.”
A first cousin to Art Garfunkel, Pearlman claimed to run an air-charter company, blimp-rental service, and the NYPD Pizza franchise, among other ventures. He’s been sued by many of his artists (“I was being monetarily raped by a Svengali,” Justin Timberlake once crooned) and recently claimed he was cooperating with authorities. Then, he disappeared. In a February 4 letter to the Orlando Sentinel, Pearlman claimed to be on tour in Germany with his latest teen-pop group, US5, but declined to address the claims of fraud. “I’m an optimist,” he wrote. “I’ve spent my life discovering people with underdeveloped talent and turning them into international superstars. Rebuilding and making things better is what I do, and rest assured, better days lie ahead.”
Tell that to Harry Robinson, who owns a heating-and-air-conditioning outfit in New Jersey. Last year, as the authorities were quietly investigating, Robinson says he invested $400,000 with Pearlman’s companies. Now he has to sell his car, and maybe his house too. All he has left from Pearlman is an autographed copy of his book, Bands, Brands and Billions: My Top Ten Rules for Success in Any Business. “I’m finished,” he says.