Getty Lou Pearlman and Aaron Carter
Lou Pearlman was a boy band mogul who died in federal prison at age 62 of a heart infection in 2016 while serving a 25-year sentence for a $300 million Ponzi scheme.
He was convicted of fraud for swindling millions of dollars from thousands of investors, many of whom were retirees living in Florida, according to court filings in his case. He launched boy bands NSYNC, the Backstreet Boys, Take-5 and O-Town, promoting them with the investor’s money and keeping most of the profits for himself. All but one of the boy bands he launched sued Pearlman. Pearlman died with much of the money unpaid and lawsuits unresolved.
Pearlman’s story originally aired in a two-hour special of 20/20 Friday, December 13, 2019 in its episode, “The Hitman: From Pop to Prison.” The episode is airing again tonight, Friday July 3, 2020, at 9 p.m. on ABC.
Here’s what you need to know:
Lou Pearlman Died in Prison From an Infection Following Heart Problems
.@ABC2020 reports on Lou Pearlman, former Backstreet Boys and *NSYNC manager who ran one of the biggest Ponzi schemes in history t.co/Uv8BIcETsi
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Lou Pearlman died of an infection of the inner lining of his heart while serving a 25-year sentence in federal prison in Florida on August 20, 2016, according to the Associated Press. He was 62.
Pearlman was suffering from a condition that prevented his heart valve from fully opening. He had surgery to have the heart valve replaced, and later contracted an infection, according to a report from the Miami-Dade Medical Examiner released less than one week after Pearlman’s death.
Pearlman’s Ponzi scheme through Trans Continental Airlines was uncovered in 2006. In 2008, he was convicted of fraud. He launched boy bands including NSYNC, the Backstreet Boys, O-Town and Take-5. The band members he managed received less fair share of the profits, and several accused him of sexual misconduct. NSYNC, the Backstreet Boys and others filed lawsuits against him.
‘NSync singer Lance Bass tweeted after Pearlman’s death, “Word is that #LouPearlman has passed away. He might not have been a stand up businessman, but I wouldn’t be doing what I love today wout his influence. RIP Lou.”
Lance Bass & Chris Kirkpatrick Said They Were Confused & Angry When Pearlman Died
I hope he found some peace. God bless and RIP, Lou Pearlman.
Lance Bass and Chris Kirpatrick, former members of *NSYNC, told ABC 20/20 they had mixed feelings when Lou Pearlman died. Pearlman had been the manager of *NSYNC, the Backstreet Boys and other boy bands, becoming a mogul of the industry. He brought Bass and others to fame, even while keeping most of their earnings and duping investors. Bass told 20/20 Pearlman’s death in prison meant none of the victims in the $300 million Ponzi scheme received closure.
“I was so confused on exactly how to feel,” Bass said. “I’m like, ‘How could you die right now when we don’t have this closure?”
Pearlman also faced allegations of sexual misconduct against boy band members. The allegations were first detailed in a 2007 Vanity Fair article. Pearlman had denied the allegations.
Pearlman died August 20, 2016. Bass said he credits Pearlman for his career, despite the fraud that funded it.
“There’s so many life lessons that you learn from everyone else’s mistakes – from your mistakes,” Bass said. “He helped start my career. He funded it… I don’t know where I’d be without him. So you have to give him that credit.”
Kirkpatrick expressed similar mixed emotions on 20/20. He was unsure how to feel when he heard the news of Pearlman’s death.
“The minute…you’d start to cry, you’d start to laugh,” Kirkpatrick said. “And the minute you’d start to laugh, you’d start to get angry, and the minute I was angry, I started to feel bad for the whole thing that happened. It was the most confusing moment probably that I’ve ever had. I know that a lot of the other guys are bitter. I understand that because like I said, it’s so many emotions. But…I wouldn’t be where I am if it wasn’t for him… and it sucks.”
Their public responses immediately after Pearlman’s death were also conflicted.
“He might not have been a stand up businessman, but I wouldn’t be doing what I love today without his influence,” Bass wrote in a tweet the day after Pearlman’s death.
“I hope he found some peace,” Justin Timberlake wrote on Twitter August 21, 2016. “God bless and RIP, Lou Pearlman.”
“Mixed emotions right now, but RIP Lou Pearlman,” Kirkpatrick wrote on Twitter the day of Pearlman’s death.
Lou Pearlman Stole $300 Million from 2,000 Investors in an Elaborate Ponzi Scheme & Filed for Bankruptcy in 2010
“My heart broke and was basically ripped out, because now I realized he was a conman.”
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Lou Pearlman was serving a 25-year sentence in federal prison in when he died August 20, 2016 at age 62. Pearlman launched boy bands including *NSYNC, the Backstreet Boys, LFO, Take-5 and O-Town while collecting millions of dollars from investors to pour into fake businesses. Among them was a purported airline, Trans Continental Airlines, which did not exist. It was managed by a fake accounting firm, according to a 2007 Vanity Fair article.
Pearlman filed for Chapter 11 bankruptcy in 2010 on behalf of Trans Continental Airlines and Lou Pearlman Enterprises. His claim was denied. According to the bankruptcy filing, which you can read here, two of his three investment schemes used a Ponzi scheme model. The first was referred to as an Employee Investment Savings Account, or EISA program. Investors were promised high returns and told their investments were FDIC-insured. Both statements were untrue.
“Pearlman and his cronies pocketed much of the investment funds and used new investments to repay or pay interest to prior investors in the EISA Program,” the bankruptcy filing said.
Pearlman also sold stocks in the company that did not exist and took out more than $150 million in bank loans by producing fraudulent documents, the court documents said.
A portion of Pearlman’s plea agreement said: “Pearlman made these misrepresentations to get money from the federally insured financial institutions. Pearlman did that because he had tremendous demands for cash from EISA investors and prior loans made by federally insured financial institutions. In sum, Pearlman ran his bank fraud scheme as another Ponzi scheme where he would use the financing that he obtained to make payments on other bank loans or to investors who were victims of his other Ponzi scheme.”
Many of the investors in the Ponzi scheme were retirees in Florida, according to Vanity Fair.
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