The man behind some of America's biggest pop franchises, including Backstreet Boys and *NSync, is on the run from the FBI after his latest business venture, basically an incredibly large pyramid scheme, started to unravel. Lou Pearlman, who managed the careers of numerous boy bands through his Trans Continental Records company, is accused of swindling over 1400 people out of hundreds of millions of dollars via an investment product sold through his original company, Trans Continental Airlines.
Pearlman and his associates reportedly marketed what they called an "employee investment savings account", mainly to senior citizens. The account seemed to offer a good return on investment, and, according to ABCNews.com, marketing literature assured investors the scheme was insured by the Federal Deposit Insurance Corp, AIG and Lloyd's Of London. Needless to say, it wasn't. Those who signed up to the scheme early did receive the interest payments they were promised, but money being invested into the scheme by newer customers was being used to make those payments.
Pearlman's whole business empire, including the pyramid scheme, began to unravel at the start of the year, with the Bank Of America beginning that previously reported legal action over millions in unpaid loans in February. Despite Pearlman publicly dismissing the mounting lawsuits against him, his closest business associate Frankie Vazquez Jr committed suicide that month, presumably because of his involvement in the crumbling and at times allegedly fraudulent business empire. Bankruptcy proceedings have now begun against the former pop mogul, and the FBI are said to chasing him over the various allegations that have been made, meaning Pearlman himself is essentially on the run. He was last seen in Berlin where he was promoting a new boyband.
Commenting on the pyramid scheme business one Florida lawyer representing eight people who lost their savings to the scam told ABC: "It was clever how he did stuff. He would advertise to senior citizens and say he was FDIC insured but he wasn't and couldn't be. He'd charm people with his showbiz connections ... he even gave some people paraphernalia from the boy bands".
Pearlman is not, of course, any stranger to the world of litigation, with many of the artists he's managed over the years eventually suing him, though being chased round the world by the FBI might be a new experience. Though there's an MTV reality show in that don't you think? Like the last time Pearlman did a reality show for MTV, he could stage a nationwide search for a new boy band, but with the added twist - can Pearlman get his band in the charts before the FBI catch up with him and throw him in jail. Or, even better, before the 1400 people he allegedly ripped off catch up with him and kick him in? I'm nabbing copyright on that idea, by the way.