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Episode 18: Boy Band Mogul

Case File

Boy Band Bandit

  • Fame and Fortune
  • Luxury cars, a $12 million dollar mansion and 58 companies. Lou Pearlman loves money and he'll do anything to get it. His charm and persuasion help him con hundreds of millions of dollars from the wealthy, the trusting and the dreamers. He creates Trans Continental Airlines…an umbrella company with subsidiaries spanning everything from music to food to aircraft.
  • Rock 'N Roll
  • Pearlman assembles five talented singers and names them "The Backstreet Boys." Success is instant. He follows with creation of *NSYNC... another boy band, this one headed by Justin Timberlake. Pearlman takes potential investors backstage to meet the bands. Investors are impressed and sign-up, but trouble is brewing.
  • Behind the Scenes
  • Lou's boy bands begin to think the man they call "Big Poppa" is a big thief! Backstreet Manager Donna Wright can't seem to figure out where all the money is going. The bands bring in millions…and Lou Pearlman takes most of it. There's a bitter split. Lawsuits are filed. Later, investors in Trans Continental begin to worry and for good reason. A federal investigation is underway.

Producer's Notes
By Rachel Pikelny, Producer, "American Greed"

  • Ask around, and you'll be hard-pressed to find someone who hasn't heard of the Backstreet Boys. About a decade ago, these pop sensations – along with their successor boy band, *NSYNC – made teenage girls swoon with their harmonies and boyish good looks.
  • Some people might even recognize the boy bands' manager, Lou Pearlman, known as the "boy band mogul," the guy behind their worldwide success. But what many people do not know is that Lou Pearlman is a fraud. He used the success of his boy bands to attract money to his fraudulent investment program. Investors were blinded by Lou's fame and fortune, allowing him to steal hundreds of millions of dollars from elderly retirees, savvy businessmen, and even his own friends. Lou Pearlman is a master of foolery.
  • I met Lou's childhood friend, Alan Gross, at Alan's apartment in Queens. It's the same modest, one-bedroom apartment where Alan lived with his parents as a child. Alan told me how even as a kid, "Louie" was always scheming. After his weekly guitar lesson, Lou would teach the other neighborhood kids the same lesson and make back the five dollars his mother gave him for his lesson. Lou did whatever he could to make a quick buck.
  • After college, Lou started a blimp advertising business called Airship Enterprises and signed on some big clients. But the moderate success wasn't what Lou craved; he wanted to be a star. As former Backstreet Boys manager Donna Wright says, "That's what his life was all about, just being in the limelight."
  • Lou ditched the blimps and moved down to sunny Orlando, Florida, where he formed his first boy band, The Backstreet Boys. The band was a huge success, and Lou duplicated that success by forming more and more groups, including the wildly popular group, *NSYNC. "They were great! I loved them!" says one Pearlman investor, Connie Cesare.
  • I met Connie and her husband Pat at Lou Pearlman's sentencing hearing last summer. Connie could hardly contain her tears as she told me how Lou had ruined her life. She referred to him as "family, a friend." Connie and Pat invested their life savings in Pearlman's fake investment program, and are now living on social security. They're just two of the hundreds of victims who've had their savings squandered.
  • To Lou Pearlman, life was a stage, and he knew how to put on a good show. I spoke with dozens of investors outside the sentencing hearing who said Lou was likeable, charming and seemingly generous. They never expected him to scam them like he did.
  • I've researched dozens of investment scams, and more times than not, the lesson is the same: "if it sounds too good to be true, it is." But this case is slightly different. In this case, the line between what's real and what's not is blurred. The success of The Backstreet Boys and *NSYNC is very real. No one will dispute that. But where Lou Pearlman claimed to be investing peoples' money was in reality, a shell company.
  • The success of Lou's boy bands allowed him to woo investors and shove their money deep into his own pockets. Blinded by the spotlight, his victims had no idea what was happening backstage.

Web Extras

  • Boy Band Mogul: Fame and Fraud Monday, 5 Jan 2009 | 12:21 PM ET
    Lou Pearlman, the legendary manager of *NSYNC and The Backstreet Boys, lives a lifestyle of fame, fortune and fraud.  He's the mastermind who scams $500 million from investors!

    Lou Pearlman, the legendary manager of *NSYNC and The Backstreet Boys, lived a lifestyle of fame, fortune and fraud.  He masterminded investor scams totalling $500 million. Learn more.

  • Boy Band Mogul/American Greed     Wednesday, 28 Jan 2009 | 12:00 AM ET

    Lou Pearlman, known for managing hit boy bands like NSYNC and the Backstreet Boys is also known for something else - masterminding a half a billion ponzi scheme . As CNBCâ??s Erin Burnett explains, he's not just taking money from musicians, but from investors and innocent retirees as well.

  • Lou Pearlman/American Greed     Thursday, 18 Dec 2008 | 12:00 AM ET

    WEB EXCLUSIVE: Backstreet Boys' attorney Clay Townsend tells how the experience with Lou Pearlman affected the group.

  • Lou Pearlmanâ??s Forgery/American Greed     Thursday, 18 Dec 2008 | 12:00 AM ET

    FBI Agent Scott Skinner tells how Pearlman forged a dead man's signature.

  • Boy Band Bandit/American Greed     Thursday, 18 Dec 2008 | 12:00 AM ET

    Hear former "Take Five" band members Ryan and Jeff Goodell talk about life with Lou.

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