Lou Pearlman, the gregarious mastermind behind kid bands such as 'N Sync and also the Backstreet Boy...

1. Boy Band Mogul Lou Pearlman Admits Role in Ponzi Scheme
Lou Pearlman, the gregarious mastermind behind kid bands such as 'N Sync and also the Backstreet
Boys, is now admitting his function in a different type of choreography: a Ponzi plan.
District attorneys released a 47-page appeal contract Tuesday authorized by Pearlman in which he
confesses to running frauds that defrauded financiers and major banks out of more than $300
million. He is arranged to beg guilty in Orlando on Thursday to government fees of conspiracy,
money laundering as well as making untrue declarations during an insolvency proceeding.
He has actually additionally vowed to assist investigators prosecute his collaborators and attempt to
recoup millions of bucks for his sufferers.
His attorneys did not return a decision seeking comment Tuesday.
A government judge will certainly make a decision Pearlman's punishment, which could be up to 25
years behind bars as well as $1 million in fines. As component of his agreement, Pearlman has to
make complete restitution to his sufferers and also surrender cash and a number of automobiles,
including a 2004 Rolls Royce Phantom.
Pearlman, 53, earned extensive fame in the 1990s for producing successful pop sensations such as
the Backstreet Boys as well as 'N Sync. The teams ultimately sued him, asserting he was siphoning
large amounts of money from them. The situations were later settled. The terms were not disclosed.
Pearlman's memorabilia from the kid band period was auctioned off last year in a personal
bankruptcy sale.
Also as the teams played to sold-out groups, Pearlman was getting financiers for his schemes. To
make them appear legitimate, Pearlman acknowledges he and others developed a make believe
airline business, a fake German financial institution and South Fla accounting firm.
But the root of his scam, a business referred to as Transcontinental Airlines Travel Solutions, was
birthed in 1981-- the very same year that 'N Sync heart throb Justin Timberlake was birthed.
For even more than Twenty Years, Pearlman and others marketed Transcontinental shares, fooling
investors right into thinking that the firm deserved millions.
Rather, the plea agreement states Transcontinental "existed simply on paper." And also after 1999, it
disappeared whatsoever-- Delaware authorities voided its incorporation in 1999, according to the
appeal arrangement.
That didn't quit Pearlman from courting investors, that included significant banks such as Financial
institution of America, Washington Mutual, Mercantile Bank and others. Pearlman likewise boasted
an Employee Investment Savings Account, which he assured would certainly yield higher returns
compared to standard financial investments.
None of it was real, baseding on the appeal arrangement. "Neither of those investments were legit,"

2. the record states. "As an alternative, they were 'Ponzi' schemes by which cash raised from later
financiers would certainly be familiared to pay off earlier investors."
Prosecutors say Pearlman accepted $118 million in financial investments into the worker interest-
bearing account in between January 2003 and December 2006. He returned about $43 million to
investors, but distributed even more compared to $38 million to himself and an entity called
Pearlman Enterprises.
Pearlman developed an elaborate network of fake finances. Those included hiring an answering
service to impersonate a South Florida bookkeeping firm, Cohen & & Siegel, which supporteded
Transcontinental's financial resources. Pearlman likewise admits in the arrangement to giving fake
income tax return to financial institutions, and also developing a phony branch of a financial
institution in Germany to try to lend reputation.
Pearlman got away the Usa in very early 2007 as well as was later recorded after he was deported
from Indonesia. At the time, he was apparently trying to create a seal and also other files to make
the German financial institution appear legitimate, the plea arrangement states.
He was likewise keeping close tabs on bankruptcy process that were begun in Fla. According to the
plea contract, Pearlman provided false claims and manufactured records to attempt to draw away or
open money that had actually been iced up.
Pearlman has been in an Orlando prison because being returned to Florida in July 2007.