24. The Mogul (Lou Pearlman)
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In 1983, the Royal Perth Yacht Club of Australia defeated the Yacht Club from New York in a race known as the America's Cup.

It was the first time in 132 years that a team other than the Americans had been victorious. The entire country of Australia was overcome with enthusiasm and national pride, for Australia was more than just winning a silly boat race. Winning the America's Cup was symbolic. It was an announcement to the rest of the world that Australia had arrived. Those who were involved with the Royal Perth Yacht Club instantly became national heroes, including the owner of the yacht, a business tycoon named Alan Bond.

though most Australians were already familiar with Alan Bond. He had been named Australian Man of the Year five years earlier, largely due in part to his international business success. There was no denying that Alan Bond was successful. He made his first million at the age of 21 in 1960 by borrowing money to buy property on the outskirts of Perth to sell to suburb developers.

It was a risky venture, but it paid off. And so had the risky venture of funneling millions of dollars into a yacht race that one team had dominated for over 100 years. I was always contained to be the forerunner in anything that was going on. First to do things and first one to take the dare to jump into the river or whatever it might be. Alan Bond was at the height of his wealth and power in the late 80s. He was inarguably the most successful businessman in Australia during that time period.

The Bond Corporation was soaring, and he wasn't necessarily shy about letting everyone know. "Wouldn't you be surprised if after a few short years you've struck oil at three fields?" "You're producing from two gold mines and two coal mines." "You're building buildings like this and retailing from stores like this." "You're exporting beer and importing cars and building airships for a rapidly rising world market."

You're into television, radio and technology, and you have a strong commitment to community involvement. Wouldn't you be surprised if after all that growth, people still associated you with only one achievement? They're about to cross, and there it goes! Australia 2 has done it! They have finally America's count! Will you stand up, Australia? Bond Corporation.

Oil and beer, gold and cars, television and blimps. It seemed like Alan Bond and the Bond Corporation had a hand in everything, and having a hand in everything apparently pays pretty well.

Bond had an estimated personal fortune of $350 million. He bought a mansion on the river for $9 million. He purchased a country estate in England where he was born for $22 million. But he shelled out the most money on his art collection, including paying $79 million Australian dollars for a single Van Gogh piece, which at the time was the highest price ever paid for a painting. One thing that Alan Bond did not spend money on was taxes.

Alan Bond hated taxes and he hated the welfare programs that were funded by taxes. At one of his company's shareholder meetings, Bond criticized the cost of the Australian government's welfare programs and accused them of being too costly.

Later, at that same meeting, he held a vote to increase his executive team's salaries by $10 million. True story. $800 million is a lot of tax that consumers have to pay on beer and oil taxes and payroll taxes and withholding tax. I think the country is overtaxed.

Alan Bond definitely put his money where his mouth was. From 1981 to 1988, Bond Corporation earned $700 million in revenue and paid about $20 million in taxes, less than 3%. Other Australian companies at the time were paying a corporate tax rate of closer to 30%. In fact, some of Alan's companies weren't paying any taxes at all. In some cases, they were receiving tax credits and the government was paying him.

Eventually, Bond legally and technically, but not physically, relocated his company headquarters to the Cook Islands, where the foreign corporate tax rate was 0%. What a patriot. Alan Bond was criticized heavily by certain members of the press and the Australian public when they were made aware of his tax-dodging ways. Others chose to look the other way. Besides, the man had won the America's Cup. He had contributed more than enough as far as they were concerned.

Even Australia's Prime Minister at the time, Bob Hawke, defended Alan Bond publicly. A lot of sloppy talk going around this country at the moment. But somehow there should be no place in the concerns of a federal Labour government for the Alan Bonds.

Prime Minister Hawke was correct. Alan Bond was a risk taker. And it would come back to haunt him.

After Rothwell's Merchant Bank collapsed after the 1987 stock market crash, Alan Bond found himself under investigation for securities violation. Apparently he had recruited an executive from a different company to contribute to the attempted private bailout of Rothwell's bank and he failed to disclose that he had collected a $12 million fee for his services. Bond was found guilty and sentenced to two and a half years in prison, but he was acquitted and released two months later after appeal.

Even more concerning, the market crash had affected Allen Bond's businesses in a big way. Bond Corporation had become overextended and over leveraged. So Allen unloaded as many assets as possible to stay afloat, but was ultimately forced to declare bankruptcy in 1992. Just a few years earlier, Allen Bond was worth hundreds of millions of dollars. At the time of his bankruptcy, he only had 38 grand in the bank and 1.8 billion dollars in debt.

In 1996, Alan Bond found himself in jail again after combining two of his favorite things, art and tax avoidance. Businessman Alan Bond is in custody in Perth tonight awaiting sentence on fraud charges.

A district court jury last night found Bond guilty on four charges under the West Australian Company Code. The charges arose from a $15 million profit made by his family company on the French Impressionist painting La Promenade. Bond was found to have done the deal at the expense of his public company, the former High Flying Bond Corporation. The 58-year-old businessman will be sentenced on Monday. He faces a possible five years in jail.

A jury found Alan Bond guilty of improperly using his position as director of Bond Corporation to allow his private company to purchase a painting from himself for $10 million less than it was worth. Before he was sentenced, additional charges were levied for siphoning $1.2 billion from Bell Resources, a company in which he owned a controlling interest, in order to stabilize his struggling parent company. At the time, it was Australia's biggest case of corporate fraud.

Alan Bond pleaded guilty and was sentenced to seven years in prison. He was out of jail less than three years later. Now that he was back on the streets and back in business, Australians struggled with how they felt about Alan Bond. On one hand, he was the national hero who bankrolled the 1983 America's Cup victory, which led to a moment of exuberance and pride for the nation.

On the other hand, Bond was an unforgiving, greedy capitalist who took every shortcut he could find if it meant an extra dollar in his pocket. During the first week of June 2015, Alan Bond, at 77 years old, underwent open heart surgery and never woke up. He left behind three children and eight grandchildren and a very complicated legacy.

And back in the late 80s, Alan Bond had sold a couple of blimps to another man who was building a complicated legacy of his own. A man named Louis J. Perlman. A man who was responsible for producing the soundtrack of the late 90s while orchestrating one of the largest Ponzi schemes in American history. An aviation enthusiast turned business magnate turned boy band producer builds an entertainment empire and a massive web of lies on this episode of Swindled.

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Louis J. Pearlman started his first business in the early 60s in Flushing, Queens, New York, when he was just 8 years old. Little Lou had constructed a makeshift lemonade stand near a bus stop in his neighborhood, where he sold his home brew to parched commuters for 7 cents a cup, a price that Lou had strategically developed after realizing that most people carried with them only dimes and nickels. Lou had discovered that almost everyone who paid with a 10-cent piece would allow him to keep the change and double his profit.

That story would be almost believable if it had not originated with Lou Pearlman himself in a book he wrote in 2002 touting his success as a businessman. Pearlman's casual relationship with historical revisionism, exaggeration, and blatant dishonesty make it difficult to believe anything he has ever said.

For example, Lou has also regularly boasted about, as a child, buying the local newspaper delivery routes from the older kids on his block and expanding the modest business to include door-to-door breakfast service. Those older kids, years later as adults, would deny ever selling their routes to Lou Pearlman. Even Lou Pearlman's origin story about his lifelong fascination with aviation is dubious at best.

Directly across from Mitchell Gardens, the building where Lou lived with his parents, on the other side of the expressway sat the Flushing Airport, which housed one of the most recognizable aircrafts in the world, the Goodyear Blimp. "It's an impressive sight, the Airship America, 192 feet long, almost 60 feet high and 50 feet across, yet lighter than air, drifting to a landing at Flushing Airport."

It takes a ground crew of at least 13 men to bring the blimp to a halt. The America, one of a fleet of four Goodyear blimps, spends the winter months at her home base in Houston, Texas. It's a fantastic ride, but unfortunately the Airship America will not be open to the public on this visit to New York. But during the winter you can take rides on Goodyear blimps if you happen to be at one of their home bases in Houston, Los Angeles or Miami. If you get the chance, do it. It's an experience you're not likely to forget.

Lou and his upstairs neighbor, Alan Gross, would watch the Goodyear blimp take off and land from their bedroom windows at Mitchell Gardens while listening to the pilots communicate with the ground crew on a radio they had borrowed from another kid in the building. One summer, Lou Pearlman and Alan Gross became so inspired, they traversed the expressway to visit the Goodyear hangar for an up-close look at the aircraft they admired. Lou practically begged the Goodyear crew for a ride that day, but was turned down and told that only members of the press were allowed to go up.

So at home that night, Lou typed out a story about the blimp for the school newspaper. He returned to the hangar with a copy of the article the next day and scored the credentials that he needed for that free ride. That blimp ride would only add more fuel to the fire of Lou's burning desire to fly. He was at the hangar almost every day that summer, sweeping the floors, running errands, and washing equipment for $1.65 an hour.

Lou was given plenty of rides on the Blimp during his time there, each one more enthralling than the last. He was confident that even at that early age, he knew exactly what he wanted to do when he grew up. But apparently, the Goodyear Blimp wasn't the only thing in that hangar filled with hot air. According to Alan Gross, the story about Lou Pearlman's maiden voyage on the Goodyear Blimp is completely untrue. Alan Gross knows the story is untrue because it is his story. Blimps were his obsession, not Lou Pearlman's.

It was Alan Gross, not Lou Pearlman, who wrote the story that appeared in the North Shore News in October 1964. It was Alan Gross, not Lou Pearlman, who received that first ride on the Goodyear blimp. And it was Alan who started working in the hangar for practically no pay, just to be immersed in the world of airships. Alan Gross was the "true helium head" as they referred to themselves. He was the one with the genuine love for blimps.

And Lou Pearlman was nothing more than a tag-along, adopting the passions of others and passing them off as his own, and then later recounting his humble beginnings in the most romantic way possible, even if it meant lying to your face. But that's Lou. He could get away with anything. Well, at home at least. Lou's mother, Rini Pearlman, spoiled him rotten. She gave her son plenty of toys to keep him occupied and happy. She gave him plenty of food, which was obvious by looking at him.

At 34 years old, Rini was older than the average first-time mother in 1954, but not for the lack of trying. Two miscarriages preceded Lou, creating an emotional blind spot that helped Rini believe that her son could do no wrong. Rini wanted to make sure that her only child loved her as much as she loved him. She chose to be willfully ignorant to any of Lou's shortcomings or misdeeds.

The Pearlmans had a funny way of avoiding confrontation like that. Lou's father, High Pearlman, who owned a dry cleaning business, fathered a child outside of his marriage to Rene. Everyone in the neighborhood knew about it, but the family never acknowledged it in hopes that their problem would just go away. That's the Pearlman way. One thing that did not go away was Lou Pearlman's fascination with flight.

After graduating from Queens College with a degree in accounting in 1976, Lou launched a helicopter taxi service based on a project he had completed for one of his business school courses. He envisioned wealthy commuters piling onto his helicopter to avoid the gridlocked traffic and grungy subways of New York City. One of the first people Lou approached about investing in his new business was his first cousin, Art Garfunkel. The Garfunkel and Simon and Garfunkel.

By this time, Lou's musician cousin was already playing to sold out arenas all over the world. Needless to say, he had a few extra bucks to spare. Art's father, who managed the son's money, told Lou that he would not help him buy his first helicopter, but he promised that he would help him buy his second. Lou continued to pitch his business to anyone that would listen, including numerous bankers and investors on Wall Street, until he finally landed a bite. A group of investors agreed to purchase the helicopters and lease them to Lou.

Commuter Helicopter Service Incorporated was born, and many of Lou's childhood friends such as Alan Gross and Frankie Voskes, the son of the maintenance man at Mitchell Gardens, were along for the ride. But the Commuter Helicopter Service wasn't very successful, not financially anyway. The company failed to generate any significant immediate revenue, but it did generate plenty of contacts in the industry which would help serve Lou Pearlman down the road.

One of those contacts, a rich German airship manufacturer named Theodor Wollenkemper, had agreed to build Lou one of his company's state-of-the-art blimps for the extremely reduced price of $1.2 million. In return, Lou would help Wollenkemper expand his international travel business by using his connections to secure more flights at the New York airports. So with Wollenkemper backing him and supplying the airplanes, Lou Pearlman launched Transcontinental Airlines in 1978,

The bulk of the company's initial business came from banks sending checks across country to speed up their depositing processes. Within a year of operation, more investors joined the party until Lou's new company was able to purchase additional planes of his own and place them into service. The air travel business was good, but Lou still couldn't shake the dream of owning his own blimp. He just couldn't afford the $1.2 million that it would cost. But Lou Pearlman wasn't going to let something like money keep him from making his dreams come true.

Instead of a blimp, Pearlman purchased an old industrial logging balloon, which are much cheaper and much less structurally sound than a typical airship. The logging balloon wasn't even in the same geometric shape as a blimp, so Pearlman pieced together a crew that rebuilt and refashioned the craft into a more traditional design. Nobody who helped build Pearlman's blimp ever believed the thing would actually fly. Nobody except Lou Pearlman, that is.

He had already submitted the paperwork to Establish Airship Enterprises Limited, a new company that would offer advertising opportunities on the side of its blimp, which would hover over densely populated areas for a sustained period of time. Lou assigned Alan Gross to assemble a marketing team and to produce a promotional video for their sales pitch.

It looks like a floating porpoise without a care in the world. That's what some people say when they see this 200-foot-long behemoth passing gracefully overhead. Here the airship displays a German advertisement during its tour throughout European skies. Airship Enterprises Limited is presently offering advertising availability with its blimp. For after-dark audiences, the spectacular multicolored lights provide a world of entertainment all of its own. ♪

The original promotional video is 12 excruciating minutes long and features a brief history of airships, list of never-ending specifications and technical facts, and action shots of a blimp that the company didn't even own.

Even Lou Pearlman himself makes an appearance in a later updated version of the video. So all the great potential in the fact that people would come from miles around, kids and adults would try to get a ride on the Blimpin. They never tire of it. Never tire of it. It's amazing. Airship enterprises were turned down pitch after pitch. Most prospective clients wanted to see the actual Blimpin action before signing any kind of a deal.

However, the company eventually found its first client and three brothers from Israel who were looking to make a splash with their new clothing company. The Nakash brothers were excited about the idea. They wanted to paint the blimp gold with bold maroon lettering that spelled out the name of their brand, Jordache.

The brothers envisioned Lou's blimp floating from New Jersey to Manhattan, where it would land in the middle of Central Park to a crowd of waiting reporters and cameras. When the doors of the blimp would open, a formation of fashion models would strut out onto a catwalk accompanied with loud music and adorned in the Jordache look.

The brothers envisioned an event so unforgettable that everyone in attendance would sit down with their future grandchildren one day and share the tale of how lucky they were to witness the great Jordache in the sky descend from the heavens onto Earth on October 8th, 1980. The launch of the Jordache blimp did not prove to be quite that unforgettable, but it was memorable for all the wrong reasons.

After struggling to lift about 30 feet into the air, the blimp spiraled out of control and eventually crashed pathetically next to a trash dump less than a mile away from where the Hindenburg disaster took place. When the strange craft left its New Jersey moorings this morning, it ran afoul of gusting winds ending up with nothing like the Jordache look. Laced across the pine trees, the ship's helium bag painted with $15,000 worth of real gold looks real bad.

You know what they say, there's no such thing as bad publicity. In the end, nobody was hurt, and the Jordache brothers were happy to have their brand name plastered all over the news. The only casualty of the accident was Airship Enterprises' only blimp, but Lou Pearlman was always a few steps ahead. Lou had originally paid a higher premium to ensure a larger, higher quality blimp like the ones made in Germany.

But when he decided to use a lower quality logging balloon instead, the insurance company failed to adjust the coverage, even after being alerted to the change via memo authored by Perlman. Long story short, Lou Perlman had technically covered himself, and after a few years of litigation, the insurance company agreed to pay out $2.5 million for a balloon that had only costed a few hundred thousand dollars to build, leaving many to wonder if the Jordache crash was a scam from the beginning.

If it was, Lou Pearlman had gotten away with it, and he had $2.5 million to show for it. He finally had enough cash on hand to purchase one of those German blimps that he was drooling over, and he had already secured a big-time client, McDonald's, to be the first company advertised on it.

1982 was a big year for Lou Pearlman. Between his helicopter commuting business, his transcon airline and travel businesses, and his blimp business. According to Lou, he had generated over $400 million in revenue.

He finally moved out of his parents house to a penthouse in Queens. He had three offices in Manhattan. And yet, he still had not paid one of his childhood best friends, Alan Gross, for the work he had done to help launch those businesses. Alan Gross would eventually break away from Lou in the late 80s and settle over a decade's worth of unpaid work for a single payment of $11,000.

Throughout the 80s, Lou continued to raise capital for Transcontinental Airlines, which was now operating 400 jets and generating more than $80 million a year. Lou promised friends and family a 20% return on their investments, and in order to seal the deal, he shared the exciting news about the impending initial public offering for his new blimp company, Airship International.

After seeing him chauffeured around town in stretch limos or driving around in his brand new cornflower blue Rolls Royce, many of those friends and family were eager to hand over their entire life savings to Lou as an investment. Everyone wanted a piece of the pie, even though it was obvious that Lou wasn't fond of sharing anything, especially pie. Unfortunately, other than a few savvy investors who pulled their funds out early, no one else would ever see a dime of that money ever again.

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In 1991, Lou Pearlman relocated his Transcon headquarters to Orlando, Florida.

Many of his hometown friends and employees like Frankie Vasquez relocated with him. After his mother died on an operating table in 1988, Lou had very little reason to stay in New York. The Florida weather was better suited for flying a blimp anyway. During those first few years in Florida, Airship International had recruited a few more big-name clients such as MetLife Insurance and SeaWorld, and shares of the company had been trading publicly on the stock market since 1985.

With the help of Lew's former neighbor in New York, Jerome Rosen, a stockbroker who had been banned from trading in Canada because of fraudulent activities, Airship International raised another $3 million through the sale of shares with artificially inflated prices, a practice known on Wall Street as a pump-and-dump scheme.

But despite the influx of cash, by the early 90s, Lou Pearlman's blimp business was struggling. At least three of its blimps had crashed for different reasons. The company's stock price responded by deflating to 3 cents per share, down from its mid-80s peak of $6 a share. Lou's golden parachute once again came in the form of insurance money paid to him for the crashed blimps, even though it had been suggested that Lou never actually owned the blimps that crashed.

There have always been rumors that Lou was merely leasing the blimps from Wollenkämper and thus had fraudulently collected insurance proceeds that weren't rightfully his. The future of Airship International was grim, but the truth is that Lou Pearlman's heart wasn't really into it anymore anyway.

By 1991, Lou Pearlman had become infatuated with something else entirely. Seeing the pop group New Kids on the Block take the world by storm with their cool haircuts and catchy songs reignited Lou's love for the entertainment business.

and the hundreds of millions of dollars the group was generating had certainly caught his eye as well. Lou already had some familiarity with the music industry. In the 1970s, Pearlman had played in and eventually managed a rock band named Flyer, but nothing substantive ever happened with it. But he had watched his cousin Art's Ascent of Stardom and became convinced that he had what it took to do the same thing. The only issue was that Lou Pearlman never had the talent to make it big in the music business, but he did have a good idea.

In 1992, Lou posted flyers and classified ads seeking teenage male vocalists everywhere teenage male vocalists in Orlando might see them. The ad read, quote, Producer seeks male singers that move well between 16 and 19 years of age. Wanted for new kids type singing slash dance group. Send photo or bio of any kind. The response was overwhelming. Florida was rife with young Disney-aged hopefuls trying to get a big break in the business.

More than 60 kids showed up at Lou's house to audition for the gig, but in the end, only five unknown performers remained. We have five very popular new guys here. Two of you guys are from Orlando, right? It's called the Backstreet Boys, brand new group. And, well, we're not gonna confuse you with those other kids, you know, the other singing group, but we're not gonna do that. But anyway, which two of you are from Orlando?

What is your name? I'm AJ McLean. AJ, and who are you? Howie D. Howie? Okay, now, where are you from? I'm from Lexington, Kentucky. My name's Brian Littrell. Brian, okay. And over here? I'm from Tampa, Florida, and I'm Nick Carter. Okay, and who are you? I'm Kevin Richardson. I'm from Lexington, Kentucky. The new heartthrobs, huh? What do the girls have to say about this? Well, they like us. Hey, let's check it out.

Lou Pearlman spent over $3 million preparing the Backstreet Boys for superstardom. He paid for vocal coaches, composers, choreographers, and musicians. He had an entire stage set up complete with a sound system built inside one of his recently vacant blimp warehouses. He brought in the former managers of New Kids on the Block, created his own production and distribution companies, and rented a house for the boys to live in.

Everything about the Backstreet Boys was carefully manufactured and packaged into a perfect product of pretty faces and baggy clothes, ready to be sold to pre-teen girls and emotionally stunted adults. Even harmless interview questions had rehearsed answers and talking points that the boys adhered to, so as not to upset any of their demographic that might be listening.

The Backstreet Boys' world takeover started in Germany, with Lou Pearlman behind them every step of the way.

The group played sold-out shows in arenas across the country on the back of the success of their first album, which had debuted at number one on the German charts. Japanese and Canadian audiences were the next in line to be conquered, but the group was still relatively unknown in the States, although that was about to change. When the boys returned home from their international tour, they signed a recording contract with Jive Records and began working on their second album. Here is Lou Pearlman leading a toast to his group's recent success.

No thanks.

In June 1997, the Backstreet Boys released their second album titled Backstreet's Back to Little Fanfare's State Side. But by the end of the year, their hit single Everybody would propel them to the top of the American charts and nothing would ever be the same. The Backstreet Boys were receiving a nauseating amount of airplay on the radio and became mainstays on MTV's video countdown show Total Request Live. They rode that wave of momentum to massive world tours, red carpets, and an endless amount of public appearances.

Being a Backstreet Boy was hard work.

Here's Lou Pearlman describing the exhausting itinerary in which his boys were undertaking. They go about their day practicing for rehearsals, maybe for a show that evening, doing more press during that day, meet and greets, going to record stores, doing signings, all these different things. And it's a long day. And at the end of the day, they plop down in their bed, which they don't know where they are sometimes, you know. They forget what city they're in or what country they're in. And if you watch an artist...

I mean, they just go through a lot of stress. Lou Pearlman knew exactly how hard it was to be a Backstreet Boy because Lou Pearlman considered himself the sixth Backstreet Boy. And not just delusionally, but legally as well. In the contracts the band signed with Pearlman, Lou was listed as the sixth member of the group, which meant he was entitled to one-sixth of the band's income. Well, what was left of the band's income anyway.

After reimbursing Lou's companies for footing the bill for all travel, entertainment, rent, fancy dinners, recording costs, etc., the Backstreet Boys, who were probably the most popular musical act on the planet at the time, took home a measly $300,000, which they then had to split five different ways. Lou Pearlman, on the other hand, had pocketed as much as $10 million.

This is Backstreet Boys member Brian Luttrell. Well, I initially filed what's called an open lawsuit, an open-ended lawsuit, because I couldn't do it by myself. You know, I knew things were wrong. I was disappointed. Knowing the work and the effort that we were putting in to the show after show after show, and this guy sitting in his office, and he's getting checks, I was like, something's wrong. Something was wrong, and Lou Pearlman had no intention of making it right.

I literally begged him physically in his office to make it right, and he didn't do it. You know, I gave him every opportunity, and then that's when all else fails. I had to, you know, file the lawsuit. The guys jumped on, and then that's when our direction kind of went and steered the other way. Those are just things that happen when it comes to the realization of, like,

dang, you know, you thought this guy was going to be for you. And yes, we are grateful. But at the same time, if greed didn't become such a part of what we were, you know, we were just some young kids that wanted to sing and make a mark and not be marked up from all of the crap, you know. And so it, you know, our path changed.

The lawsuit between the Backstreet Boys and Lou Pearlman was settled out of court in 1998 for an undisclosed amount, and the relationship was damaged beyond repair. The boys were left to reconcile their gratitude for the man that gave them a chance with their hatred of the man that took advantage of them and ripped them off for millions of dollars. This is Backstreet Boy A.J. McLean. And to find out he's been a con man this whole time makes you think, was anything ever true? Anything you ever said to us or did for us, was it all really true or was it...

Half and half or was it all bullsh*t? The Backstreet Boys released their third album, Millennium, in 1999 without six-member Lou Pearlman. The album debuted at number one, selling more than a million copies in its first week. As of today, the Backstreet Boys are the top-selling boy band of all time, with over 130 million records sold worldwide. Lou Pearlman, on the other hand, was already years in the process of testing his boy band formula.

By the time he parted ways with the Backstreet Boys, Pearlman had another group of five teenagers sitting at the top of the charts. "We're NSYNC!" NSYNC, huh? What could that possibly mean? "It was actually my mom, kind of, spit out the name NSYNC. She thought of it and what it means is together with our harmonies and together with our dancing,

And, I mean, it was a perfect name, we thought. We looked at the name after we had chosen the name, and it was kind of funny because we realized that the last letters of each of our first names actually spelled in sync. It's like Justin for the N, and Chris for the S, Joey for the Y, Lansing for the N, and JC for the C. And that spells N-S-I-N-K. Thanks for that explanation, super young and awkward Justin Timberlake.

After the Backstreet Lawsuit made headlines, it didn't take long for the NSYNC boys to figure out that they were getting a raw deal from Lou as well. The group had sold a total of 4 million albums in 1998, but were living on a cash per diem of $35 each per day. NSYNC spent much of 1999 trying to renegotiate their contract to no avail. With the help of their lawyers, they eventually found a loophole in their contract that allowed them to sign with a different record label.

Pearlman sued the band for breach of contract for $150 million, to which NSYNC countersued for the same reason for $25 million. The lawsuit was settled in December 1999 for an undisclosed amount. And just like the Backstreet Boys, NSYNC would follow up their legal battle with Lou Pearlman with the release of their most successful album, which they released in the year 2000, appropriately titled No Strings Attached.

Lou Pearlman wasn't worried. He had struck gold twice with Backstreet and NSYNC. There's no reason he couldn't do it again. Lou was convinced that their success was more of a reflection of his formula than their talents.

Even the media began to agree with him. King of Pop has actually been Michael Jackson's title for some time now, but now some people are beginning to apply it to a new king who isn't a singer or a performer and who has no musical training at all. Meet Lou Pearlman. How you doing? How you doing? Founder and CEO of the Transcontinental Companies, a billion dollar team. In fact, Lou was so unconcerned with the current state of his musical roster that his spending never slowed.

If anything, he was spending more than ever. Transcon expanded to include a deli, a compact disc manufacturing company, and a scam disguised as a modeling company that promised magazine covers and acting roles to unattractive people who paid the company $1,000 for professional headshot photographs. At this point, Lou Pearlman was almost entirely out of the Blimp business, having sold his remaining shares to Julian Binsher, a business partner that he met at Australia tycoon Alan Bond's property sale.

Pearlman was also almost completely out of his air travel business. The corporate registration for Transcontinental Airlines had expired in March 1999 and was never renewed. But that didn't stop Lou Pearlman from continuing to sell shares of the company to private investors as if it were still operating. To centralize his businesses, Pearlman worked out a deal with the city of Orlando to redevelop and repurpose Church Street Station, a fledgling tourist attraction in the heart of downtown that had morphed into an eyesore.

Before long, the once abandoned train station was crawling with overly tanned pretty boys in sleeveless t-shirts who were recording in the music studio, working out in the gym, swimming in the pool, or practicing their dance moves in one of the rehearsal spaces. Lou had essentially created a boy band factory designed to continuously pump out America's newest heartthrobs. "France Continental Company's business track record will bring music to your ears when it comes to experience in capturing the teen market."

Founded by Louis J. Perlman, a name now synonymous with the music industry, Transcontinental introduced the world to hugely successful music groups, hit TV shows, and a feature film packed with stars. And that's just the beginning. Hopeful teenagers from all over the country would travel to Church Street in an attempt to get noticed by Lou, and Lou had no problem finding a spot for the new talent.

Many of them were given menial jobs like driving Lou around in his fancy cars or emptying the trash cans in his office in exchange for eventual pop stardom. Lou even moved a few of the boys into his mansion. He just liked having them around. The fact that did not do much to help quell the budding rumors about Lou Pearlman's sexuality and his preference for young men. Rich Cronin of the Lou Pearlman-backed band LFO was perhaps the most outspoken about Lou Pearlman's sexual deviance. You remember LFO, right?

They sing that one song about liking girls who wore Abercrombie & Fitch and how Chinese food made them sick. Brilliant stuff. Here's Rich recalling a time when Lou, who demanded his artists refer to him as "Big Papa", became very forward with him. He lost his temper on the phone and he said he told me what he wanted. He said he wanted... he wanted to touch... touch my... you know, dick. Listen, I wanna... you're gonna come to my house, fuck the bullshit!

Rich also claimed that Lou told the boys in LFO that the Backstreet Boys became famous in Germany because one of the members spent the night alone with a German media mogul. And according to Rich Cronin, Lou told the boys in LFO that they too could be famous in Germany if they agreed to the same deal.

And since Lou Pearlman knew exactly what this mysterious man from Germany wanted, he offered to practice on the boys so that they would know what to expect. Some of Lou's boys have told stories about hands on thighs, massages, naked wrestling matches, weird late night bedroom visits, and more. But despite these allegations, no charges were ever levied against Lou Pearlman related to sexual misconduct.

Many of the highest-ranking members of his stable, including Lance Bass, have denied experiencing or being aware of Lou's rumored predatory behavior. Most of the accusers were simply dismissed as bitter rejects or failures of Pearlman's pop music factory. Besides, Lou Pearlman had a longtime girlfriend named Tammy Hilton. Lou met Tammy in 1996 when she was assigned as his at-home nurse after a cyst on his liver had ruptured, almost killing him.

since his mother had died as a result of post-surgery complications. Lou Pearlman was terrified of going under the knife and refused all required operations. Luckily, Lou survived without them, thanks in part to his nurse and new girlfriend Tammy, whom he would never share a bed with in the 10 years that the two were acquainted. Totally normal.

Lou Pearlman's last hurrah in the music industry came in 1999 when he partnered with ABC and MTV to create a TV show called "Making the Band" which embarked on a reality show style nationwide search to build the next big boy band. Lou named the band O-Town as an ode to his adopted hometown of Orlando for which he had been given the key.

O-Town never garnered near the amount of attention nor money as Lou's previous projects, and he would never get the opportunity at making another one because his aviation and pop music empire was about to be exposed for what it really was, a massive fraud. The largest single investor in Lou Pearlman's businesses was an engineering professor in Chicago named Dr. Joseph Chow.

Since the early 90s, Chow had invested over $14 million with Lou Pearlman, a large portion of which was put into Transcon's Employee Investment Savings Account Program. The Employee Investment Savings Account Program, or EISA, was Lou's company-managed retirement program that he offered to his employees and investors, and eventually the public. Sort of like a 401k, but with higher than average returns. According to the documentation supplied to potential investors, there was very little risk involved.

All of the accounts were backed by the FDIC on top of insurance policies from AIG and Lloyds of London, and all of its financial statements had been audited by Cohen and Siegel, an accounting firm based in Coral Gables, Florida. When Dr. Chow died in 2004, his family attempted to withdraw the money invested in Pearlman's EISA. Pearlman stalled at every turn, refusing to pay the money to the family or supply the needed documentation. At one point he even told the Chows that the documents were blown away in a hurricane.

when he eventually offered them a settlement of 10 cents on the dollar. The family hired an attorney who began digging into Pearlman's businesses. Not only was it discovered that there were no AIG or Lloyds of London insurance policies covering the EISA, it was discovered that the accounting firm Cohen and Siegel did not even exist. Neither did Transcontinental Airlines, which was once Lou's main business. Transcontinental had only existed on paper. Lou never actually owned any airplanes.

The transcon plane on the cover of the investment brochure for the company was a miniature model photograph to look like it was flying. It was also discovered that Lou Pearlman had not filed taxes since 2001. All of the financial statements that he had supplied investors had been completely bogus. Not only did he use those financial statements to fool people like Dr. Chow, he used them to trick legitimate financial institutions into loaning him a combined total of $160 million over the years.

Throughout his career, Lou Pearlman borrowed new money to cover old money, the classic definition of a Ponzi scheme, and he used that money to prop up his other endeavors, you know, buying blimps and developing bands, putting on the appearance of success. The sad truth was that Lou Pearlman, by 2004, had very little, if any, income and massive amounts of debt.

Over a period of 20 years, Lou Pearlman had created more than 84 corporate entities to bilk as many as 1,800 investors, including some of his closest friends and family, out of more than $500 million in total. And the worst part, it probably could have been stopped much earlier. We believe the state of Florida was negligent in their handling of the investigation. And we believe that the governor and possibly the attorney general

took donations and received money from Transcontinental and that creates a conflict of interest for them. The first complaint from investors about the potential fraudulent nature of Lou Pearlman's businesses happened 12 years earlier. But the Florida Attorney General at the time, Charlie Crist, who would later become the governor of the state, called a halt to the investigation because Lou Pearlman had donated $10,000 to Florida's Republican Party.

when it became obvious that the entire operation was a scam. Frankie Vasquez, one of Lou Pearlman's childhood friends that by all indications had unwillingly and unknowingly participated in his scam, walked into his garage, climbed into his Porsche, wrapped a green t-shirt around his face and cranked the ignition. When police arrived, the garage door was so hot it almost burned their hands.

Inside of the house, they found Frankie's will, a list of computer login information, and other useful documents neatly organized into piles on the living room floor. In March 2007, Lou Pearlman was ruled involuntarily bankrupt. His home and offices were raided. His assets were seized and auctioned off. There were no more mansions or fancy cars or expensive watches. No more airships or serenades from boys with shiny earrings and gelled hair. There was no more Big Papa.

Figuratively and literally, Lou Pearlman had disappeared months ago. Apparently, Lou Pearlman spent the next six months traveling the world, avoiding his inevitable arrest. He went to Germany, to Spain, to Panama, to Singapore, before he eventually landed in Indonesia, where he was spotted at a buffet of all places by German tourists and reported to the FBI on June 14th, 2007. As of, um...

0600 this morning. A flight came in from Bali, continental flight, and Mr. Louis J. Perlman was on board and he was arrested officially by the FBI approximately 6 o'clock when the flight landed. He was brought to our office here around 1 o'clock this afternoon for arraignment, initial appearance.

It was discovered that while Lou was on the lam, he posed as a phony German bank and filed a $5 million claim against his own company that was currently being liquidated in bankruptcy. The last act of a desperate man. Perlman was in complete denial about his situation, at least publicly. He told everybody that would listen that he expected the charges to be dropped, and he asked the judge for phone and internet access so he could continue promoting his bands.

Yet on March 3rd, 2008, Lou Pearlman faced reality and pleaded guilty to money laundering, bank fraud, bankruptcy fraud, and investment fraud. When determining Pearlman's sentence, Judge G. Kendall Sharp read letters and listened to testimony from some of Lou's victims, like Lois Nevler, Lou's cousin. She told the judge, quote,

Please do not be lenient on him. He does not deserve it. Winetta Reynolds took the stand and shared with Judge Sharp how her husband, before his death, had invested more than $3 million into EISA. She described to the courtroom how tears were running down her husband's face when he found out he had lost it all. Her husband realized that he would not be able to provide for his family after he was gone. She described how he looked at her and told her, quote,

There were other stories of 80-year-old retirees who could no longer afford health insurance. Stories of younger retirees losing everything and returning to work new jobs, sometimes two, which they would probably continue to do until their dying days. Quote, Mr. Perlman has ruined my life. No amount of money would restore my dignity or peace. Lou Perlman was given the maximum sentence of 25 years for his crimes. As part of his plea deal, Lou was given a one-month reduction in sentence for every million dollars that he returned.

All of the funds recovered from the sale of Perlman's assets would be returned to his victims. But needless to say, his victims weren't satisfied. This hasn't really affected me personally, but it's affected my grandchildren. Because that money was there for their college education. It's gone. No, it doesn't go far enough for me. I lost what I lost. Four cents on the dollar is nothing. It's in my retirement. It's...

It's gone. Even if he gets the money back, he should be put in jail and kept in jail until he dies. That lady would receive her wish. On August 19th, 2016, Lou Pearlman died in a prison in Texarkana, Texas at 62 years old. And get this, he died of complications as a result of surgery, just like his mother and just like Alan Bond. Full circle. Lou Pearlman's artist, he was Big Papa.

He was a creative, energetic entrepreneur in the music industry. To others, he was the biggest swindler and con man in the history of Florida. Swindled is written, researched, produced, and hosted by me, a concerned citizen, with music by Ethan Helfrich. For more information about the show, follow us on Twitter, Facebook, and Instagram at Swindled Podcast, or visit swindledpodcast.com, which has been newly redesigned. Go check it out.

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