Lou Pearlman, a convicted Ponzi scheme operator who became famous in the 1990s as the record company owner and manager behind a string of top-selling pop groups including Backstreet Boys and NSYNC, died Friday from undisclosed causes while in prison. He was 62.
From Flushing, NY, Pearlman began his adult life working in aviation, attempting in the late 1970s to launch an air taxi business using helicopters and, later, a similar business using airships. By the early ’90s he was a millionaire owing largely to a talent for fraud, and turned his attention to music. Pearlman founded his own record label, Trans Continental Records, with the goal of copying the boy band model pioneered by New Kids On The Block producer Maurice Starr, and struck gold with his first band, Backstreet Boys. Following in their success, Pearlman and his associates repeated the process step by step with the almost equally successful NSYNC.
He would go on to sign pop groups like reality TV project O-Town, Take 5, Natural and US5, the girl group Innosense, and solo artists like Aaron Carter, Jordan Knight, Smilez & Southstar and C-Note.
Pearlman enjoyed huge success with his artists, but with the exception of US5 ended up being sued by all of them for misrepresentation and fraud. For example, he and his label made millions from the Backstreet Boys, while the group itself made only $300,000. Pearlman either lost every case or was forced to settle out of court. He eventually left music production and moved into talent representation, but the company he formed went out of business after multiple accusations of fraud.
Pearlman’s fall came in 2006, when it was discovered that he had for nearly 20 years ran a complex Ponzi scheme, drawing investors for companies that existed on paper only. When Florida state regulators seized his companies and brought charges against him, Pearlman fled the country. He was caught in Indonesia in June 2007 and, after being returned to the U.S., was sentenced in 2008 to 25 years in prison without the possibility of release until 2029.