True Crime/Paranormal/Conspiracy Theories Part VII

Boy Band Mogul: Lou Pearlman

Louis Jay Pearlman (June 19, 1954 – August 19, 2016) was an American talent manager and scam artist. He was the person behind many successful 1990s boy bands, having formed and funded the Backstreet Boys. After their massive success, he then developed NSYNC.

In 2006, he was accused of running one of the largest and longest-running Ponzi schemes in United States history, leaving more than $300 million in debt. After attempting to evade capture, Pearlman was apprehended in Bali, Indonesia in June 2007. He pled guilty to conspiracy, money laundering, and making false statements during bankruptcy proceedings. In 2008, Pearlman was convicted and sentenced to 25 years in prison. He died in federal custody in 2016.

Early life

Lou Pearlman was born and raised in New York City, New York, the only child of Jewish parents Hy Pearlman, who ran a dry cleaning business, and Reenie Pearlman, a school lunchroom aide.

He was a first cousin of the musician Art Garfunkel.

Pearlman's home at Mitchell Gardens Apartments was located across from Flushing Airport, where he and childhood friend Alan Gross would watch blimps take off and land. According to his autobiography, Bands, Brands, & Billions, it was during this period that he used his position on his school newspaper to earn credentials and get his first ride in a blimp. This is disputed by Gross, who claims he was the school reporter and allowed Pearlman to tag along.

Garfunkel's fame and wealth helped inspire Pearlman's interest in the music business. As a teenager, he managed a band, but when success in music proved elusive, he turned his attention to aviation. During his first year as a student at Queens College, Pearlman wrote a business plan for a class project based on the idea of a helicopter taxi service in New York City. By the late 1970s, he had launched the business based on his business plan, starting with one helicopter. He persuaded German businessman Theodor Wüllenkemper to train him on blimps and subsequently spent some time at Wüllenkemper's facilities in West Germany learning about airships.

Suspicions of insurance fraud and pump-and-dump

Returning to the U.S., Pearlman formed Airship Enterprises Ltd, which leased a blimp to Jordache before actually owning one. He used the funds from Jordache to construct a blimp, which promptly crashed. The two parties sued each other, and seven years later Pearlman was awarded $2.5 million in damages.

On the advice of a friend, Pearlman started a new company, Airship International, taking it public to raise the $3 million he needed to purchase a blimp, falsely claiming that he had a partnership with Wüllenkemper. He leased the blimp to McDonald's for advertising.

Pearlman then relocated Airship International to Orlando, Florida, in July 1991, where he signed MetLife and SeaWorld as clients for his blimps.

Airship International suffered when one of its clients left and three of the aircraft crashed. The company's stock, which had once been pumped up to $6 a share, dropped to a price of three cents a share, and the company was shut down.

After he took the company public in 1985, Pearlman became personally and professionally close to Jerome Rosen, a partner at small-cap trading firm Norbay Securities. Based in Bayside, Queens, and frequently in trouble with regulators, Norbay actively traded Airship stock. This sent Airship's stock price consistently higher, enabling Pearlman to sell hundreds of thousands of shares and warrants at ever-higher prices. However, Airship was reporting little revenue, cash flow, or net income. In return for keeping his penny stock liquid, Pearlman allegedly paid Rosen handsome commissions, according to a mutual friend, that reached into 'the tens of thousands of dollars' per trade.