This Extremely RARE Certificate was Featured on 60 Minutes. Airship International stock certificate. Blimp Dirigible Zeppelin Company. Notorious Fraud and Ponzi Scheme. Digital signature of Louis Pearlman scam artist, founder and manager of Backstreet Boys and NSYNC. Dated 1998, pre-bankruptcy certificate. 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. After attempting to evade capture, Pearlman was apprehended in Bali, Indonesia in June 2007. In 2008, Pearlman was convicted and sentenced to 25 years in prison. [3][4] He died in federal custody in 2016. [5] 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 own 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. [8] 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 the airships. 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. 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. 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. Entertainment industry career[edit] Pearlman became fascinated with the success of the New Kids on the Block, who had made hundreds of millions of dollars in record, tour and merchandise sales. He started Trans Continental Records with the intent of mimicking their boy band business model. Pearlman and the Wrights were then introduced to NSYNC, which was formed by Chris Kirkpatrick. With these two major successes under his belt, Pearlman had become a music mogul. Other boy bands managed by Pearlman were O-Town (created during the ABC-MTV reality television series Making the Band), LFO, Take 5, Natural, Marshall Dyllon (co-created with country music artist Kenny Rogers)[13] and US5, as well as the girl groups Solid HarmoniE and Innosense (with Britney Spears in the very beginning as a short-term member), co-managed with Lynn Harless (the mother of NSYNC band member Justin Timberlake). Other artists on the Trans Continental label included Aaron Carter, Jordan Knight, Smilez & Southstar and C-Note. Pearlman also owned a large entertainment complex in Orlando, including a recording studio he called Trans Continental Studios, and a dance studio near Disney World named O-Town. [9] In 2002, Pearlman and Wes Smith co-wrote Bands, Brands and Billions: My Top 10 Rules for Making Any Business Go Platinum. [14] Band lawsuits[edit] With the exceptions of US5 and Marshall Dyllon, all of the musical acts that worked with Pearlman sued him in federal court for misrepresentation and fraud. All cases against Pearlman either have been won by those who have brought lawsuits against him or have been settled out of court. The members of Backstreet Boys were the first to file a lawsuit against Pearlman, feeling that their contract-under which Pearlman collected as both manager and producer-was unfair, because Pearlman was also paid as a sixth member of the Backstreet Boys i. One-sixth of the band’s own income. Fellow boy band NSYNC was having similar issues with Pearlman, and its members soon followed suit. [7] At the age of 14, Aaron Carter filed a lawsuit in 2002 that accused Pearlman and Trans Continental of cheating him out of hundreds of thousands of dollars and of racketeering in a deliberate pattern of criminal activity. This suit was later settled out of court. Regardless of the name, all incarnations were based on the business model used by Emodel founder Ayman “Alec” Difrawi, himself a convicted con artist, [16] who played a principal role in running Options/TCT/WSN[17] and setting up Fashion Rock. The companies received unfavorable press attention, ranging from questions about their business practices to outright declarations that they were scams. [21] The New York State Consumer Protection Board issued an alert, naming it the largest example they had found of a photo mill scam. [22] San Francisco’s labor commissioner declared Options/TCT/WSN in violation of California law, and several state agencies were reported to be investigating the company. [23] In Florida, around 2,000 complaints were filed with the then-Attorney General Charlie Crist and the BBB, and an investigation was started by Assistant Attorney General Dowd. However, as the newly appointed Assistant AG MacGregor was unable to find “any substantial violations”, no charges were filed. Further complicating matters was the fact that the company had since declared bankruptcy, leaving no deep pockets from which to collect damages. [24] By June 2004, Fashion Rock, LLC had filed a civil suit for defamation against some who had criticized Pearlman’s talent businesses. The case was dismissed and closed in 2006. [25] One of the accused, a Canadian consumer-fraud expert Les Henderson, successfully pursued a libel lawsuit against Pearlman, Tolner, El-Difrawi and several others. [28] Difrawi continued filing lawsuits that were all dismissed and was most recently running Expand, Inc. For more than 20 years, Pearlman had enticed individuals and banks to invest in Trans Continental Airlines Inc. TransCon Records, and both companies’ parent, Trans Continental International Inc. All three companies were fictions that existed only on paper-at least until Lou Pearlman’s boy bands took off and TransCon Records was profiting from signed acts. After the success of NSYNC and Backstreet Boys, he turned the groups and their fame into the engine to further expand his Ponzi scheme. [7] Investigation and arrest[edit] In February 2007, Florida regulators announced that Pearlman’s Trans Continental Savings Program was indeed a massive fraud, and the state took possession of the company. [31] Following a flight from officials, over the course of which he reportedly had been seen in Israel and Germany, Pearlman was arrested in Indonesia on June 14, 2007, after being spotted by a tourist couple from Germany. [32] He was living in a tourist hotel in Nusa Dua in Bali. Pearlman had been seen in Orlando in late January 2007, in early February in Germany, including an appearance on German television on February 1. Reportedly he was seen in Russia, Belarus, Israel, Spain, Panama, and Brazil. In early February, an attorney in Florida received a letter from Pearlman sent from Bali. [33] Pearlman was then indicted by a federal grand jury on June 27, 2007. [35] Conviction and sentencing[edit] Five days before his sentencing in May 2008, Pearlman requested a telephone and an Internet connection two days a week to continue to promote bands. Kendall Sharp of the U. District Court for the Middle District of Florida rejected the request. Pearlman could reduce his prison time by one month for every million dollars he helped a bankruptcy trustee recover. He also ordered individual investors to be paid before institutions in distributing any eventual assets. [37] Bankruptcy[edit] Pearlman and his companies were forced into involuntary bankruptcy in March 2007. They quickly discovered the art and memorabilia was mostly fake. Cronin claimed that Pearlman had “wanted to bang everyone” and had attempted to seduce him multiple times. Cronin was of age. [41] Fellow LFO band member Brad Fischetti, however, continued to refer to Pearlman as a friend, expressed sadness at the news of his arrest, imprisonment, and death. [42] Nick Carter, when asked if the claim was true, suggested that bitterness might be a motivating factor for the claim. [43] In an interview conducted by the Orlando Sentinel, former NSYNC member Lance Bass, when asked about the claim, stated that Pearlman had never behaved inappropriately with them. [44] Death[edit] In 2008, Pearlman began his prison sentence with a projected release date of March 24, 2029. However, he suffered a stroke in 2010 while incarcerated. [36] He was diagnosed with an infection of a heart valve. Pearlman had surgery to replace a heart valve a few weeks before his death. The prison took him to a hospital where he was scheduled for another surgery. Pearlman ultimately died while still in custody at the Federal Correctional Institution in Miami, Florida, on August 19, 2016, from cardiac arrest. He was buried ten days later on August 29, 2016, in the family burial area. He was 62 years old.