Lou Pearlman at Large
Depending on whom you speak to, Lou Pearlman's been guilty of swindling money from people for years. When Lori and I lived in Orlando, his Trans Continental Entertainment organization cast a shadow over the entire region's creative scene. Pearlman often tried to translate his success with creating the Backstreet Boys and N'Sync into other arenas, especially when they involved baby bands, models, and wealthy investors.
For example, someone very close to me wound up at a job interview for one of Pearlman's enterprises, which basically consisted of extracting a few hundred dollars from aspiring singers and models to reserve a head shot page on website, something you can easily do yourself in an afternoon using Starzoogle. The kicker was actually getting these poor folks to believe that the agency was actually doing something to get these artist web sites in front of industry execs.
Working on another project, I discovered that folks in the region often loved to boast that their studios or rehearsal spaces or equipment companies were favored vendors of Pearlman. In reality, Trans Continental owed money to nearly everyone in town. If you denied Pearlman access to your business, you risked alienating the other customers that wanted to cut their records where Lou did his. Nobody liked getting a call from Trans Continental, but everyone felt like they had to.
In the meantime, Trans Continental started snapping up pricey real estate in Orlando, including a historic downtown train station that had been converted to a nightclub complex. Lori and I walked around there one night and there were maybe five other lost tourists just trying to find a place to eat. But the perception that Lou was "behind" a project would give him tremendous leeway among city officials and people with otherwise sound common sense.
And so, the "lottery" mentality prevalent among many music scenes was in hyperdrive in Orlando. Instead of working hard to grow audiences, many of the musicians I met there were far more interested in getting "discovered" by someone like Lou Pearlman. They wouldn't hesitate to drop $700 on a "talent review" session with Lou's intern's second cousin, but they'd complain about the $35 enrollment fee at one of my live audience building workshops. C'est la guerre.
So, it's with only a little bit of Schadenfreude that I read today's reports that Lou Pearlman is wanted by the FBI and IRS for questioning in an investigation into Trans Continental Entertainment's fraudulent investment offerings.
The FBI alleges that Lou and his team advised senior citizens to invest money into a fund that was "100% insured" against loss, something that no legitimate investment opportunity can ever claim. When the seniors would call to complain or worry or -- heaven forbid -- pull money out of their accounts, Lou would get on the phone to tell them that everything would be alright as soon as he got back from whatever lavish music industry event he was attending at the moment.
The FBI estimates that Lou and his cronies bilked over $500 million from investors, banks, and insurance agencies.
Think about that for a moment.
If you've been reading my books, or David Hooper's books, or Bob Baker's books, you know that $100,000 a year is a totally doable income stream for many working musicians. By that math, he could have launched the careers of 5,000 working musicians with the same amount of money. Which is what most of the investors thought he was doing.
All we have left, since Lou spent that $500 million on private jets and hotel banquets, is the really, really funny idea of him trying to hide out in some off-the-grid village like an aging Nazi officer or mob boss in hiding. And, really, this is the kind of guy you're going to notice if he shows up in your town:
The bankruptcy trustee appointed by the state has taken over Trans Continental's website, stating that there's not even enough money left in the company to buy postage stamps to send out bankruptcy notices. I halfway expect the site to be hosted on GeoCities by the end of the month.
What to take away from all this?
It sounds cliche, but it's true. The more that someone tries to dazzle you with their hype and connections, the less they can really do for you and for your long term well being. Lou's an extreme case of the kind of folks that swim around the frings of the music business, and an example that even someone well-connected can wind up falling way off the rails.