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The Man Who Created Backstreet Boys and NSYNC – And Then Ripped Them Off

Lou Pearlman

The Backstreet Boys and NSYNC were two of the biggest boybands of the 1990s and 2000s, but things turned ugly when they were ripped off by their "sixth member."

Louis Pearlman, 62, was the brains behind a number of boybands and pop acts during the period but was ultimately sued and sent to prison after carrying out a massive Ponzi scheme.

Pearlman was born in New York and was inspired by the musical success of his first cousin - the legendary Art Garfunkel.


He initially ran a successful airship business but was always fascinated by the success of the first boyband - New Kids on the Block.

The band had made hundreds of millions of dollars and Pearlman saw the money-making potential of similar acts.

Inspired by this, Pearlman set up his own record label called Trans Continental Records.

The first band he signed was The Backstreet Boys.

The group contained five unknown performers who were chosen by Pearlman after a $3 million talent search.

The band went on to be the most successful boyband of all time, selling 130 million records.

After the success, Pearlman took on the management of NSYNC.

The band went on to launch the career of Justin Timberlake and sell 70 million records of their own.

Pearlman went on to manage a large number of other bands and singers.

He also owned an entertainment complex in Orlando called Trans Continental Studios.

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Pearlman was sued by nearly all the groups he worked with

Things went sour for Pearlman after a large number of the musicians took him to court for misrepresentation and fraud.

All of these cases were either won or settled out of court.

The first suit was from the Backstreet Boys.

The group said said their contract with Pearlman, which he collected as their manager and producer, also had him as the sixth member of the band.

This means despite not being in the band, he was paid one-sixth of their income.

This meant the band members had initially split $300,000 while Pearlman and the label raked in millions.

NSYNC felt the same.

In 2002, 14-year-old Aaron Carter - brother of Backstreet Boy Nick Carter - also claimed Pearlman and the label cheated him out of hundreds of thousands of dollars.

That suit was settled out of court.

The longest-running Ponzi scheme in American history

In 2006, it was discovered Pearlman was the perpetrator of the longest-running Ponzi scheme in American history.

He had enticed investors to pump money into his record company for more than 20 years.

He defrauded people of more than $1 billion, of which $300 million is still missing.

The companies - Trans Continental Airlines Inc, TransCon Records, and both companies' parent, Trans Continental International Inc - only ever existed on paper.

When the boybands became massively successful, he took his fraud to the next level.

He used fake Federal Deposit Insurance Corporation, AIG, and Lloyd's of London documents to secure even more cash in a program titled Employee Investment Savings Account.

He also used fake financial statements from the made-up accounting firm Cohen and Siegel to secure bank loans.

In 2007, the investigators concluded Pearlman was committing a massive fraud and took possession of the company.

Around $95 million collected from investors was gone.

In February 2007, Florida regulators announced Pearlman's Trans Continental Savings Program was indeed a massive fraud, and the state took possession of the company.

Pearlman and two of his associates, Robert Fischetti and Michael Crudelle, were ordered by the judge to bring back any assets taken abroad "derived from illegal transactions."

The investigation led to Pearlman being charged with three counts of bank fraud, one count of mail fraud, and one count of wire fraud.

Jailed for 25 years for Backstreet Boys and NSYNC fraud

Pearlman was jailed for 25 years in May 2008 for charges of conspiracy, money laundering, and making false statements during a bankruptcy proceeding.

His companies had been forced into involuntary bankruptcy in March 2007.

Investors in the companies made millions from auctioning Pearlman's assets and personal items.

This included a mansion full of well-known works of art and priceless memorabilia, later discovered to be mostly fake.

Pearlman's jail sentence was due to end in March 2029.

However, he suffered a stroke in 2010, which led to him having heart surgery.

Six years later, he died from cardiac arrest at the age of 62.

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