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The Hit Charade: Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U. S. History

The Hit Charade: Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U. S. History

by Tyler Gray

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Without Lou Pearlman, there would have been no Backstreet Boys, no *NSYNC, and possibly no Justin Timberlake. In the late 1990s, Pearlman's boy bands ushered out guitar-and-angst-driven grunge music, and *NSYNC and Backstreet Boys began to dominate the television and radio airwaves. At the core of this squeaky-clean pop revolution was a sinister international fraud


Without Lou Pearlman, there would have been no Backstreet Boys, no *NSYNC, and possibly no Justin Timberlake. In the late 1990s, Pearlman's boy bands ushered out guitar-and-angst-driven grunge music, and *NSYNC and Backstreet Boys began to dominate the television and radio airwaves. At the core of this squeaky-clean pop revolution was a sinister international fraud conceived by Pearlman, a husky huckster who first honed his crooked business skills as a teenage math nerd and blimp enthusiast in Flushing, Queens. From there in the mid 1980s and from his Orlando, Florida, base in the early 1990s through 2007, he cheated hundreds of investors out of nearly $500 million. When they finally caught on to him and started demanding he return their money, the “Sixth Backstreet Boy” had already fled to Germany and then to Indonesia, where he was eventually nabbed by authorities and charged with a historic federal fraud.

Tyler Gray (the only journalist to speak with Pearlman while he was in jail) weaves together the fascinating behind-the-scenes story of the greed and desperation of this boy-band mogul and monumental scam artist. Gray unravels Pearlman's twenty-year long Ponzi scheme and explores persistent rumors about alleged inappropriate behavior by Pearlman toward members of the boy bands and other young men. Along the way, former friends, family members, Pearlman business associates, and band members themselves reveal detailed accounts of everything from the heyday of their stardom to Pearlman's more troubled times.

The Hit Charade starts with Pearlman's awkward youth and follows along as his juggling act becomes increasingly complex, then builds to the heartbreaking moments when investors—retirees, relatives, and friends—and government authorities discover that the man they had trusted had been cheating them all along. How did this chubby boy from middle-class Queens, who pioneered some of the music industry's most lucrative pop ensembles, mastermind one of the largest and longest running Ponzi schemes in U.S. history? Here, finally, is the true story of Lou Pearlman's epic rise and fall.

Editorial Reviews

Publishers Weekly

In the wake of phenomenally successful tweeny-bopper pop stars like Miley Cyrus and the Jonas Brothers-as well as the recent reunion of boy-band New Kids on the Block-the time is right for a good look at the ever-present sleaze of the music industry, and journalist Gray provides it in great, greasy bucketfuls. His focus is Lou Pearlman, the manager of the Backstreet Boys and INSYNC who, Gray explains, used their earnings to finance his exorbitant lifestyle including a multimillion-dollar mansion, a fleet of private planes and expensive cars, and, inevitably, "a shady world of endless investments." Gray's look at the bands' music is serviceable. However, Gray has a keen eye for business, and he writes fluently in detailing how Pearlman with "an assembly of hucksters as his new business partners," massively scammed not only his boy bands (he collected "50 percent of all recording royalties, 100 percent of all advances") but hopeful model wannabes as well as gullible investors, including Pearlman's first cousin Art Garfunkel and government officials of Orlando, Fla. (Nov.)

Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Library Journal

Gray, a senior editor for Blender magazine, has written a juicy tale of the sinister goings-on behind some of the biggest bands in popular music. He describes the machinations of Lou Pearlman, who promoted squeaky-clean pop bands 'N Sync and the Backstreet Boys while doing the dirtiest of deals, ultimately cheating hundreds of investors out of nearly $500 million. This sordid story receives a tabloidlike treatment, and Gray's subpar writing and reliance on secondhand sources and peripheral players are a bit heavy on a he said/he said style of journalism; however, Gray also scored the only interview with a jailed Pearlman, and there is plenty of innuendo and backstage dealing to sustain the reader's attention. This tale of dreams, schemes, fame, fortune, and fraud is recommended for those interested in the backstage dealings of pop music. Public libraries should purchase.
—Bill Baars

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The Hit Charade
Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History

Chapter One

Trans Con

On a typically sunny Orlando afternoon in January 2006, an accountant named Paul Glover arrived at the ragtime-themed offices of Trans Continental Enterprises, a collection of travel, entertainment, restaurant, and retail operations presided over by fifty-one-year-old boy band impresario Lou Pearlman. He walked past a flowing indoor fountain beneath authentic World War I planes hanging from the ceiling and rode a glass elevator to the third floor, filed past gold records and framed accolades touting the successes of Pearlman's various pop groups, and nestled into Lou's corner office, the one with the faux-tiger rug and electric draperies that opened to a panorama of downtown Orlando—"O-Town," as Lou had rechristened it when he put it on the international entertainment map. The middle-aged mogul had burst into prominence in the '90s, back-dooring his way to the top of the pop charts with bubblegum acts Backstreet Boys and *NSYNC, followed by O‑Town, LFO, Natural, Take 5, US5, Aaron Carter, and more. To frame it in the simplest present pop cultural terms: Without Lou Pearlman, there would be no Making the Band, no Lance Bass or bestselling Lance Bass book Out of Sync, no FutureSex/LoveSounds or other albums from Justin Timberlake, no Aaron or Nick Carter public train wrecks to gawk at—a horrific alternate dimension for millions of pop culture consumers. More than anything, though, he scored the soundtrack for the coming of age of an entire generation. He beat impossible odds in the entertainmentbusiness not once but twice, doing as a lone entrepreneur what entire music conglomerates couldn't. He shattered sales and revenue records with his seminal quintet, Backstreet Boys, then he trolled Central Florida's pool of Disney darlings (and scoured the back burghs and hollows of Mississippi) to do it all over again with *NSYNC. As one record executive put it, "It was like finding a needle in the haystack . . . twice." But Glover didn't come for an autograph. He was sent to save Lou from financial ruin—and maybe jail. As it turned out, the only thing more astonishing than the unlikely fame and decades-long success of the boy band Svengali was the monumental fraud that underscored it.

Born on June 19, 1954, in Flushing, Queens, Lou Pearlman grew up on the third floor of a different kind of complex, a modest elevator building in Mitchell Gardens, a brown brick, middle-class cluster of high-rises set apart from the big city by open spaces and green lawns. He was his mother's son. Reenie Pearlman had him well into her thirties, and once she brought Lou into the world, she was sure to keep him happy and well fed. His father was the late-'50s model of a working-class family provider, Ward Cleaver with a Queens accent (and a dark streak). He ran a humble custom dry-cleaning business and even taught Lou the merits of customer satisfaction—and the best places to feast on roadside meals—on dry-cleaning delivery ride-alongs, his version of quality time.

By age nine, Lou had styled himself as an entrepreneur, too, the proprietor of a lemonade stand by a neighborhood bus stop. In the years that followed he assumed the roles of hustling paper delivery boy, math nerd, "helium head" (slang for a blimp groupie), and onetime guitarist turned manager of a successful local rock band called Flyer. Music, he would frequently say, ran in his family—he's folksinger Art Garfunkel's first cousin. While other kids played stickball and chased girls, Lou retreated indoors, where he created fantasy worlds and fake businesses, usually involving rock 'n' roll or airships, and he made himself a fabulous player in them all. He studied accounting at Queens College, where he breezed through classes and formed the ideas for his first real business—a helicopter commuter service—as a final project. After graduating he started the helicopter service, then a fledgling charter airplane business, both run from his Mitchell Gardens home base. Then, as the helicopter service merged with a larger company and the airline business took off, Lou finally moved out of his parents' place and built his first blimp. In reality, he was never the sky captain he made himself out to be. In 1981, Lou's first airship crashed. In the years that followed he wrecked three more. After each, he pocketed insurance money for his next move, and his blimp company even went public, but it was his private airline company, Trans Continental Airlines, and its travel service that funded dozens of other air transport, food, and entertainment ventures in Lou's Trans Con empire.

By 1991, the boy from Flushing had outgrown Queens. He moved a ragtag but loyal cadre of workers to Orlando, Florida, where the climate was friendlier for both flying and reinventing oneself in a swashbuckling style. A malleable media came to know Lou as a jovial merchant prince who'd banked his first million by age twenty-one and his first $400 million by age twenty-four. At home in Mickey Mouse's backyard and approaching forty, Pearlman plunked down millions of dollars—or wrangled investors who helped him cover the tab—to make Backstreet Boys pop stars. When Lou did finally crack the code in the entertainment business, pop music would never be the same.

The Hit Charade
Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History
. Copyright © by Tyler Gray. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

Meet the Author

In his thirteen years as a journalist, Tyler Gray has covered everything from a teenager's death-penalty trial for murder to the drug- and sex-fueled shenanigans of fuzzy theme park characters in Orlando, Florida. His stories have appeared in the New York Times, Esquire, Radar magazine, Men's Journal, the New York Daily News, the Orlando Sentinel, the St. Petersburg Times, and other publications. He has appeared as a pop-culture and news commentator on ABC, CNN, MSNBC, FOX, Comedy Central's the Daily Show with Jon Stewart, and other television broadcasts. Gray is currently a senior editor at Blender magazine in New York City.

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