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Case file s1743 · Music and sport · 2016
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2016
Lou Pearlman: Lou-pearlman-mugshot
Lou Pearlman. Federal Bureau of Investigation. Public domain, Wikimedia Commons.
Died
19 August 2016
Place
Federal Correctional Institution, Miami, Florida · United States
Field
pop manager and label owner · Business and finance on the timeline
Legal tradition
US federal law (bankruptcy, criminal fraud) · Common law
Historical event
The late-1990s boy band boom
Religion
Lou Pearlman: Jewish (recorded as 20th-century American Jews, 21st-century American Jews on Wikipedia)
Music and sportNowNorth AmericaUnited States

Lou Pearlman built the Backstreet Boys and NSYNC on a $300 million Ponzi scheme, fled to Bali, and died in prison as investors got 6 cents on the dollar

Lou Pearlman created the Backstreet Boys and NSYNC from Orlando. His company Trans Continental sold investors an "Employee Investment Savings Account" program. Investors put nearly $300 million into his ventures, and federal prosecutors called it then the longest-running Ponzi scheme in US history. Trans Continental Airlines existed only on paper. Creditors forced him into involuntary bankruptcy in March 2007, and he disappeared. On 14 June 2007 Indonesian police arrested him in a hotel in Nusa Dua, Bali, after a German tourist couple recognized him. He pleaded guilty in March 2008 to conspiracy, money laundering and false statements. On 21 May 2008 Judge G. Kendall Sharp sentenced him to 25 years, with one month off for each $1 million he helped the bankruptcy trustee recover. His Church Street Station property sold at auction for $34 million in April 2007. Trustees found the art and memorabilia in his mansion were mostly fake. Trustee Soneet Kapila filed over 700 clawback suits against investors who had been paid more than they put in, and recovered about $35 million to $36 million. In 2013 investors were projected to get about 4 cents on the dollar; by 2014 total recovery reached about 6 percent. Pearlman died in prison at 62 of a heart infection. No further distribution has been found after 2014.

What the law took from it

In a Ponzi bankruptcy, early investors who were paid out can be sued to return the money to later victims.

Sources
  1. Internet ArchiveGovernment record
  2. NPRPress
  3. scarincihollenbeck.comPress
  4. ponzitracker.comPress
  5. Wikipedia (English)Encyclopedia

Cite as: celebrity.estate, “Lou Pearlman built the Backstreet Boys and NSYNC on a $300 million Ponzi scheme, fled to Bali, and died in prison as investors got 6 cents on the dollar,” story s1743, https://www.celebrity.estate/lou-pearlman-2016, updated 30 October 2026.

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Where this case sits

Music and sportNowNorth AmericaCommon lawUnited States