- Richest Business › Producers
- Net Worth:
- -$400 Million
- Date of Birth:
- Jun 19, 1954 - Aug 19, 2016 (62 years old)
- Place of Birth:
- Record producer, Businessperson, Confidence artist, Impresario, Entrepreneur, Film Producer, Actor
- United States of America
What was Lou Pearlman's Net Worth?
Lou Pearlman was an American record producer and talent manager who had a peak net worth of -$400 million at the time of his death. At the absolute peak of his power and fame, Lou Pearlman's net worth was easily in the $200 million range. Lou Pearlman earned his fortune through his music management company, Trans Continental Records, which launched a number of boy bands, notably the Backstreet Boys and NSYNC. It should be noted that by the time he died in 2016, Lou was deep in dept to investors who had been defrauded in what has been described as one of the biggest Ponzi schemes in American history. He was subsequently apprehended (on the run) and pleaded guilty to conspiracy, money laundering and making false statements during a bankruptcy proceeding. Pearlman was convicted and sentenced to 25 years in prison in 2008. He died in federal custody in 2016.
Lou famously was inspired to start Trans Continental Records in the 1980s. At the time he was operating a private jet leasing business and he was stunned to learn that the New Kids on the Block were had agreed to rent his largest most expensive jets for months on end. As the first cousin is folk singer Art Garfunkel (of the former group Simon & Garfunkel), Pearlman had some experience and connections in the music industry. That's how Trans Continental Records was born. The label's first band, the Backstreet Boys, consisted of five unknown performers selected by Pearlman in a $3 million talent search. Management duties were assigned to a former New Kids on the Block manager, Johnny Wright, and his wife Donna. The Backstreet Boys went on to become the best-selling boy band of all time. Pearlman and the Wrights repeated this formula (almost exactly) with the band NSYNC. To date, The Backstreet Boys have sold 130 million records worldwide and NSYNC has sold 70 million.
Early Life and Education
Lou Pearlman was born on June 19, 1954 in Flushing, New York. He was the only child of Jewish parents Hy and Reenie. His father ran a dry cleaning business, while his mother worked as a school lunchroom aide. Inspired by the success of musician Art Garfunkel, his first cousin, Pearlman developed an interest in the music business and briefly manged some bands in his late teens and early 20s. For his higher education, he attended Queens College.
While in college, Pearlman developed a business plan for a helicopter taxi service in New York City. He would go on to launch a similar business in the late 70s called Airship Enterprises, which used blimps. Pearlman soon started a new company, Airship International, in order to raise the money needed for the purchase of a blimp. Relocating the business to Orlando, Florida, he signed MetLife and SeaWorld as clients. Pearlman took the company public in 1985, after which he began a partnership with Jerome Rosen, a partner at a trading firm. Rosen's trading firm actively traded Airship stock, causing Airship's stock price to soar and allowing Pearlman to sell large amounts of shares at ever-higher prices. Ultimately, Airship shut down following multiple aircraft crashes and plummeting stock prices.
Captivated by the success of New Kids on the Block, Pearlman formed Trans Continental Records to launch the next big boy band. The first band on the label was the Backstreet Boys. The band consisted of a quintet of unknown singers Pearlman had selected through a talent search. Those five unknown singers were Nick Carter, Kevin Richardson, AJ McLean, Brian Littrell and Howie Dorough, all of whom would eventually become global superstars. The Backstreet Boys are the bestselling boy band in history with record sales of 130 million globally.
Pearlman then replicated his success with the group NSYNC, which he funded and helped develop into a similar phenomenon. NSYNC featured Justin Timberlake, JC Chasez, Lance Bass, Joey Fatone and Chris Kirkpatrick. The formula proved to work and NSYNC went on to sell 70 million albums worldwide.
Due to his enormous success with the Backstreet Boys and NSYNC, Pearlman became a venerable music mogul. He went on to manage numerous other boy bands, including O-Town, Take 5, Natural, LFO, and US5; he also managed some girl groups, such as Solid HarmoniE and Innosense. Other notable artists on Pearlman's Trans Continental label included Aaron Carter, C-Note, and Jordan Knight.
Despite his incredible success in the entertainment industry, Pearlman was shadowed by a number of major scandals. For one, nearly all of the acts that worked with him sued him in federal court for fraud and misrepresentation. The Backstreet Boys and NSYNC filed lawsuits claiming that their contracts were unjust, as Pearlman was making more money than the band members themselves. Aaron Carter, at only the age of 14, sued Pearlman for racketeering and cheating him out of hundreds of thousands of dollars.
Pearlman was also embroiled in a scandal related to talent scouting, namely via an online talent company he purchased from Mark Tolner. The company was predicated on a business model employed by convicted conman Ayman Difrawi. Soon, the Better Business Bureau and the New York State Consumer Protection Board issued alerts about the company being a scam. After Pearlman declared bankruptcy, the company's assets were sold in early 2007.
Pearlman's largest-scale crime was his decades-long Ponzi scheme, which was discovered by investigators in 2006. The longest-running Ponzi scheme in the history of the United States, it defrauded investors out of more than $1 billion. Pearlman executed the scheme by enticing people and financial institutions to invest in companies that didn't yet exist. After he achieved success with the Backstreet Boys and NSYNC, he weaponized the groups' fame to expand his Ponzi scheme. Pearlman used falsified documents to secure the confidence of investors and fake financial statements to get bank loans.
Arrest and Conviction
In early 2007, the state of Florida determined that Pearlman's Trans Continental Savings Program was the fraud it had appeared to be, and consequently seized the company. Pearlman fled, but was arrested in Indonesia later in the year. He subsequently pled guilty to numerous charges, including conspiracy and money laundering, and was indicted by a federal grand jury. In the spring of 2008, Pearlman was convicted and sentenced to 25 years in prison. Earlier, he and his companies were forced into involuntary bankruptcy, with his assets and belongings being auctioned off.
Death and Legacy
While incarcerated in 2010, Pearlman suffered a stroke. Diagnosed with a heart valve infection, he underwent surgery for a replacement valve. In the summer of 2016, Pearlman passed away from cardiac arrest while still in federal custody in Miami, Florida.
The legacy of Pearlman is an example of the corruption and abuse that are regular occurrences in the entertainment industry and beyond, and that often continue on unabated for too long. He has been the subject of various media properties, including the 2019 documentary film "The Boy Band Con: The Lou Pearlman Story."
In 1999 Lou paid $4.25 million for a massive lakefront mansion in Windermere, Florida. Situated on 4.5 acres of sprawling manicured property with endless lawns and multiple guest homes and other structures, Lou lost the home as part of his bankruptcy proceeding. In 2008 a bankruptcy court attempted to sell the property for $7.9 million. The trustee eventually accepted $2.6 million in June 2011. The new owner performed a major renovation. Here's how the property looked in 2019 when it was listed for $16.6 million (it did not get any buyers):