Former king of the boy bands Lou Pearlman faces the music in an exclusive jailhouse interview

On a sunny January afternoon in Orlando, Florida, a buttoned-down 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 boy-band impresario Lou Pearlman. The now 53-year-old Pearlman burst into prominence in the '90s, waddling his way to the top of the pop charts with bubblegum acts 'N Sync and the Backstreet Boys, followed by O-Town, LFO, Natural, Take 5, US5, and Aaron Carter, among others. By 2003, when he took over the Trans Con complex—a once-thriving tourist destination known as Church Street Station—he was as much an Orlando icon as Mickey or Goofy. He was often spotted zipping around town in his powder blue Rolls-Royce Phantom or in a stretch Hummer limo, blonde girlfriend in tow. Banks tripped over themselves to loan him millions for new projects. In grateful acknowledgment of his contributions to the local economy, Orlando officials literally handed him the key to the city.

Meanwhile, unbeknownst to even his closest executives, the companies that buoyed his mid-'90s hit parade and lavish lifestyle had fallen into financial shambles. Investigators had been looking into Pearlman's operations since early 2000, as company debts mounted and news of a budding scandal leaked. Security guards at Pearlman's offices, once tasked with fending off starstruck teens, had instead begun warding off angry investors who demanded money and answers. And in November 2006, Pearlman's longtime friend Frank Vasquez, who'd served as Trans Con's vice president of operations and was intimately familiar with the business, climbed into his Porsche, lowered his garage door, and turned on the ignition. With raids of Pearlman's home and offices by the Justice Department and the IRS just around the corner, the corpulent mogul—known to his underlings as Big Poppa—was desperate to wring out any liquid assets that might buy him some time.

That was where Glover came in. The 48-year-old CPA was brought into Pearlman's flailing operation by Frank Amodeo, a secretive "distressed business manager" who, for two years, had been working quietly behind the scenes to bail out Trans Con. At Amodeo's request, Pearlman ordered his executives to open the corporate books to Glover, presuming the accountant would be a team player. Big mistake.

By 3 p.m. that January afternoon, Glover had set up camp in Pearlman's spacious third-floor corner office—accented with a faux tiger rug, shower, and motorized draperies—and had begun poring over documents as Trans Con senior executive Bob Fischetti and Pearlman's executive assistant, Janet Hart, hovered anxiously nearby.

Among the documents the accountant discovered were boxes of angry certified letters from investors in a $500 million savings account scheme that had kept cash flowing to Pearlman's faltering music management company. The investors wanted their money. But there was no money. Instead, records clearly indicated that "that half-billion dollars was going straight into Lou's hands," Glover says. "Immediately, I'm thinking, This is a Ponzi scheme.

For Glover, the biggest red flags were the official-looking quarterly statements for Trans Con's Employee Investment Savings Accounts. While the accounts had nothing to do with Pearlman's music operations, these phony investment vehicles, peddled by local insurance salesmen and financial advisors, clearly traded on Pearlman's reputation as an entertainment mogul with a golden touch. The accounts promised investors—including Pearlman's employees, friends, and relatives, as well as trusting retirees—higher returns than standard savings accounts. Investor statements were audited by a firm called Cohen & Siegel of Coral Gables, Florida, but Glover spotted glaring errors, even in the boilerplate used in the footnotes. "I've seen poor accounting work before, but I thought, wow, this is a shoddy firm." So he decided to ring up Cohen & Siegel with a few questions. Much to Glover's surprise, the moment he pressed "send" on his mobile phone, the phone on Pearlman's desk started buzzing. "When I hung up my phone, the phone on his desk quit ringing, too," Glover says. "Janet and Bob started laughing. They said, 'Oh, no, he's Cohen & Siegel.'" Glover dialed Cohen & Siegel once more. Lou's line lit up again.

A few weeks later, Pearlman plopped himself on the veranda of his $12 million Italianate Orlando mansion to do a little wheeling and dealing. Protected by a cordon of guards armed with Uzis, he agreed to sell off what was perhaps the only legitimate asset he had left, the city block–size, honky-tonk Trans Con headquarters—along with its restaurants, compliment of massive bars and ballrooms, and even the Paris Hilton—themed Club Paris nightclub—to Orlando developer Cameron Kuhn for $34 million. As the feds prepared raids on his home and offices, Pearlman boarded a commercial jet and fled to Germany. While his exact movements remain a mystery, he popped up in Berlin to accept a Goldene Kamera "Pop International Band" award with his last active boy band, US5, and while there, sent a letter to the Orlando Sentinel touting the group's musical accolades and promising things would be cleared up real soon. At some point, he also visited Panama, where, according to documents later found in his Balinese hotel room, he considered becoming a legal resident.

German tourist Thorsten Iborg, 32, was sunning on a beach in Bali in June when he spotted a heavyset man wearing shorts and a Hawaiian shirt, sipping coffee. Iborg immediately recognized him as the creator of the Backstreet Boys. Later, he and his wife passed the man in the hallway of their hotel, the Westin, observed him at a cocktail party thrown by the hotel's manager, and spotted him idly surfing the Web in an Internet cafe. "He was watching some YouTube music videos," Iborg says. "He looked sad and bored. I think he wanted to be caught." Iborg sent an e-mail announcing his discovery to St. Petersburg Times reporter Helen Huntley, who passed the tip on to the FBI with his permission. A few days later, Iborg snapped a photo of Pearlman pawing at a pancake and waffle breakfast. He was busted by Indonesian police just minutes later. He had registered at the hotel under the name "A. Incognito Johnson" and was carrying a credit card with the same surname.
Security guards at Pearlman's offices, once tasked with fending off starstruck teens, had instead begun warding off angry investors who demanded money and answers.The onetime owner of a Gulfstream V flew "con air" back to Orlando, where he was indicted on three counts of federal bank fraud and single counts of wire and mail fraud (stemming from his default on $160 million in bank loans)—offenses with a maximum combined sentence of 130 years in prison. But he has yet to be charged for his biggest alleged crime: bilking 1,800 investors out of nearly half a billion dollars. Investors say they were given brochures that said their money was guaranteed by the FDIC, AIG, and Lloyd's of London. It wasn't.

If the evidence sticks, the man who masterminded some of the music industry's most lucrative pop ensembles will chalk up another superlative for orchestrating what many consider the largest and longest-running Ponzi scheme in U.S. history.

When I visited him last July in the Orange County jail, the former music mogul joked that incarceration has afforded him rare downtime, and said he regretted nothing.

"I'm proud of everything I've done," he said. "I've had a great, great time. I've just enjoyed all of the people throughout my career. We were the pioneers of a new regime. We brought a lot of joy to the world."

It's been quite a long fall for the cherubic Svengali once described in doting profiles as a real-life Horatio Alger. Pearlman, the son of Flushing, Queens, dry-cleaning business owners—and a cousin of Art Garfunkel—began his career as a newspaper delivery boy and later played guitar in a local band. Though he wasn't cut out for the stage, he eventually found his way into the music business via an alternate route: outfitting planes for Phil Collins, Paul McCartney, and New Kids on the Block—the seminal pop quintet that inspired him to start a boy band of his own.

Before the Backstreet Boys hit it big, Pearlman's biggest claim to fame was his ownership of Chippendales, the beefcake troupe of male peelers. Teaming up with pop producer Johnny Wright (the man who discovered Britney Spears), he began searching for his own quintet. He spent $3 million over the next two years tapping Disney's nearby talent pool of young wannabes, sweet-talking stage moms, and auditioning members for what would become the Backstreet Boys. He paid out of pocket for vocal and dance lessons, apartments, per diems, hotel and travel expenses, haircuts, and more. When he'd found his five, he spent even more money to ensure their success. He'd drop $50,000 on a charter flight to keep them on their tightly booked touring schedules. "An entourage of 11 people would be flying all over the place," says Wright, Pearlman's partner in Trans Con until the late 1990s and now president and CEO of Wright Entertainment Group. "When the Backstreet Boys' first single failed in the U.S., I said, 'Let's start again in Germany.' The label didn't want to fund it, so Lou put up his own money. Where it came from, I don't know. There used to be a running joke, because Lou would go to Atlantis [resort and casino] all the time. We'd say, 'Oh, Lou's going to make payroll this week.' Everyone said he was great at craps."

Wright suspected Lou had a benefactor with deep pockets, but he also had the impression that Lou's impressive hustle was working. "The whole time I was with Lou, he did everything he said he'd do," Wright says. "Whether he had to rob someone in the middle of the night, I don't know. But the money was there."

The Backstreet Boys gambit paid off. The group's second album, Millennium, sold more copies in its first week than any record released up to that time. In due course, Pearlman built a $6 million, state-of-the-art studio near Walt Disney World. The facility featured a professionally lit stage where his expanding stable of rising stars practiced their dance routines, a pool and gym where they worked out with a trainer, and dressing rooms where they were groomed and primped by a team of image consultants. "O-Town," as the studio was called, soon become a teenybopper mecca; prepubescent fans (and their mothers) would camp out in the parking lot waiting for glimpses of their idols and begging for autographs, even from Pearlman.

"He became almost as big a star as the artists he was representing," Wright says.

Looking to double down, Pearlman created cookie-cutter boy group 'N Sync. Once again, he quickly struck gold. The group's self-titled American debut album, released in March 1998, sold more than 10 million copies by the end of 1999. Press accounts estimated that Pearlman's combined businesses—which now included a charter jet service, blimps, and production studios—were worth in excess of $950 million. Colleagues say he relished his mogul lifestyle, sleeping on a Louis XIV bed, sporting a $250,000 Rolex, and jetting to gigs in his new Gulfstream V.
Justin Timberlake trashed Pearlman in Rolling Stone, claiming he'd been ''monetarily raped by a Svengali.''

It was all part of the Big Poppa mystique he had assiduously cultivated. "He picks you up in his limo, and takes you to his restaurant and his studio, and so-and-so is recording," Wright recalls, "and on his wall are platinum records, so I can see how people could get wrapped up and want to invest in him."

To some of his artists, he's still the teddy bear with the Black card. Brad Fischetti, brother of Trans Con executive Bob Fischetti and a member of the Lyte Funky Ones (LFO for short), one of Pearlman's chart-topping sensations, remembers being put up in a New York hotel while Pearlman negotiated LFO's record deal.

"We were down in the lobby of the Millennium Hotel in Times Square. Lou and one or two of his associates come walking in, and he tells us we're going to be signed to Arista Records, with Clive Davis producing," says Fischetti, 31, who now runs 111 Records. "And you're just sobbing because you're so excited."

Asked if he ever had the sense that Trans Con was headed for disaster, Fischetti says, "All I know is, Lou is a guy who gave me a chance in the music industry. I feel sad for everyone involved—the banks, the people who allegedly lost money." And even Lou. "The guy just wants to be liked."

That became a bigger challenge when his bands started realizing just how much he was making off them. In 1998, the Backstreet Boys sued him for a bigger share of the profits. And in 1999, the members of 'N Sync settled a $150 million breach of contract suit and a $25 million countersuit against Trans Con and Pearlman, alleging they had been cheated out of royalties. Justin Timberlake would later trash Pearlman in Rolling Stone, claiming he'd been "monetarily raped by a Svengali."

Feeling betrayed by Backstreet, Pearlman was determined to retain control of 'N Sync. Wright says, "He felt he had to save face. He had two of the biggest groups in the world trying to separate themselves from him. At all costs, I think he was trying to prove to the industry that their success wasn't about them, it was about him." When Pearlman dug in his heels rather than renegotiate with 'N Sync, Wright severed ties with Trans Con, taking the band with him. He still works with Timberlake.

As the boy band phenomenon began to wane in the late '90s, Pearlman started branching out. In 2002, he bought a scandal-plagued model scouting business, Options Talent, then took it through a series of name changes in an attempt to revamp its image. But clearly, it had bigger problems. More than 2,000 consumer complaints were filed against the company in Florida alone. Customers who paid up to $2,000 each for photo shoots say they were promised more in the way of modeling work than the company could ever deliver. Former employees describe traveling around the country on "photo tours," tasked with styling and shooting the most unlikely runway hopefuls, including a male model with a lazy eye and a woman who was missing an arm. A two-year investigation into the business yielded no formal charges, but Pearlman's reputation was once again suffering.

As his troubles mounted, Wright says, he began to scramble. "Success in the music business is often compared to drug addiction," Wright says. "When it goes away, you try to get it back, no matter what it takes."

It was just after 9 p.m. on January 5 when, faced with evidence of massive fraud, Paul Glover made his fateful decision. Hired to stave off Trans Con's implosion, he decided to blow the whistle instead. As he collected evidence of Pearlman's shady dealings, Glover kept his poker face.

"I didn't want to tell them, 'Hey, it's a scam and anyone associated with it is going to jail,'" he recalls. "I was trying to pretend I didn't know what I was staring at, operating as though I was there to help them out."

Eventually, Glover told Fischetti and Hart that he needed a week to come up with a plan of action. And then, his heart racing, he got up to leave. "I was wondering, are these people going to jump me on the way out of the office?" Glover glanced at the beefy guards standing between him and the door. They let him pass peacefully, taking along a box of heavy documents that, he expects, "could indict virtually everyone there."

He then called the state attorney's office fraud hotline, setting the investigation that was already underway into high gear. But even with dozens of alleged victims still emerging and talk of a class action suit, Pearlman has yet to be charged with what could be hundreds of counts of federal fraud charges related to his bogus savings account scheme.

"We're looking into Mr. Pearlman and his entities, and at this point, he's charged with bank fraud," says Steve Cole, spokesperson for the U.S. attorney. "We have a very aggressive investigation that is ongoing."

When Radar paid a visit to the Trans Continental complex in mid-July, the former nerve center of teen pop appeared frozen in a particularly turbulent moment in time. Pearl Steakhouse, where it's said Pearlman routinely ordered three-pound lobsters as appetizers, was empty. Scale replicas of vintage bi- and tri-wing World War I fighter planes emblazoned with the Trans Con logo hung from the ceiling, rebranded props from the complex's kitschy past. In Pearlman's office, shredded documents, canceled checks, Post-it notes, Bop magazines, half-empty grape jelly containers, and a pair of 4XL sweatshorts were strewn about the floor. The walls were covered with posters of US5, Jordan Knight, and other recording artists. A lone Chippendales calendar hung askew near the doorway. Amid the detritus on Pearlman's floor was a youth soccer league's schedule, with games highlighted in hot pink.

Pearlman's financial records had been carted away by federal investigators, and in June, a bankruptcy trustee auctioned off $225,000 worth of platinum records, Pearlman's key to the city, and other tawdry keepsakes. A fire sale of Pearlman's household goods—including furniture, fine china, handguns, and a golf cart version of a Cadillac Escalade—was scheduled for August 25 at press time. Pearlman's Rolls was repossessed in January, and the Orange County Sheriff's Department has seized his Gulfstream V.

As for the rest of the money he allegedly stashed away, no one—aside from Pearlman himself—seems to know where it is. "It's obviously hidden somewhere," says Soneet Kapila, a court-appointed trustee. "It's too early to say where."

Unsurprisingly, J. Cheney Mason, an Orlando attorney, now questions his own role in defending Pearlman against numerous lawsuits (including those brought by the Backstreet Boys and 'N Sync): "This all makes me wonder how valid some of the positions I took were when [plaintiffs] were claiming he was a cheat and fraud."
I would just love to take him and put my hands around his neck and choke him until his eyeballs pop out.Mason thinks Pearlman has only begun to face the music. "My belief is that he's going to be charged with a whole lot more," he says, adding that Pearlman owes him $15.5 million in legal fees. "If he had any concept of reality at all, he'd be directing the bankruptcy court to that money so he could make restitution. I believe he's stashed somewhere between $150 and $200 million." Asked for his theories as to where the cash might be, he laughs. "If I knew, I'd be over there with my shovel getting it myself!"

Many of Pearlman's victims feel the same way. Marie Weber and her husband and mother-in-law initially invested $500,000 in Pearlman's savings program. Her last statement showed a balance of $864,000. Now, she has nothing. The Naples, Florida, couple had earmarked the money to pay for their son's college education and the mortgage on their retirement home in Georgia. "This man, I just would like to look him in the eye and ask him how in the world could he enjoy his life," Weber says, tearfully. "I would just love to take him and put my hands around his neck and choke him until his eyeballs pop out."

These days, the man who once lived it up in a six-bedroom, 11 1/2-bathroom mansion occupies an 11-by-7-foot cell in Orlando's Orange County Jail, where he spends an average of 23 hours per day alone, meeting occasionally with his court-appointed public defender. He's allowed thrice-weekly guest visits, and when Radar turns up for one of them, he hobbles to his chair in a bleak videoconference room and squints into a camera, straining to recognize the person on the other end. Though he appears out of breath, he claims he's in great spirits and has been shedding pounds by doing 100 to 200 sit-ups per day. His standard-issue prison jumpsuit is nearly the same shade of blue as his beloved Rolls. His hair is grayish-blond. Though he smiles broadly and frequently, his gaze is darting and suspicious. He's declined all official media requests since being incarcerated, so when I identify myself as a reporter, he seems nervous, politely declining to speak about any specifics relating to his current legal woes. "I'd love to come out about a lot of things," he says. "I think there are things missing from the story. Nobody's heard my side, which is unfortunate, but my lawyer has advised me against talking about anything having to do with the case."

Asked how he thinks the charges will impact his legacy, he softens a bit. "I'm planning on this chapter ending relatively soon," he says. "There are a lot of nice young fans out there who will always love what I've done." He talks about his blimp company—"the first to rival Goodyear," he boasts—and reminisces about his many successes and accolades. "I got the World Award from Mikhail Gorbachev," he says, proudly noting that other recipients include Steven Spielberg and Morgan Freeman. "I got that two years ago at the Hofburg Palace in Vienna."

It's clear Pearlman fancies himself a king in exile, convinced that virtually no amount of wrongdoing can overshadow the contribution he has made to music. The more he talks about his artists, the more relaxed he seems. He even jokes about his diminished circumstances. "It ain't the Four Seasons!" he says in a nasally voice, jiggling a bit with laughter. "This is just one of those hurdles in life that you have to get past," he adds, suddenly serious. "There will be more artists we'll develop in the future. I think the time is right for it again. I mean, the Spice Girls just got back together. The Backstreet Boys are about to get going again. They had a band member quit, but they're about to stage a comeback." Wright, who now represents the group, counters that Pearlman hasn't had a stake in them since 2005. But no one seems to have told Lou, who's eagerly awaiting a reunion. "We are still entitled to a share of the revenue," he says.