Federal agents executed search warrants on Thursday at New York native Lou Pearlman’s Florida office and home, the latest in a string of legal problems facing the man who built the Backstreet Boys and ‘NSYNC.
The search came less than two weeks after a state court-appointed receiver took control of three Pearlman companies. A judge issued that order after Florida’s Office of Financial Regulation alleged that for 15 years Pearlman has sold unregistered securities through a bogus savings program. Also on Thursday, Pearlman’s attorneys in that case filed a court motion to withdraw from representing him.
Pearlman, who moved to Orlando in 1990, conjured multi-platinum success by piecing together boy bands in the 1990s. He claims to have done nearly $2 billion in retail music sales and owns a restaurant franchise, a new steakhouse and a dining and entertainment complex in downtown Orlando. He has been sued over the years by several of the young stars he managed, who accused him of locking them into predatory deals. Pearlman has said the now-resolved lawsuits were just overblown contract negotiations.
FBI agents and other law enforcement investigators spent hours on Thursday carrying boxes away from Pearlman’s offices.
The FBI referred comment to the U.S. attorney’s office, which issued a statement saying: "Other than confirming the existence of an investigation, we are not in a position to comment further at this time. Today’s searches are part of this investigation."
A former Pearlman spokeswoman reached for comment Thursday said she has not worked for him since last month. Pearlman did not immediately return a message from The Associated Press left on one of his voice mail accounts. He could not be reached by e-mail because the inbox was over capacity.
Stephen LaFreniere, the head of an Orlando real estate brokerage who said he was hired to manage Pearlman’s complex, said he’s been unable to pay its electric and garbage bills for three or four months because Pearlman’s employees have been collecting the rent before he could get it. LaFreniere said he doesn’t know where the combined $100,000 from Church Street Station’s 15 or 16 tenants has been going. He also had no idea where Pearlman was.
"I’ve only met the man twice," he said.
Besides the state’s allegations and possible federal charges from the Thursday search, Pearlman faces four lawsuits from banks alleging past-due loans of $14 million and overdue loan guarantees of $49 million, according to the Office of Financial Regulation complaint.
The state accuses Pearlman of collecting more than $95 million from more than 1,000 investors "by making a variety of misrepresentations." He’s accused of promising to put people’s money in insured bank accounts earning better-than-average dividends but instead transferring those funds to himself and his companies.
The state found less than $15,000 in four bank accounts used over the past four years for Pearlman’s savings program, according to the complaint.