Lou Pearlman Owes $300M

Former boy-band impresario Lou Pearlman was ordered to pony up at least $300 million to repay banks and investors swindled in a long-running scam, a federal judge ruled July 16.

The final figure could go even higher if U.S. District Judge G. Kendall Sharpe agrees that $124 million in interest should be included in restitution. And that’s in addition to the 25-year sentence Pearlman received on fraud charges earlier this year.

A decision on the inclusion of interest in the total restitution amount was postponed.

Regardless of the final figure, nobody’s holding their breath for repayment. Prosecutors say they have been unable to find assets with which to repay Pearlman’s alleged victims, despite the millions he made guiding the careers of ‘Nsync and Backstreet Boys.

He is allowed to manage – from jail – the few artists he still has. And he may also put whatever he makes from his jailhouse job toward restitution. In sentencing Pearlman, Sharpe offered to shave a month from the sentence for every $1 million repaid. But Pearlman’s attorney reported July 16 that no more money has been returned.

Attorneys from both sides, the FBI and FDIC determined Pearlman took $195 million from more than 1,000 people, some of whom lost their life savings, in an alleged savings program promising 6 percent to 10 percent returns, and $126.7 million in bogus loans from federally insured banks. Another $70 million was invested by people who thought they were buying shares in companies owned by Pearlman that mostly had no assets.

The judge has ordered that individual investors be repaid first, then banks. He wanted them punished for poorly judging Pearlman worthy of multimillion-dollar loans, many secured with the same collateral.

While reserving judgment on interest, Sharpe said it was unfair to charge Pearlman the high rates he promised investors because it would reward their poor decisions.

"Since the time of the sentencing all you’ve gotten from the defendant is the smirk on his face," Sharpe told prosecutors. "So let’s try to get some money first."

Sharpe remanded Pearlman to the Federal Bureau of Prisons, which will transfer him to an undetermined facility. Pearlman had been at the Orange County Jail, a few miles from his opulent former office in Orlando.