Pearlman built quite a bit of wealth running two aviation companies in the 80s -a blimp advertising company and a charter place service. To keep both afloat, he needed investors. As the money flowed out, his tactics for attracting and keeping investors slid to the illegal side. He never had the assets or the insurance that he claimed to have. But investors, mostly retirees, kept the money rolling.
He jumped into the music business in 1992, after admiring the success of New Kids on the Block. He auditioned thousands of boys for his group, the Backstreet Boys, who became a worldwide sensation over the next few years. Many more auditions, and more bands followed. Pearlman wallowed in the joy of having so many young, attractive, and talented young men around.
Some, especially the teenagers, shrugged and giggled when he showed them pornographic movies or jumped naked onto their beds in the morning to wrestle and play. Others, it appears, didn't get off so easily. These were the young singers seen emerging from his bedroom late at night, buttoning their pants, sheepish looks on their faces. Some deny anything improper ever happened. But the parents of at least one, a member of the Backstreet Boys, complained. And for any number of young men who sought to join the world's greatest boy bands, Big Poppa's attentions were an open secret, the price some paid for fame.
Meanwhile, Pearlman’s blimp business fell to the wayside, and the charter plane business was found to be an elaborate exageration.
Backstreet Boy Brian Littrell couldn’t understand why the band members were only making about $12,000 a year when record sales were so hot. He sued Pearlman, opening the door for other Pearlman protegees to sue for profits due. The greatest payment the bands received was freedom from Pearlman’s control.
A family who had invested $14 million dollars in Pearlman’s schemes sued, also. In his defense, Pearlman used forged documets, a ficticious accounting firm, and a deceased tax attorney. One by one, investors started getting suspicious. Many had invested millions with Pearlman. One even committed suicide when he discovered the house of cards Pearlman had built.
He had left the country last January, just days before the state sued him, alleging that he had bilked nearly 2,000 investors, many of them elderly Florida retirees, out of more than $317 million in a Ponzi scheme lasting at least 15 years. A dozen banks also sued for more than $130 million in back loans. Later the indictment would come. Big Poppa, it turned out, had been an accomplished swindler long before he formed his first band. His were scams of jaw-dropping audacity. Pearlman's largest company, a colossus he boasted was bringing in $80 million a year, was … well, not. For years his investors, starry-eyed after rubbing elbows with 'NSync and the Backstreet Boys, never questioned his promises of forthcoming riches. When they finally did, he fought back with lawsuits, forged documents, and fictitious financial statements. When the truth began to come out, he ran.
On June 15, 2007, Pearlman was arrested by FBI agents in Jakarta, Indonesia. His trial is scheduled for next spring. Read the entire story at Vanity Fair.