Snowball system - The great scam of boy band king Lou Pearlman
Millions of girls had sleepless nights thanks to the man with the powerful double chin and the figure of a whale. Like an assembly line producing Lou Pearlman's boy bands, he made teen heartthrobs dance like puppets. This business made the manager famous, but another one would send him to prison.
Impressed by the musical success of his cousin Art Garfunkel, the New York-born Pearlman, who was born in 1954, played in a rock band in his youth – with little success. He had more success as a businessman. He bought zeppelins, started a helicopter taxi service, founded a travel agency, and the charter airline Trans Continental Airlines. Pearlman was not yet 30 when he became a millionaire. Even then, however, he was not entirely truthful. When one of his zeppelins crashed, he tried to defraud the insurance – a practice he would nearly repeat with almost every musician he worked with later on.
Fascinated by the meteoric rise of the New Kids on the Block, Pearlman entered the pop business in the 1990s. "Big Poppa" was the nickname he gave himself, with legendary formations like the Backstreet Boys, US5, or *NSYNC with Justin Timberlake among his protegés. The bands sold millions of records – and "Big Poppa" made a fortune.
25 Years in Prison for Pearlman
But that wasn't enough. Instead of leading a quiet life in Florida, where he had lived since 1991, Pearlman built one of the largest Ponzi schemes in the US. Over 300 million dollars were collected from small investors in ten years, who believed they were investing in the "Trans Continental Savings Program," a kind of pension fund for the employees of Pearlman's airline. However, the airline had hardly any employees. The boss pocketed the money.
When authorities looked into "Big Poppa's" business practices in 2006, he was in Germany with his band US5 for an award ceremony. Pearlman fled and went into hiding. Months later, he was arrested on Bali and extradited to the US. In 2008, he was put on trial. The heavyweight was sentenced to 25 years in prison. The judge offered a deal: for every million he paid back to his creditors, a month of his sentence would be waived. Pearlman didn't take the deal. He died in prison in August 2016.
Main Character
Lou Pearlman enriched the pop world with the phenomenon of boy bands. No other producer launched so many clone groups into the charts. When asked how long the boy band hype would last, he once said, "It's over when God stops creating little girls." To finance his lavish lifestyle and his monstrous Florida mansion, he set up one of the largest Ponzi schemes in the US – and defrauded investors of millions.
Documentary about Pearlman "Dirty Pop Business – The Boy Band Scam" is available on Netflix.
In his pursuit of financial success beyond the pop music world, Lou Pearlman implemented a 'Snowball system' with his Trans Continental Savings Program, misleading investors into believing they were investing in an employee pension fund for his airline. This 'Snowball system' eventually led Pearlman to build one of the largest Ponzi schemes in the US.
Despite being offered a chance to reduce his 25-year prison sentence by paying back a portion of the defrauded money, Lou Pearlman refused this opportunity, ultimately serving out his full sentence and passing away in prison in 2016.
