American Scandal - Lou Pearlman: Pop Music Con Man | Behind the Hit Charade | 4

Episode Date: December 10, 2024

Journalist Tyler Gray was working in Orlando when he first heard about Lou Pearlman and his growing business empire. But it wasn’t until authorities apprehended Pearlman in Bali in 2007 that Gray began to investigate the story behind the man who created the boy bands NSYNC and Backstreet Boys. Today, Tyler Gray joins Lindsay to talk about his book, The Hit Charade: Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History. Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterListen to American Scandal on the Wondery App or wherever you get your podcasts. Experience all episodes ad-free and be the first to binge the newest season. Unlock exclusive early access by joining Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial today by visiting wondery.com/links/american-scandal/ now.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hi, this is Lindsey Graham, host of American Scandal. Our back catalog has moved behind a paywall. Recent episodes remain free, but older ones will require a Wondery Plus subscription. With Wondery Plus, you get access to the full American Scandal archive, ad-free, plus early access to new seasons and more. Join Wondery Plus in the Wondery, I'm Lindsey Graham, and this is American Scandal. The Backstreet Boys and NSYNC epitomized the boy band sound of the 1990s. These two bands were the brainchild of Lou Pearlman, head of Transcontinental Enterprises. And for a while, it seemed like everything Pearlman touched made money.

But behind the fancy offices, the Rolls Royce, and the Gulfstream jet, lay a dark truth. Lou Pearlman was running a massive Ponzi scheme. He financed the boy band's rise to fame using other people's money and helped himself to their profits. When the Backstreet Boys and NSYNC sued and parted company with Perlman, he continued his scheme of selling phony retirement accounts to family, friends, and elderly people, even his barber. But it all caught up with him in 2008,

when a judge sentenced Lou Perlman to 25 years in prison for bilking more than 1,400 victims, including people and banks, out of around $500 million. Today, I'm speaking with Tyler Gray, the author of the hit charade, Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History. Lou Pearlman held that infamous record until Bernie Madoff broke it. Our conversation is next. In the past decade, Boeing has been involved in a series of scandals and deadly crashes that have dented its once sterling reputation. At the center of it all, the 737 MAX.

The latest season of Business Wars explores how Boeing allowed things to turn deadly and what, if anything, can save the company's reputation. Make sure to listen to Business Wars wherever you get your podcasts. Tyler Gray, thanks for speaking with me today on American Scandal. Thanks for having me. I really appreciate it. So you were living and working in Orlando back in the 90s when Lou Pearlman was just launching Transcontinental Records and the Backstreet Boys and all the rest. How did Lou Pearlman come onto your radar?

I became sort of Backstreet aware, Lou aware, when I was working as a waiter in Orlando, Florida. It sounds like the title of the song. But I was waiting tables when this person named Kim, who was my colleague, and she was great. And she was dating this guy that she was doting on, and his name was Alan Siegel. And he was this New York businessman who turned out to be a VP of Transcontinental Records, which would become part of Lou's enterprise. And Kim would always talk about how Alan's got these huge bands that he's working with in Germany, and they're massive overseas, and they're going to be really big here.

And they're called the Backstreet Boys, and they're this boy band, and they super cool. And we'd snicker under our breath like, that sounds horrible. We were all like rock and roll kids. And we were like, this sounds like the cheesiest thing in the world. And it turns out Kim was right. So then you started working at the Orlando Sentinel as a reporter. So I guess this gave you a few early brushes with Lou's businesses. What were your early impressions of Transcontinental and Lou Pearlman as he was building up his empire? One of my first beats that I picked up and covered was a small business beat. The job was to find really interesting companies to cover that were sort of startups. And in that beat, I came across one of my first Lou Pearlman adjacent companies, and it was a company called Shape CD. There was literally like cut compact discs,

like CDs that were into the shape of people's faces, like a boy band face or a logo of a company. And like, they'd have a song or two on them, but there wasn't a lot of space because they looked weird. Then that was owned by Alan Siegel, that person that was dating someone I used to wait tables with. I also covered at least one nightclub that was being started by people in Lou's world. And it was called the Vanguard Room. And as a nightlife reporter covering everything after dark and clubs and music, it was a new venue and it was pretty swanky and it looked really nice. It was almost done and it never really got done and it never really took off and it never really opened. But it was another place that I'd covered. And there were studios that Lou had,

and you couldn't be in Orlando without coming across something that he had touched. He impressed local leaders too, I think a lot in Orlando. He saw him as a force for development and a force for bringing tourist dollars and attention to Orlando, which is very much an attention economy there. Those leaders would eventually bestow him with things like keys to the city or a million and a quarter in taxpayer-funded incentives to help him with his businesses. He was a darling of Orlando for a while, so you couldn't ignore his impact, his outsized impact in Orlando. You mentioned that Orlando has an attention economy, and that might be one of the reasons why Lou Pearlman ended up there. He's not a native. But why Orlando? What was the reason for this nexus?

You know, it was sort of a place that he used to go as a kid with some of his friends. They would do trips and they would all kind of come down and they'd stop at fun places along the way. He knew the Disney world was here. And by the time he decided to relocate his business to Orlando, it just was a hotbed of young talent. It drew others from around the nation who wanted to come and strike it famous through the pathway to fame that was Disney. So he found himself in a target-rich environment. You know, why Lou would come to Orlando, I think there's another important reason that's built deep into the code of what Orlando is and why it attracts the people that it attracts. It has something called the Homestead Act. And the Homestead Act means that no matter what happens to you, if you go broke and if you're accused of financial crimes,

the government can't take your house. So you see a lot of celebrities setting up these giant McMansions on lakefronts in Orlando. And if things go south and they go broke, or maybe they get accused or convicted of doing something wrong, the government usually can't take their house. They'll always have that big estate. So maybe it was prescient on his part. Why don't you remind us about his empire? Because we know the music empire, but that's not how he got started. Lou actually did have an idea for a legitimate business. When he was getting out of business school, a final project had to do with a helicopter business that he wanted to start that would go

from lower Manhattan to the airports. And it would be this transport business with these helicopters. And he needed not one, but two helicopters. He needed a backup to be a legitimate business. And so he went to the family where he knew there was money. And that was to Jack Garfunkel, who was Art Garfunkel's father. And Art was Lou's cousin. So he had that connection. And Jack was like, hey, it's a good business idea.

It's really good. I'll buy your second helicopter. And it was sort of like a wink-wink saying to Lou, like, if you can scrape together funding to get this thing off the ground, I'll be a second-round investor. And so Lou took Jack's statement of I'll buy you a second helicopter and ran with it and ended up saying to other investors, I've got one helicopter. I just need a second. It ended up saying to other investors, I've got one helicopter. I just need a second. And that was how he ended up getting some banks on the hook to buy the helicopter that he ended up getting leased back to and started a legitimate helicopter business in New York.

But he ended up having like 84 corporations and limited partnerships that were all strung together somehow by the end of things. Blue really did have an empire. But even with this empire that he brought to Orlando, it was clear very early on that something wasn't right. And I heard that you actually were approached as a potential victim of one of these schemes. People had been paying money to one of Lou's model scouting businesses, but then never getting anything in return. Tell us the story. The modeling business was a really interesting one because it was kind of like a breaking point for Lou. It was kind of when things really started to go south. What happened was,

is he bought this company called Options Talent and took it over. It was struggling. It was sort of failing. And for some reason, he thought he could turn it around. More importantly, he saw it as a vessel because it was a public company that he could turn it into him getting on a Wall Street. Like this was his pathway of pouring in his various companies through this shell of options talent, which he renamed transcontinental talent and renamed it a whole bunch of different things over time. I came in contact with it because I had this friend, this guy named Wheat Wurzberger, Wheat, like fields of wheat, Wurzberger, a photographer I knew in Orlando. I'd moved to

New York. Wheat was still in Orlando, but he took this job with this model scout agency because he was a photographer and they would send them on these road trips to places like New York City. There would be people on the street who would bump into somebody and go, hey, have you ever considered modeling? And someone would be flattered and they go, oh my gosh, no. And they go, you want to come do some headshots? Like we could schedule you. And then Weed would go take their headshots. The people would get charged, you know, one or $2,000 for all these headshots. And there was no guarantee that any of that stuff would ever result in any sort of modeling gigs for any of those people. And in fact, did not. So when Wheat came and told me about this story and that he was doing this thing, he also told me that he wasn't getting paid like

he was supposed to, but the checks were bouncing. And it was a check bouncing from this guy, Lou Perlman, who was supposed to be this huge mogul with these millions and millions of dollars. Like, why was he running a scammy model business where the checks were bouncing for payroll? So that's when I started to wonder what the heck was going on. And could this actually be as sort of scammy as it seemed to be on the surface? Here's how you know it's a scam. I got approached on the street by one of these people early days in New York walking through Times Square, and I'm tall, but I'm not a model. And somebody was like, hey, have you ever considered modeling? And I'm like, of course I haven't. Have you seen me? But nevertheless, it feels flattering. And it was almost like, wow, if they're reaching all the way out to me, they're really casting a wide net here,

and this is weird. And you weren't the only one who thought something was fishy here. The Florida state attorney's office began an investigation of the so-called talent scouting agency. What came of that? Not a damn thing. It was weird because the thing about the investigation into Lou by the state attorney general in Florida is that, number one, it went nowhere. It was transferred into oblivion. The prosecutor was moved off the case and then it disappeared. A lot of people think that's because Lou gave $10,000 to the governor as a donation. Other people think it's because of emails

they couldn't use, weren't admissible, or the case would have hinged upon them. Regardless of why it disappeared, this is a classic example of many, many things that somebody could have spotted that would have alerted them to Lou's house of cards. It could have been the card that sent the whole thing tumbling down and nobody caught it. They didn't dig deeper into his bigger businesses at the time. And later, you know, when he was claiming

to run this business and having all these investors in these airplanes, no one bothered to look up in the sky to see if there were any airplanes with transcontinental logos on them. Same thing. There were just multiple opportunities where people could have pulled the thread of Lou's businesses and the whole thing would have come unraveled. I'm Jake Warren, and in our first season of Finding, I set out on a very personal quest

to find the woman who saved my mom's life. You can listen to Finding Natasha right now exclusively on Wondery Plus. In season two, I found myself caught up in a new journey to help someone I've never even met. But a couple of years ago, I came across a social media post by a person named Loti. It read in part, Three years ago today that I attempted to jump off this bridge, but this wasn't my time to go. A gentleman named Andy saved my life.

I still haven't found him. This is a story that I came across purely by chance, but it instantly moved me and it's taken me to a place where I've had to consider some deeper issues around mental health. This is season two of Finding, and this time, if all goes to plan, we'll be finding Andy. You can listen to Finding Andy and Finding Natasha exclusively and ad-free on Wondery Plus. Join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify.

On January 5th, 2024, an Alaska Airlines door plug tore away mid-flight, leaving a gaping hole in the side of a plane that carried 171 passengers. This heart-stopping incident was just the latest in a string of crises surrounding the aviation manufacturing giant Boeing. In the past decade, Boeing has been involved in a series of damning scandals and deadly crashes that have chipped away at its once sterling reputation. crashes that have chipped away at its once sterling reputation. At the center of it all, the 737 MAX. The latest season of Business Wars explores how Boeing, once the gold standard of aviation engineering, descended into a nightmare of safety concerns and public mistrust. The decisions, denials, and devastating consequences bringing the Titan to its knees and what, if anything, can save the company's reputation. Now, follow Business Wars on the Wondery app or wherever you get your podcasts.

You can binge Business Wars, The Unraveling of Boeing, early and ad-free right now on Wondery Plus. Let's rewind a little bit and talk about Lou Pearlman's origin story. In our series, we portrayed him as someone who definitely liked to live large, but he came from a middle-class background in Queens, New York. In writing your book, Hitcherade, you talk to people who knew Lou in his early informative years. What did you find out about his character? The thing that I found out about Lou as a young kid is that there's the story that he himself tells in his own biography, especially about his youth. And then there's the story that

the other kids around him now grown up would tell about him. And oftentimes those things were a complete odd. So there's no doubt Lou was a shy kid. He was a bit overweight. He was picked on for his appearance. He did have some friends, but it was kind of like the nerd squad. Like they were into math. They were into blimps, like Goodyear blimp type blimps who flew nearby where he lived. They called themselves helium heads. So you're kind of getting the nerd vibe.

He did have like a, you know, a loving family. His dad ran a dry cleaning business. His mom sort of was always doting on him and cooking snacks and kind of doing everything for him at home. But, you know, what you really started to find is that he created this story about things like being a newspaper delivery guy. Like he had this elaborate story in his book about how he so smartly like went around the neighborhood and picked up routes that some of the other kids who'd had the same routes for a long time didn't want anymore, couldn't do anymore. And they'd sell it to him. And oftentimes for like $500, they'd sell their paper routes to Lou, which was like a crazy amount of money back in the early 80s. And yet supposedly was able to come up with some deals to sort of take on the debt and then pay it off over time. He tells this all in his book like he's an elaborate businessman. The problem with the stories like this are is that when you talk to those other former newsboys, they say, no, that didn't happen like that. Lou didn't buy anything from us. He might have helped out with

some paper delivery, but he certainly didn't have $500 to pay anyone anything and take over any routes and make them a better business. And it wasn't just pure fictionalization of his story. He also borrowed some other people's stories as well. He did borrow other people's stories. There's this guy, Alan Gross, who was like his childhood best friend, lived across the hall with him in Queens in the building where they lived. And Lou would go to the window of his apartment building and look out across the field and see in Flushing, Queens, where the Goodyear blimp was taking off and landing. And eventually he would talk about wandering across the street and going over there and bugging the people at Goodyear and

eventually talking them into getting a job and ended up hanging around with him a lot and saying he worked for Goodyear as he finished college. And the problem was when you talk to Alan, his best friend, Alan's like, no, that was my apartment. Lou's didn't even face the landing place for the blimps. Alan's place was the place that faced the blimps. He was the one who was obsessed with blimps and did all this research and study. It was Alan who actually approached the person from Goodyear and got the job working. Lou was just kind of hanging around in the background. And people sort of say like he was there, but he was just sort of weird in the background.

So that was Lou's early life in Queens. And you mentioned he made his start in aviation with this helicopter company. But how did his business dealings begin to veer away from legitimacy? Lou claims to have made his first $1 million by the time he was age 21 and his first like $400 million in his early 30s. And he did set up a money-making business that was a helicopter company. He got his pilot's license and he shuffled business travelers between New York and Jersey. So there was a real business there that was legitimate for a while, but pretty quickly he took what was legit and he started to parlay it into blimps. Again, the dude was into blimps, kind of the weirdest aircraft you could possibly be into, but something about it was right for Lou.

And he sold ads on the side of these blimps to places like Jordache Jeans, which was like a hip jeans company in the 80s at the time. That blimp would end up crashing. He would get a big insurance payout for that for like two and a half million. And that's really when things super shifted for Lou and he kind of crossed the Rubicon. He used the money from that blimp crash, but it was actually a fraudulently gained insurance claim on a sort of dud blimp that was never going to fly. He used that money and took it and bought an actual legit blimp. And that started really Transcontinental Airlines and the business that he grew from there. Well, so far, if we disregard the insurance fraud

and the malfeasance behind it, it still seems like a reasonable career trajectory from helicopters to planes to blimps. We're all up in the air. How did Lou Pearlman then leap from aviation to producing boy bands? Yeah, so, you know, he's got this blimp company, right? You're right, it's pretty legit.

There's a little twist of facts that landed him a lump of cash from insurance. And he started Airship International, which was his blimp company. And that actually went public, but it was underwritten by this penny stock operation. You know, penny stocks, like just tiny little amounts of money for stocks. And he kept issuing stock and they were doing things like pump and dump, which was essentially like pumping up these stocks to be worth money and then selling them off really quickly for profit. He did get some attention from regulators there, but he managed to sort of stay on the edge of what was going on. But it all kind of really

clicked for Lou. And the shift really happened this one time when he had chartered a plane for a band. And this band was called New Kids on the Block. And his story goes that they paid in cash. Like they brought a suitcase full of cash to pay for the flight. And Lou was like, whoa, what's going on? How do these guys have like a ton of cash? And, you know, he'd been around Art Garfunkel. But like seeing this young group of guys he'd never even heard of like flash around a suitcase full of cash to pay for a chartered plane. He was like, what the heck is happening here? And he asked the manager who was with him, like, who are these guys? How come they have this much

money? He's like, oh man, the guy was like, you know, it's a great business. These guys are cashing in. This boy band thing is really big. And that person was Maury Starr who went on to produce New Kids on the Block. Problem with that story, like so many stories in Lou's past, I talked to Maury Starr and he's like, I don't recall that happening at all. And it wasn't just the money of the music industry that was alluring to Lou. He had a musical background too. Yeah. Lou was actually in a local band called Flyer that was in Queens. This is some local guys who put together a good rock band. And Lou originally started out playing in the band, playing guitar, but, and this is cruel and it shouldn't be the

way, but he didn't fit the part visually. He's a heavy guy. Everybody else in the band was kind of traditionally good looking or whatever you want to call it, but for right or wrong, Lou didn't fit the mold. He was sort of weird on stage and they were like, you know, it's not really working out with you on guitar. And so Lou's like, I'll manage the band. So he became the manager and sort of the off stage member of the band. And he started of promised them the world. And he said he'd set up a world tour for them and negotiated a record deal with Columbia Records. And he told the guys he was really winning for them.

And none of it actually came true because it wasn't. This is when, about the time that Lou moves his operation to Florida and Transcontinental Records becomes a division of Transcontinental Airlines, however weird that might be. And this is when he starts scouting and training up his boy bands. This took a lot of time and a lot of money. This is probably the period in which his businesses begin to resemble a Ponzi scheme the most. Who is he taking money from? Well, you know, Lou was getting money from

family and friends mostly and banks. Like he wasn't just relying on friendships and family to give him money. He would actually convince banks with this long list of companies that he had. They had all this collateral to put up and nobody stopped to look whether there were actually any transcontinental airlines planes flying in the sky or not, they would just sort of keep issuing him credit. His name was out there as a successful guy. It's like if an Elon Musk or somebody came to a bank today and asked for a loan, he'd be more likely to get it than not because of his name alone. And so while Lou was no Elon Musk, he was still making the rounds and getting people to invest in him based mostly on his name. But a lot of regular people invested in Lou. They took their pensions or retirement savings. There was a person whose son had a heart

condition and they had these medical savings, but instead they put it into Lou's investment schemes so that they could make a little more on their money. There were retirees who had saved up their whole life. He even convinced his child, a barber back from from Queens that he could retire early if he invested in him. And there was a cousin that invested in him, not Garfunkel, but a different one. There's this one guy, Joseph Chow, who was maybe one of his biggest investors, just invested over and over and over again. He ended up pouring $14 million into Lou's businesses over time. In the meantime, Lou was actually paying the boy bands that he was running at the time really poorly. So I can almost understand getting money from banks

in terms of loans based on paper collateral. That's one sort of fraud. But the fleecing of everyday investors seems like something altogether different and requires a different skillset from Lou. What was his pitch to investors? What was the hook? Lou's pitch to investors, the mom and pop people,

first of all, they were starstruck. Here was a guy who had been on MTV. He made it known to the world that he was behind Backstreet Boys and NSYNC and shared the edge of the spotlight with them whenever it was possible. So they were starstruck and they're like, oh my God, this guy, he's got the Midas touch.

Everything he touches is gold. But it wasn't like he was promising to them that he was going to make them rich overnight. He pitched an investment scheme that he said was part of his larger set of companies that was the employee savings plan. You had to work for him in order to be a part of it, but he likes you, he'll extend it to you. And this was not get rich quick. It performed a couple percentage points better than the average 401k. So people would invest over time. And the promise would be that over the course of time you would normally spend investing in a retirement fund, you would make 3%, 4%, or 5% more in his fund.

And it was called the Employee Investment Savings Account, or EISA. It was styled to sound like a legitimate thing, which is the employee retirement investment savings account or ERISA, which is a common thing at companies. So I'm just wondering about the character of a man who sits at the table at night and comes up with EISA, knowing fully well that it's 100% fraudulent, and yet he's successful at it. People believe him. People are drawn to him. Did Lou have any redeemable qualities? How did he pull this off? Well, it's important to understand that it wasn't just his word when it came to these financial investments in this fraudulent savings scheme. He produced

documents from AIG, from Lloyd's of London, to say that these things were secure, that they were insured. And in fact, those were things that he made on his printer, like on Photoshop or Microsoft Paint or whatever he was using at the time. Like he literally just comped together a document and sent it to people because who the hell would have the audacity to do something that brazen? And no one really thinks at the time, you know, we live in different times now, but in the time, like no one would think that somebody would just be that brazen to do that. And then on top of it all, like he did have the Midas touch when it came to some of these band members. He could recognize talent and he was an engaging guy.

He had this thing where he could talk to you and pretty quickly understand what your biggest dream was and then make you believe it was true. But actually, he was just sort of absorbing your dream and making it his own. He did deliver to some early investors. That's the mark of a great Ponzi scheme, right? Or horrible Ponzi scheme, depending on how you look at it. Early investors will sometimes get paid back. So there's always somebody out there who can say, I got some money back investing with this guy. He really did me right. And now I have a million dollars on my $500,000 investment. Meanwhile, he's getting new investors to pay that extra 500,000 he paid back to somebody on their $500,000 investment. Meanwhile, he's getting new investors to pay that extra $500,000 he paid back

to somebody on their $500,000 investment. So new investors pay for old debts. That's the definition of a Ponzi scheme, and it's why they're often so successful. So around 2004, things start to fall apart for Lou Pearlman. Banks are calling angry investors, are demanding repayment. One of the characters that I found fascinating was Paul Glover in this story, who suddenly finds himself at the center of a massive fraud ring. What was his story? So there's this guy, Paul Glover, who I love. He's like my favorite character in the story. And the reason I love him is because, all right, he's a forensic accountant, right? And Lou actually brought him in, or somebody in Lou's transcontinental companies brought him in. Now, mind you, this is when there's 84 companies going. People are starting to knock on the door of his massive complex in the middle of downtown Orlando, which was like, did it better, built fake cities of their own and people left. He took that over.

And so here he is inside this giant compound. His companies are bleeding cash. He has very little liquid assets available. He brings in this guy who has a really good reputation as a forensic accountant to come pour over the mess and tangle of his companies to see if there's any bit of cash that he can squeeze out of anything that he's got. And so this guy's like, yeah, sure, I'll do it. He comes in, he gets the keys to Lou's office, he gets the access to all the files, and he starts going through them. And one by one, he starts seeing really sloppy investment work and accounting work. And he sees this accountancy that's gone through and certified all these

different documents. He starts seeing the employee investment savings account and he starts seeing different loans and things. And this firm that sort of had audited everything is called Cohen and Siegel. And so he's like, I'm just going to give these guys a ring. It seems like there's some like shoddy work going on here. I want to see what was going on at the time. So he picks up his mobile phone that he's got on him, right? And he dials this number for Cohen and Siegel, which is in South Florida. And he's sitting in Lou's office and nobody else is there. It's just him. And he dials this number. And as he's dialing, somebody's calling Lou's phone on his desk, right? The number on Lou's desk starts ringing and nobody answers the Cohen and Siegel. So he hangs up the phone and he goes, I'm going to call him again. And he dials his phone again.

And when he dials it, the number on Lou's desk rings again. And so the phone number, Cohen and Siegel, was attached to the one on Lou's desk rings again and so the phone number Cohen and Siegel was attached to the one on Lou's desk because there was no Cohen and Siegel it was Lou he was auditing his own fraudulent documents and what was uh Paul Glover's decision at that moment he's discovered fraud what does he do so there's Paul Glover sitting here he sees the phone ring on Lou's desk and he realizes this whole thing is built on a scam. And suddenly it all makes sense. Every document he's looking at is not a way to find more money for Lou. It's evidence of fraud.

And so his mission shifted in that moment. And as he sat alone in Lou's office and had a bunch of boxes, he started to try to assemble the best set of evidence that he could find to take out of that office that day and bring it down the street to the authorities. He was hip-hop's biggest mogul, the man who redefined fame, fortune, and the music industry. The first male rapper to be honored on the Hollywood Walk of Fame, Sean Diddy Combs.

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From his meteoric rise to his shocking fall from grace, from law and crime, this is The Rise and Fall of Diddy. Listen to The Rise and Fall of Diddy exclusively with Wondery Plus. So Paul Glover has tripped over evidence of a massive Ponzi scheme, and he goes to the authorities. Once the authorities get involved, Lou Pearlman leaves the country. What do you know about his life on the run? This is about the time that I started following the story really closely. Lou had mailed a letter to the Orlando Sentinel, where I used to to work saying that he was going to pay back all his investors. He bragged about attending this award ceremony in Germany for a boy band that he was currently promoting at the time called Us Five. Then he went from Germany to Spain and then to Panama and then to Singapore and then ultimately Bali, Indonesia.

And by the way, a lot of this stuff was being documented by a St. Petersburg Times reporter named Helen Huntley, who was all over this. And she's the one that got the call when this German tourist named Thorsten Eibord saw Lou Perlman in Bali, Indonesia at the buffet wearing his classic cornflower blue triple, quadruple large t-shirt. And the tourist took a photo being from Germany. He knew very well the boy band scene that Lou had started there. And he's like, hey, that's that guy with the boy bands. Isn't he wanted? So he took a photo and he emailed it to Helen Huntley at the Times who tipped off

the FBI. And so Lou was staying at the Westin Resort in Bali, Indonesia, and he checked in under an alias, A. Incognito Johnson. And so the Indonesian authorities came and arrested him, sent him to Guam, a U.S. territory where he was indicted on bank and wire fraud charges on June 14th in 2007. And that's really where I sort of got involved. I'm like a small-town Florida kid who moved to New York City and was working for this magazine that I really revered. And I was always looking for angles for stories. And I started to realize that this place I came from, Florida, was like a treasure trove

of weirdness. All this stuff that I'd seen as a reporter or a person living in Orlando, it was really weirder than I even realized when I was in the middle of it. And that's when I decided to come down to Orlando and try to get an interview with Lou for first a magazine article and later what would become a book. So I imagine one of the first things that happens once Lou is discovered to be overseas on the run is an immediate action to try and secure what assets might remain to recoup money for people harmed. How did the authorities go

about doing this? Well, once Lou's arrested, a different set of forensic accountants, this time being paid by the government, swooped in and tried to take a look at what all he had as soon as they could so that they could reclaim some of the money for investors. In their accounting, he had stolen at least $340 million, maybe as much as $500 million from investors. And his business, Transcontinental, the whole swath of businesses were put into bankruptcy. So they could come in and like start to claim his personal finances and try to sell off things to get investors their money back. There was no giant pot of money sitting in a secret bank account somewhere. So this was what they had to do. And in 2007, in June, a super weird website popped up, a bankruptcy auction for his businesses

and headquarters in Orlando. And it would only end up raising about $200,000. But you got to look inside like the kind of crazy life that this guy was living, the silly, almost like childish things that he was buying with the money. He had a Cadillac Escalade golf cart. So like a mini shrunken down Cadillac Escalade. He had an Uzi submachine gun. He had like a life-size statue of Anakin Skywalker from Star Wars. Just super weird stuff. There was never any kind of big bank account hiding somewhere or money buried somewhere. So with hundreds of millions of dollars missing, it's no surprise that Lou Pearlman ended up in a jail cell.

But you interviewed him while he was in Orlando's Orange County Jail. How did you get in to see him? What was it like to talk to Lou Pearlman, the man himself, taken down so far? The line is, you know, he traded his $250,000 Rolex for a set of metal cuffs.

That was sort of the running joke at the time, even though it was not funny to a lot of people. But I did interview him when he was in the Orange County Jail. And look, I'd been a reporter covering crime in courts in Orlando for quite a while. I knew how the system worked. I also knew that in Orlando, in Florida, there was government and sunshine laws, which really allowed you a lot of access to anything paid for by tax money. And I also knew that there's no reason why a member of the press should be treated any differently than a member of the public. And the member of the public had the perfect right to go into the jail, sign up to visit anyone they wanted.

And that person would be brought in front of a closed circuit camera without even knowing who they were meeting. So that's what I did. Instead of trying to go through a media channel, I just signed up to go see him. And so I went into the jail and I had about 30 seconds when he dropped in front of the closed circuit camera and said, hello, you know, kind of questioning. And I made my case and said, look, I'm a journalist working on a story. And there's been a lot written about your situation, but nobody's heard your side yet. And he said, you know, there's a lot I really want to talk about here, but my lawyer says that I shouldn't. I'm like, well, then let's just talk about your legacy. And that really opened him up. And from that moment on, he really started talking. We spent 45 minutes talking in jail. And he expressed how he really thought of himself as a king in exile and expected this chapter to be ending relatively soon. And from then on, he would talk to the person he called his girlfriend, who would talk to me. And that was how I kind of communicated with him in jail for a better part of a year.

It sounds like Lou not only told tales to his investors, he was telling tales to himself. Even while in prison, everything was looking up. He was still a king, but in exile. What did Lou Pearlman do in prison? In prison, I think he thought it was just a little less of a comfortable working office for him. He was telling everybody he was still working with Us Five, which is a group that he had kind of cloned from the best quality of his biggest boy bands, Backstreet Boys and NSYNC. And yeah, when Lou was in, he was trying to manage an act that called himself Bite Boy. And it was like a rock kid in Orlando who was just sort of this kind of strange, irreverent rock and roll act. You know, the kid played a couple of shows. I went to him. He wasn't that good. Like it was just sort of weird. And Lou had this idea for a reality show called Second

Chances that would feature like losers from American Idol and America's Next Top Model, which I think is kind of a concept that's happening in reality TV now though. So he tried to manage bands. He tried to start new businesses. Do you think Lou Pearlman had any remorse for scamming so many people? I don't think Lou had any remorse at all. In his mind and in the mind of a lot of Ponzi schemers, they're just one step away from being able to make everything awesome for everybody. And they'll be beloved for the risk that they took in the process. And that was Lou till the end. I mean, you know, the person he for a long time called his girlfriend, Tammy, was telling me that he was saying, he's got all these plans,

he's doing his thing, you know, he has some ideas. Like there wasn't any sort of real admission of the hurt and the pain that he had caused. How have members of the boy bands spoken about him? It's super conflicting for members of the boy bands who worked with Lou. Like to them, he wasn't all monster. I think he had a bit of a fatherly vibe about him for some of them. Like they called him Big Papa. Like that was the nickname for him or Papa Lou occasionally. And he did like try to create this air of like everybody's a big family.

And frankly, like if there was no Lou, there'd be no Future Sex Love Sounds by Justin Timberlake. There'd be no NSYNC or Backstreet Boys. You wouldn't see the talent that came out of that happening if it were for Lou. So even the ones who are super pissed off at him, they say it and then they go, and it's weird because at the same time, I wouldn't be here in this position in life if it wasn't for Lou. You mentioned that when you saw Lou Pearlman in jail, you were able to get him to open up when you talked about his legacy in jail, you were able to get him to open up when you talked about his legacy. That was something he was interested in. I guess I'd like to know what you think his legacy is. Well, the fact is he died alone in a Miami prison with

very few people around him and not even really enough money to finish his burial service. So there's that. But then there's also this sort of idea that the modern era of pop music, as we know it, has been heavily influenced by the boy band era that Lou Pearlman had the vision to make happen. And so did he have the means to make it happen? Not legally, but could he recognize talent? Absolutely. So in that regard, when Lou said that first time when I sat down with him, you know, we brought a lot of joy to a lot of people. That is true. But on balance, the heartache was bigger. Well, Tyler Gray, thank you so much for talking with me today on American Scandal. Thank you so much. That was my conversation with Tyler Gray, author of the hit charade, Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History. Lou Pearlman held that infamous record until Bernie Madoff broke it. history. Lou Pearlman held that infamous record until Bernie Madoff broke it.

From Wondery, this is Episode 4 of Lou Pearlman, the con man of pop from American Scandal. In our next series, we delve into the Challenger space shuttle disaster of the 1980s. Under pressure to meet launch deadlines, NASA and its contractors ignored a serious design flaw that led to the death of seven astronauts, including the first teacher in space, Krista McAuliffe. If you're enjoying American Scandal, you can unlock exclusive seasons on Wondery Plus. Binge new seasons first and listen completely ad-free when you join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify. And before you go, tell us about yourself by filling out a survey at wondery.com slash survey. American Scandal is hosted, edited, and executive produced by me, Lindsey Graham for Airship. This episode was produced by Pauly Stryker. Our senior interview producer is Peter Arcuni.

Sound design by Gabriel Gould. Music by Lindsey Graham. Produced by John Reed. Managing producer, you.