American Scandal - Lou Pearlman: The Con Man of Pop | Bye, Bye, Bye | 3

Episode Date: December 3, 2024

Following his split with the Backstreet Boys and NSYNC, Lou Pearlman finds it increasingly difficult to keep up appearances around his rapidly crumbling empire. Soon, investors begin demanding their money back, and an accountant turned whistleblower threatens to expose Pearlman’s lies. Listen 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 app or on Apple Podcasts. podcasts. It's mid-2005 in Chicago, Illinois. Attorney Edwin Brooks paces the floor of his office waiting for the phone to ring. He's expecting a call from a process server he's hired to serve a subpoena this afternoon, but so far he's heard nothing and is growing impatient. With each lap around the room, Brooks glances up at the clock on the wall,

then at the stack of financial documents that have littered his office and his mind for the last several months. Late last year, Brooks was hired to represent the estate of Dr. Joseph Chow. Chow had sunk around $14 million into music mogul Lou Pearlman through various loans and investments. But after Chow died and his family tried to collect the money, Pearlman refused to pay. He even sued the Chow family to prevent them from demanding repayment, citing a forbearance letter that granted Perlman permission to pay back the money at his own convenience. Initially, Brooks was stunned to see Chow's name signed to such an ill-advised agreement, but upon closer examination, the lawyer

came to believe that Chow may not have signed the document at all. After weeks of combing through Chow's agreements with Perlman, he noticed that the signature on the forbearance letter was an exact match for one he'd seen on another letter signed by Chow, which probably meant the signature on the forbearance letter had been forged, likely by Perlman. Unfortunately, the letter is a legal dead end. Brooks only has a copy of the comparison signature, not the original, And without originals of both documents, he wouldn't be able to prove in court which one was real and which one was fake. But Brooks still has forgery on his mind, and he's been studying every Perlman-related document he's been able to get his hands on with suspicion.

That's why he sent a process server to the Florida offices of Cohen & Siegel, the accounting firm listed on Perlman's personal financial statements. Brooks wants to know if their account records match the ones that Perlman turned over to Brooks, and to do that, he needs to serve the firm with a subpoena. But as Brooks completes another lap around his office floor, he looks up at the clock and sees that it's after 5 p.m. in Florida. The subpoena should have been served at least half an hour ago, and he doesn't understand what the holdup is. Finally, the phone rings. Brooks lunges over a pile of reports to grab the receiver. Edwin Brooks speaking. Hey, it's the process server.

Yeah, yeah. How'd it go? You served the subpoena? Well, about that, um, the place doesn't exist. What do you mean? Well, I went to the address you gave me and there's no business called Cohen and Siegel there. Yeah, you sure you're at the right address? Yep, I'm sure. But I'm telling you the only business here is some kind of secretarial services company. Oh, well, they have a German address too. Maybe they just employ secretarial services for their U.S. customers? That's possible. But serving papers internationally, that's a whole other can of worms. Yeah, and you know, I'm not sure it's worth it, honestly.

Why do you say that? Well, it's, I mean, have you thought about the name of the accounting firm, Cohen & Siegel? What about it? Those names don't ring any bells for you? I mean, should they? Mickey Cohen, Bugsy Siegel? Gangsters who founded Las Vegas. Yeah, I don't think this is a real business at all.

Oh my God, you think Perlman faked an entire accounting firm? Looks like it to me. All right, I gotta go. And thank you for your help. Good luck getting this guy. Brooks hangs up the phone, his mind reeling. He googles the number for the FBI and begins to dial, but then stops himself. He has an ethical duty to get the best possible outcome for his clients, the Chow family. And from that perspective, the better move is to keep gathering proof that Perlman is a con artist and use that evidence to push Perlman to pay the

Chows the biggest settlement possible. So Brooks hangs up the phone. For the sake of his clients, he'll leave the criminal case to the professionals. But he now feels certain that Perlman's con runs far deeper than he could have imagined, and that many others have been caught up in his web of lies too. 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. From Wondery, I'm Lindsey Graham, and this is American Scandal. By the late 1990s, Lou Pearlman rocketed to fame as the impresario behind the Backstreet Boys and NSYNC, two of the biggest pop acts in the world. He built a reputation as a risk-taking entrepreneur who oversaw a vast empire that included not just musical acts, but a private airline company, restaurants, and real estate. But at the height of their popularity, both the Backstreet Boys and NSYNC sued to be released from their contract with Perlman,

citing him for fraud and dereliction of fiduciary duty. In the wake of these lawsuits, Perlman tried to create another hit band, but had little success and was bleeding money. And soon, Perlman's other businesses would come under increasing scrutiny, raising the question of whether Perlman was really a brilliant businessman

or just a cunning con man. This is Episode 3, Bye Bye Bye. It's August 2006 in Orlando, Florida. Lou Pearlman sits hunched over his desk, dialing the number for a bank in Georgia. The phone rings once, twice, and then the call gets redirected to a series of pre-recorded greetings inter interspersed with on-hold music. Perlman slumps back in his chair. He needs to speak to a loan officer as soon as possible, but he's made enough of these calls to know it probably will be a while before a human answers the phone. So as he listens to the voice on the recording, explained for the third time that someone will be with him shortly, Perlman gazes around his office.

Four years ago, this former train depot was just a run-down tourist trap. Then Perlman bought it and transformed it into a thriving business center, complete with ornate fountains and a glass elevator. He opened a steakhouse and set up his headquarters in the building. The office used to be a source of pride for Perlman, but lately it's felt more and more like a symbol of everything that's gone wrong in his building. The office used to be a source of pride for Perlman, but lately it's felt more and more like a symbol of everything that's gone wrong in his life. Perlman took on massive debt to buy this building, and now he's struggling under the weight of it. Since losing his boy band

Cash Cows, he's had to take out loans from nearly a dozen banks to keep his various businesses afloat, but they weren't enough, and now he needs to borrow more. The on-hold recording stops abruptly, and finally a loan officer answers. Perlman doesn't want to sound desperate, so he clears his throat and leans forward in his chair, placing his elbows on his desk to steady himself. Yeah, hi, this is Lewis J. Perlman with Transcontinental, and I'm calling to follow up on a loan application I submitted. A colleague of mine sent over all the paperwork last week. Mr. Perlman, yes, yeah, I have your application right here. You're seeking a loan of $2.5 million.

That's correct. Okay, well, we just need to confirm a few details. Absolutely. All right, well, we have a letter here from the accounting firm of Cohen and Siegel that says Transcontinental has a $50 million reserve fund held in a bank in Germany. Is that correct? That's correct. Okay. Well, we're going to need a statement directly from the bank confirming these holdings. Well, Cohen and Siegel is a third-party accounting firm. I don't understand why that won't suffice. Yeah, I'm sorry, but it's company policy. We need to receive verification from the institution that's actually holding the money. Okay, but that's not the only collateral I'm offering. I'm also, there's also my personal

home and my Rolls Royce, as well as the 49 airplanes owned by Transcontinental. Yes, I see that. All very helpful, but this reserve account is a key asset, and we would still need a statement from the bank itself. Is that a problem? No, not at all. It's just another step I didn't realize was necessary. I'm trying to move this along as quickly as possible. I understand that, and I can assure you that as soon as we receive the paperwork, we will move forward without delay. Okay, all right. Well, then I'll get it to you as soon as I can. Thanks for your help. It's been my pleasure. Well, then I'll get it to you as soon as I can. Thanks for your help. It's been my pleasure.

Perlman hangs up the phone and sighs. He starts to feel his chest tighten in panic. He needs that money now, but he's never let a little paperwork get in his way. Perlman wakes up his computer and opens the file where he keeps the letterhead for the fictitious German bank he made up years ago. And as he prepares to write his own financial statement, Perlman reminds himself that he's been in plenty of financial holes before and he's always found a way out. This time will be no different.

By the summer of 2006, Lou Perlman has borrowed close to $160 million from various banks, using almost all the same assets as collateral. But what none of the banks realize is that, for the most part, those assets don't exist. Transcontinental Airlines doesn't own a single plane and never has. The private planes Pearlman chartered to bands in the 80s and 90s were all leases. His company's brochure still features the same photo of a Model 747 that he and a childhood friend faked decades ago. Transcontinental Airlines technically doesn't even exist as a company. Their registration expired in 1999,

and Perlman never bothered to renew it. And it's not just the banks that he's been misleading. Over the years, many of Perlman's friends and family members bought into Transcontinental's Employee Investment Savings Account, or ESAs, which Perlman assured them were both insured by the FDIC and Lloyds of London. This wasn't the case, and ESA isn't even a real type of investment vehicle. Perlman made it up. But to make the account seem legitimate, Perlman's been generating fake investment statements using fake letterhead from the fake accounting firm Cohen & Siegel. But there's no money in the accounts of any of Perlman's investors. All of their money has been

directed straight into Perlman's pocket, and he's spent it freely for decades. But now Perlman is starting to face reality. He's already been sued by multiple banks for non-repayment, and the authorities have started to ask questions about ESA. In late 2006, Perlman is called to sit for a series of interviews with agents from the Florida Office of Financial Regulation, and they want to know why investors have been unable to withdraw their money from their ESA accounts. Perlman claims that he's trying to pay back his investors, but the money is in a German bank, and the Department of Homeland Security is holding up the transfer.

He agrees not to sell any more ESA investments until the matter is cleared up. And Perlman's latest lie buys him some time with the Florida regulators. But among his investors, word of the Cho family's lawsuit has begun to spread. More and more people are starting to have concerns about the integrity of their investments. And soon they start taking those concerns straight to Transcontinental. In late 2006, Mandy Newland, one of Perlman's longtime assistants, is sitting at the front desk of the Transcontinental office, struggling to manage the phones. They've been ringing non-stop,

and every call is someone asking about money. Perlman has assured Newland and the rest of the Transcontinental staff that he's taking care of the situation, but he's rarely in the office these days, and his promises aren't relieving anyone's concerns. Suddenly, the door swings open, and an elderly couple marches in, demanding to see Lou Pearlman immediately. The man explains that they've been calling for weeks to no avail, so they drove all the way down here from New York to confront Lou in person. Newland is apologetic, as she explains that Pearlman is not in the office, and she doesn't know when he'll be in.

But she promises to let him know that they came all this way to see him. The couple looks deflated and exhausted, but they still refuse to budge. The old woman's voice shakes as she explains they invested their entire life savings with Perlman, and if they don't get the money back, they could lose their home. Newland doesn't know what to say. She wants to help them, but she doesn't know how. So she gently reiterates that she'll make sure to tell Perlman that they are here the next time she speaks to him, but does little to comfort the couple. She watches the old

woman's lip begin to quiver before she bursts into tears, sobbing that they're going to end up in the street. The old man wraps a steadying arm around her shoulder, and as he guides her out of the office, he promises they'll try again tomorrow. But before the door is even shut, another elderly man marches in, demanding to know where his money's gone. Newman's heart sinks. She tries to maintain her composure, but she isn't cut out for this. When she started working at Transcontinental, she felt like she was in the business of making people's dreams come true. But now, every person who calls the office seems like they're living a nightmare. In January 2007, Lou Pearlman hires an accountant named Paul Glover to

comb through his books looking for assets that can be sold to pay back his bank loans and investors. It's a last-ditch effort to save Transcontinental, or at least delay its inevitable implosion. But when Glover arrives at Perlman's offices on January 5th, the music mogul isn't there. Instead, the accountant is greeted by Transcontinental Vice President Bob Fischetti and led into Perlman's corner office, where a fake tiger-fur rug covers most of the floor and a row of filing cabinets lines one of the walls. Fischetti motions toward the filing cabinets and tells Glover that he can review every document he needs. Glover thanks Fischetti and then gets to work. He takes a seat and begins reviewing stacks of financial documents. Since Transcontinental was founded in the 1980s,

there are thousands of pages to shift through. And Glover works through the day, flipping through page after page until the numbers start to blur. But just when he thinks he can't look at another document, his eye catches on some small print at the bottom of one of the more recent reports. It's a standard accounting disclaimer, but the language is out of date. Glover's a bit confused. The document was generated by Cohen and Siegel, the same accounting firm that has signed off on almost every one of Transcontinental's financial documents for the last two decades. So Glover checks another report, and the disclaimer is wrong on that one too. This is not the kind of error that a reputable accounting firm would make. It's a legal liability

not to have the most up-to-date disclaimer language on these forms. So Glover decides to give Cohen and Siegel a call. He pulls out his cell phone and dials the number on the company's letterhead. But when Glover hits send, the phone on Perlman's desk starts ringing. It could be a weird coincidence, but when Glover hangs up his cell phone, Perlman's phone stops ringing. Glover's heart thumps in his chest. He calls Cohen and Siegel's number again, and again, Perlman's phone starts ringing. Glover's mind races. He rushes over to where he put the ESA statements and starts paging through them.

They've all been generated by Cohen and Siegel, the company that Glover now knows to be a front for Lou Pearlman himself. Suddenly, a thought strikes Glover like lightning. The reason none of Pearlman's investors have been able to withdraw their money is that there is no money. Pearlman has been running a Ponzi scheme. He's been luring investors with a promise of better-than-average returns and then placing most of that money straight into his own bank account. And judging by the dates of these ESA statements, he's been doing it for over 20 years. Usually Ponzi schemes work by using new investor money to pay the returns of the old investors.

So maybe a few investors had gotten their money back with interest in the beginning. But now too many people are trying to get their money out and Perlman isn't bringing in enough new investments to cover the gap. Glover was hired to help Perlman, but now knows he can't. This man is a criminal, and Glover decides he's going to do the right thing and use his access to Perlman's financial records to bring him to justice. 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 mum's life. You can listen to Finding Natasha right now exclusively on Wondery+. 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. He was hip-hop's biggest mogul, the man who redefined fame, fortune and the Wondery app, Apple Podcasts or Spotify. 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. Diddy built an empire and lived a life most people only dream about. Everybody know ain't no party like a Diddy party, so. Yeah, that's your son. But just as quickly as his empire rose, it came crashing down. Today I'm announcing the

unsealing of a three-count indictment, charging Sean Combs with racketeering conspiracy, sex trafficking, interstate transportation for prostitution. I was f***ed up. I hit rock bottom, but I made no excuses. I'm disgusted. I'm so sorry. Until you're wearing an orange jumpsuit, it's not real. Now it's real. 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. When accountant Paul Glover was hired to sort through Lou Pearlman's financial documents in January 2007, he thought he was dealing with a standard bankruptcy case. But as he stands in Pearlman's office,

surrounded by thousands of pages of what he has discovered are false financial statements, Glover realizes that he's come face-to-face with evidence of one of the biggest Ponzi schemes in American history. He flips through the ESA statements again, his eyes focused on the totals listed at the bottom. He isn't certain of the exact numbers yet, but it looks like Perlman has taken hundreds of millions of dollars from vulnerable investors. Glover shakes his head.

He can't let Perlman get away with this. He has to get this evidence to the authorities. But outside Perlman's office, transcontinental employees are milling about, waiting for Glover to finish his work. And he has no idea how much they know or don't know about Perlman's scheme. It's entirely possible that they're in on it. So Glover wants to try and sneak out without attracting attention while carrying as much evidence as he can. Glover grabs a file box and starts loading it up with financial documents. He grabs ESA statements and revenue reports from Transcontinental and anything else he can turn over to the authorities to prove what Perlman's been up to. And then, just after 9 p.m., Glover peeks out the door of Perlman's office with a box of evidence in his hands.

There are still a few people working, but most of the staff have gone home. This might be his best chance. This might be his best chance. But as Glover exits Perlman's corner office and walks past rows of cubicles, transcontinental vice president Bob Fischetti suddenly appears out of another office and blocks Glover's path. Glover puts on his best poker face and reminds himself he just needs to throw Fischetti off the scent for long enough to get to his car. Fischetti flashes a grin that long enough to get to his car. Fischetti flashes a grin that, to Glover, looks a little forced. Hey, Paul, you taking off for the night?

Yeah, it's been a long day and I'm white. Totally understand. You've been at it a while. What's in the box? Oh, more documents, you know. Gotta review them all. You need to take them with you? It's easy if I just go through them at my office. Won't be in your hair.

Well, it's not a problem for you to come here. You're not in the way at all. I appreciate that, but it adds commute time. It's more efficient if I take the files with me. Okay, but what exactly are you taking with you? Oh, various tax returns, revenue reports. I need to find assets anywhere I can. Lou and you guys at Transcontinental, you're in a bit of a jam.

And how long will you need these for? About a week, give or take. A week? Well, the company's been around a long time, and there's all these subsidiaries. It's taking me a while to sort it all out. Hmm, really? Look, I just want to make sure I don't miss anything. I know creditors are breathing down Lou's neck. I'm sure you're feeling the stress.

So the more thorough I am at this stage, the more likely I'm going this stage, the more likely I'm going to be able to find something to help you out. Fischetti stares at Glover. Glover swallows, fighting hard to keep his face neutral. Finally, Fischetti claps Glover on the shoulder. Well, we appreciate all your help, Paul. It is a big mess. Well, no problem. Tell Lou I'll be in touch as soon as I'm finished going through everything. All right? Will do. Fischetti steps aside and Glover heads for the exit, resisting the urge to run as fast as he can.

And when he finally reaches his car, Glover puts the box full of evidence in the trunk and collapses into the driver's seat, breathing hard. into the driver's seat, breathing hard. After Glover leaves Perlman's office, he calls the state fraud hotline to tell them what he's discovered. Then he meets with some investigators who take a statement from Glover as well as the box of documents. Then on February 1st, 2007,

Florida's Office of Financial Regulation files a civil suit against Perlman. They allege that Perlman has been committing fraud for at least 15 years through the sale of EASAs, and they detail some of the lies Perlman told to make the accounts seem legitimate. Around the same time, the banks that loan money to Perlman decide they're done letting him dodge them. He's defaulted on every one of his loans and owes the banks nearly $200 million combined. So a group of banks in Orlando go to federal court and ask the judge to put Transcontinental into bankruptcy, freezing the company's assets. But that's when they discover that Transcontinental barely has any assets left.

What little money remained in the company's accounts had already been transferred to the personal accounts of Perlman and other company executives. And when FBI agents raid Transcontinental's offices two weeks later, on February 15, 2007, they find the place ransacked. Panicked employees shredded as many documents as they could and carted off anything of value to sell. The place has been stripped of TVs, audio equipment, even furniture. So agents load up their truck with whatever documents are left and head to Perlman's home, where they seize more evidence. But Perlman himself is nowhere to be found. When FBI agents question transcontinental employees, they discover that Perlman hadn't been in the office for six weeks. The last person to see him was his executive

assistant, Mandy Newland, who had gone with Perlman to Ireland, where he was scouting another boy band. After that, Perlman had flown to somewhere in continental Europe with a former member of one of his bands named Michael Johnson. Right now, his exact whereabouts are unknown. So with Perlman on the lam, the case turns into a media circus, generating news not just in the United States, but all over the world. Word that the man behind the Backstreet Boys and NSYNC was running a Ponzi scheme hits especially hard in Germany, where both bands got their start. So when a 32-year-old German computer programmer named Thorsten Eborg sees the coverage,

Perlman's image lodges somewhere in the back of his mind. But Eborg forgets the story and moves on with his life. But then in June 2007, nearly six months after Perlman left the United States, Eborg and his wife are on vacation in Bali, Indonesia, and that image of Perlman comes rushing back. Eborg is walking down a white sand beach, enjoying the sunshine outside the Western resort Nusa Dua, when he spots a heavyset middle-aged man with large glasses dressed in a Hawaiian shirt.

Eborg squints, thinking, that man looks a lot like Lou Perlman. Eborg tries to tell himself it's just a random tourist, but he can't shake the sense that it really is Perlman. So he heads to the resort's business center and searches the internet for pictures of Perlman. And as he scrolls through the photos online, all of his doubts disappear. The man he saw was definitely Lou Perlman. And from everything Eborg has read,

he's a wanted fugitive. Maybe there might be even some kind of reward for a tip leading to his arrest. So Eborg continues Googling, and he comes across a blog written by a financial reporter with the St. Petersburg Times named Helen Huntley. Huntley's been covering the Perlman case closely, outlining how his scams worked and peeling back the layers of deception. So Eborg sends her an email, letting her know that he believes Perlman is staying at the Western Resort Nusa Dua in Bali.

Huntley writes back, thanking him for the note. She confirms that the FBI has been looking for Perlman and asks Eborg if she can forward his email to them. Eborg agrees and soon he's excited to find an email in his inbox from FBI Special Agent Scott Skinner. But to E. Borg's surprise, Skinner doesn't seem especially interested in the information E. Borg has to share. The agent says that at this moment there is no arrest warrant for Perlman, and that because the United States doesn't have an extradition treaty with Indonesia, Perlman is allowed to travel through the country as he pleases. E. Bborg is disappointed

by the somewhat dismissive tenor of Skinner's email, but he reminds himself that Skinner must be getting tips like this from all over the world and that it has to be difficult to sort the true sightings from the false ones. So Eborg tries to turn his attention back to simply enjoying his vacation. But the very next morning, while standing in line at the resort's breakfast buffet, Eborg again spots Perlman, this time at a table by himself, sipping coffee. That's when Eborg gets an idea. He walks back to his table

and asks his wife for their camera. She wants to know why, and he explains he wants to take a picture of Perlman and send it to the FBI. Maybe photographic proof would encourage them to take him seriously. So after his wife hands over the camera, Eborg pivots in his seat,

lines up the shot, centering Perlman in the frame. Holding his breath, he pushes the shutter button, and Eborg has the photo. Indisputable proof that Perlman is in Bali. And he hopes it's enough for the FBI to take action. 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. 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. In June 2007, FBI agent Scott Skinner is sitting at his desk when an email comes in from a German citizen named Thorsten Eborg. Only yesterday, Skinner had received a tip from Eborg saying he'd spotted Lou Pearlman at a resort in Indonesia. Skinner replied saying the FBI has no arrest warrant for Pearlman and that because Indonesia has no extradition treaty with the U.S., the music mogul is free to travel the country as he pleases.

But that's not entirely true. The FBI does have an arrest warrant for Perlman. And even though the U.S. and Indonesia have no extradition treaty, the Bureau can circumvent this legal restraint by working with the Indonesian National Police. But Skinner doesn't want to explain any of that over email. For all he knows, this e-borg person could be an associate of Perlman's, or even Perlman himself. And this supposed tip could be an attempt to glean information about the FBI's investigation,

or an attempt to lead them on a wild goose chase. So while Skinner feigned disinterest, he ordered two agents from an FBI field office in Indonesia to fly to Bali. They're at the Westin Resort Nusa Dua right now, scoping the place out. And when Skinner opens this latest email from Eborg and sees the photo he sent, he can't help but laugh. In the corner of the photo, sitting at a table just across from Perlman, are his two agents, dressed undercover as tourists, waiting to make their move. But the agents can't approach Perlman just yet.

While Eborg was in the business center, emailing Skinner the photo of Perlman, the agents went to meet with Indonesian national police and convinced them to expel Perlman from the country as an unwanted visitor. With that leverage in hand, the agents return to the resort and make their move. They tell Perlman that he is no longer welcome in Indonesia and he'll have to leave the country. Perlman agrees to fly with them to Guam, which is a U.S. territory. And once the plane lands, Perlman is officially arrested and placed in jail. He's indicted for bank fraud, mail fraud, and wire fraud,

crimes for which he faces a combined maximum sentence of 130 years in prison. In response, Perlman petitions the court for a public defender, claiming he has no money to pay for his own attorney. To Perlman's victims and the authorities, it seems impossible that he could have burned through more than the $500 million he's accused of stealing. But many believe that Perlman has squirreled much of it away in hidden assets, but there's no way to prove it.

In July 2007, roughly a month after being captured in Indonesia, Perlman is transferred back to Orlando, where he's denied bail and separated from the general population. The judge is worried that the other inmates will recognize Perlman and try to extort him. And when confronted with the indictments, at first Perlman insists he's innocent. He spins a story of an elaborate conspiracy, hinting that powerful Florida figures, including the state's governor and the mayor of Orlando,

were the real puppet masters behind the schemes he stands accused of. But in March 2008, Perlman finally pleads guilty. He admits that Transcontinental Airlines and the ESA program were fraudulent from the beginning. His sentencing hearing is scheduled for two months later in May, and dozens of Perlman's victims travel to attend. Jennifer Chow and her mother arrive from Chicago. They've already settled their suit against Perlman for nine million million on an arranged payment schedule, but they still haven't received most of that money, so they want to attend Perlman's sentencing and hopefully see justice served. So on the morning of May 21, 2008,

Jennifer and her mother enter the courtroom and find that it's packed with Perlman's victims. Many of them are elderly and shuffle into the courtroom using canes and walkers. Jennifer shakes her head. These people all look so vulnerable. After a few moments, Perlman is escorted into the courtroom. He's shackled in handcuffs and leg irons, sporting a navy jumpsuit with Orange County corrections stenciled across the back. Jennifer holds her mother's hand.

It's been years since they've seen Perlman in person. There were reports that he had lost significant weight in jail, but he looks the same as she remembers him. The clerk then announces that Judge G. Kendall Sharp is entering the courtroom, and everyone gets to their feet. Judge Sharp enters and wraps his gavel, starting the proceedings. Perlman's lawyer stands up and argues that Perlman should receive a lenient sentence. Under his plea agreement, Perlman is facing a maximum of 25 years in prison, but he's 53 years old, so his lawyer argues that

this is effectively a life sentence. He maintains that Perlman was never on the run, simply on a business trip overseas, and uses the fact that Perlman willingly went to Guam as proof that he was cooperative. He also argues Perlman genuinely believed that he would be able to pay everyone back. After his lawyer wraps up, Perlman reads a short statement. He apologizes for his actions and says he wants to do everything he can to make it right. Jennifer Chow just shakes her head. She doesn't buy Perlman's apology. She remembers how hard he fought to avoid paying what he owed her father,

including suing her family for trying to get the money they were owed. She doesn't see any reason to believe he's changed since then. And others in the courtroom agree. The judge allows the prosecutor to call some of Perlman's victims to testify about the ways they were hurt by Perlman's con. One by one, they take the witness stand, recounting how Perlman promised them everything and left them with nothing. One woman breaks down as she talks about how even though she should be retired, now she has to work two jobs to make ends meet.

Another victim talks about how her husband died just seven months after learning that all their money was gone, believing he'd failed his family. Jennifer finds herself fighting back tears. The scale of Perlman's wrongdoing is mind-boggling. And like Jennifer's father, these people tried to do the right thing. They all talk about how they looked over his insurance certificates, requested financial statements.

Everything seemed above board. But Perlman fooled them all. After the testimonies are finished, the judge reviews every count and orders Perlman to serve the maximum 25 years. Around the courtroom, Perlman's victims erupt in applause, cheers, and sobs of relief. Jennifer closes her eyes and exhales. No one is getting their money back, but at least Perlman is paying for his crimes. Even though Lou Perlman's empire crumbled, and he likely won't get out of prison until 2029, empire crumbled, and he likely won't get out of prison until 2029, the former music mogul doesn't give up hope. He spends much of his time behind bars on the phone, calling old friends and business

acquaintances, including a former member of one of his boy bands, Michael Johnson. Johnson had been traveling with Perlman in early 2007, when Perlman was apprehended by the FBI. At the time, Johnson thought they were scouting bands for a company he and Perlman was apprehended by the FBI. At the time, Johnson thought they were scouting bans for a company he and Perlman were planning on starting together. But as the trip wore on, and Perlman started acting stranger and stranger, Johnson decided to Google Perlman from the Hotel Business Center in Bali.

That's when Johnson first learned that Perlman was accused of financial crimes, and when he realized that they weren't on a business trip at all, they were on the run. So Johnson left Bali before the FBI arrived, and he has since learned a lot more about the scope of Perlman's crimes. He's sickened by them, and he's certain that Perlman deserves to be in prison.

But Johnson can't bring himself to cast Perlman aside entirely. Johnson can't forget the ways that Perlman was good to him, believing in him as a musician and then an entrepreneur. And he knows Perlman's having a hard time in prison. He keeps getting beaten up by other inmates, who accuse Perlman of ratting them out in an attempt to broker deals for himself. So when Perlman starts calling Johnson from prison, Johnson reluctantly answers every time, trying to keep Perlman at arm's length, but without cutting him off completely. When Johnson sees that he's getting a call from an unknown number, he knows who's probably on the other line.

So he picks up, and an automated voice informs him that he's receiving a call from an inmate at a federal penitentiary. Johnson accepts the call. Hey, Lou. Mikey, hi. How's it going? I'm doing great, buddy. Walking the track, doing my thing.

That's good. Good. And I'm close to a deal. I'm going to get out of here soon. Well, you know, just be careful with that. You remember what happened last time. I don't want you getting into another dangerous situation. Don't worry about that. My lawyers are working on a whole new angle. I just got an email from them today. It's looking really good. Johnson closes his eyes. He knows this is a lie. Perlman doesn't have any lawyers right now. Well, good, good. I'm

glad to hear that. But in the meantime, you know, I've got all these guys in here singing for me, and I think I could put together a band in here. Some record executives have already reached out to me. Johnson shakes his head. He knows this is another lie, but it's so pathetic Johnson can't bring himself to call Perlman out. Well, I'm glad you're keeping busy. You could help me manage them. We can get our business off the ground, maybe even sell this story to a TV network. That would be great. Big things are coming, Mikey. Big things. This is just a hurdle, you know, and we have to get past it. Yep, we sure will. But hey, I got, I got to run. Some things I need to take care of. Sure, sure. Talk to you later. Take care, buddy.

You too, Lou. Stay safe. Johnson hangs up the phone. He doesn't have anywhere he needs to be. He just couldn't talk to Perlman anymore or listen to any more lies. Perlman's living in a fantasy world where he's still a big shot on the verge of another triumph. And as Johnson stares out the window, it occurs to him, maybe Lou Perlman's been living in a fantasy world his entire life. On August 19th, 2016, Lou Perlman died in federal custody from cardiac arrest. He had served eight years of his 25-year sentence and was 62 years old. At the time of Pearlman's sentencing, there was at least $300 million of investors' money unaccounted for.

At the sentencing hearing, the judge had offered to reduce Perlman's sentence by one month for every million dollars he returned, but Perlman didn't facilitate the return of any money. Some believe that he had it stashed away somewhere, but most experts believe Perlman simply spent it. Shortly after his arrest, Vanity Fair published a long article about Perlman and his crimes, including accusations that Perlman had sexually abused members of his bands. Sources said that Perlman showed underage boys pornography, massaged them, and would jump on their beds naked to wake them up.

But most of the allegations were never proven, and in a 2014 interview, Perlman denied any sexual wrongdoing. But the legacy of the bands he created lives on. NSYNC held the record for most albums sold in a week for 15 years, and several of its members went on to successful solo careers, most notably Justin Timberlake. And the Backstreet Boys continue to tour today. They've sold over 100 million records, which makes them the best-selling boy band of all time, just like Lou Pearlman

always believed they would be. From Wondery, this is Episode 3 of Lou Pearlman, the con man of pop for American Scandal. In our next episode, we speak with Tyler Gray, author of the hit charade, Lou Pearlman, boy bands, and the biggest Ponzi scheme in U.S. history. charade, Lou Pearlman, boy bands, and the biggest Ponzi scheme in U.S. history. 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.

If you'd like to learn more about Lou Pearlman, we recommend Tyler Gray's The Hitch Raid, the Netflix series Dirty Pop, The Boy Band Scam, and Mad About the Boys by Brian Burroughs, published by Vanity Fair. This episode contains reenactments and dramatized details. And while in most cases we can't know exactly what was said, all our dramatizations are based on historical research. American Scandal is hosted, edited, and executive produced by me, Lindsey Graham, for Airship. Audio editing by Christian Paraka.

Sound design by Gabriel Gould. Music by Lindsey Graham. This episode is written by Austin Rackless. Edited by Emma Cortland. Fact-checking by Alyssa Jung Perry. Produced by John Reed. Managing producer, Olivia Fonte. Senior producer, Andy Herman.

Development by Stephanie Jens. Executive producers are Jenny Lauer Beckman, Marshall Louis, and Erin O'Flaherty for Wondery.