The Big Flop - N*Sync's Secret Sixth Member: The Boy Band Pyramid Scheme with Good Children Podcast | 77

Episode Date: March 3, 2025

He turned five fresh-faced teens into the Backstreet Boys, then secretly created their rivals N*SYNC. But while his boy bands were hitting high notes, Lou Pearlman was orchestrating one of the biggest Ponzi schemes in history. From fake accounting firms to $300 million in fraud, discover how the man who built a pop empire ended up behind bars.The hosts of Good Children, Joe Hegyes and Andrew Muscarella, join Misha to share a story that might sound crazy, but it ain’t no lie: It’s the downfall of Lou Pearlman.Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterListen to The Big Flop on the Wondery App or wherever you get your podcasts. You can listen early and ad-free on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial by visiting wondery.com/links/the-big-flop/ now.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

You know what's even better than listening to the big flop? Listening to the big flop without any ads! With Wondery+, you can enjoy the floppiest of flops, completely uninterrupted. It's like having a front row seat to the world's biggest train wrecks. Join Wondery Plus in the Wondery app or in Apple Podcasts and upgrade your listening experience today. I've got a tough question for you. Which group do you stan harder? The Backstreet Boys or NSYNC?

You know, they were the biggest boy bands of the 90s, but did you know that the same guy was responsible for creating both groups? And did you know that he also wound up in jail? Well today on The Big Flop, we're talking about Lou Pearlman, the boy band mogul who lost everything because he made some exceptionally shady business deals and made a lot of people's money go a buy, buy, buy. Luke Perlman created the Backstreet Boys and NSYNC and he cashed in big on their fame at their expense. I was in the biggest band in the world and selling millions of records and someone's making millions and millions, but I can't even afford my apartment in Orlando.

Boy band promoter turned federal prisoner. Lou Proman sentenced today for defrauding banks and investors out of as much as $300 million. We are on a sinking ship. You just realized your business needed to hire someone like yesterday. With Indeed, there's no need to stress. You can find amazing candidates fast using sponsored jobs. With sponsored jobs, your post jumps to the top of the page for your relevant candidates, so you can reach the people you want faster.

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and support our show by saying you heard about indeed on this podcast. Indeed.com slash wonder ECA. Terms and conditions apply. Hiring indeed is all you need. From wonder E and at will media, this is The Big Flop, where we chronicle the greatest flubs, fails, and blunders of all time. I'm your host, Misha Brown, social media superstar and starting a petition to get together,

back together, at Don't Cross a Gay Man. And on our show today, we have the co-hosts of the podcast Good Children. We'll see how good they really are. It's Joe Hedges and Andrew Muscarello. Welcome to the show. Hello. Thank you for having us.

It's an honor. So excited, truly. So excited. Okay, so before we get into the disaster that is Lou, what's your history with boy bands? Ooh. Besides like Day Awakenings. Yeah.

I think that's definitely my history with them. Were you a big, I was more of a girl group type of guy. I understand that. For me, like I was at NSYNC concerts, I was at Backstreet Boys concerts, like I was at, what was that other one? There was- 98 Degrees? Of course, 98 Degrees. Like, I was at, what was that other one? There was... 98 Degrees.

Of course, 98 Degrees. And then there was an even neasher one. Who was singing the song about Abba Kram, being a bitch, and new kids. They sang, I like girls that wear Abba Kram, being a bitch, Chinese food makes me sick. Whoever that was. I was also standing that group.

I think we honestly, we stand whatever our older sisters stand. Yeah. My sister was ten years older, so I was living vicariously through her, especially when it came to New Kids on the Block or 98 Degrees, like their Christmas albums. Oh, my gosh. We were streaming. And I always had a crush on, I think, Jay-Z. Jay-Z, oh, my God.

Oh, my God, Jay-Z. Well, Jay-Z. I guess also Jay-Z. Okay. Jay-Z, Jay-Z, I guessed also Jay-Z. Okay. Jay-Z, Jay-Z, Shazay, Shazay's. Um, specifically his puppet doll, if you remember those. No.

They sold, like, the dolls of them in whatever music video that was. And my sister had them all, and I definitely got acquainted with the dolls, for sure. That's kind of crazy, Joe. Yeah, that's me. OK. Well, in this episode, we are talking about Lou Pearlman, the music manager who made millions as the mastermind behind the Backstreet Boys and NSYNC,

but wound up on the run from the law without a single dollar to his name. That's so crazy. I know. We've all been there. We have all been there. Definitely been on the way. Not having a single dollar to my name. On know we've all been there. We have all been definitely been on the way. Not having a single dollar to my name on the run. Yeah. So going all the way back, Lou is born in 1954 and grows up in New York City.

As a kid, there's one thing he loves more than anything else. Aviation. Okay. And I'm not talking about Ryan Reddell's gin, I'm talking about like anything that flies. Right. Now, Lou particularly loves blimps. And when he's 10 in 1964, he rides his bike out to an airport

where the Goodyear blimp has landed and pleads with the captain to give him a ride. But the captain, rightfully so, refuses, telling Lou that rides are only for VIPs and members of the press. So what does Lou do? He goes to his school paper, tells them he wants to write about the good year blimp, and that's how he gets his blimp ride. This is a sick man already. I mean, that's just... That's a crazy workaround. It means very you.

Yeah, it's very me. Oh, that's great. We're already comparing me to Lou Perman. That's amazing, actually. I will say it is... If they were to tell me I'm not VIP, I would find a way to be VIP. Yeah. She's a mover, she's a shaker. I'm not getting on a blimp, I'll tell you that. No.

End of situation. So, good for him, I guess. Clearly, from a very early age, Lou is exceptionally good at finding sneaky ways to get people to give him what he wants. Yeah. Okay, since you are Lou Perlman-coded, what's the sneakiest method you've ever used to get something you wanted?

Oh, shoot. Now, this is really putting me on the spot. I think I would say maybe the podcast. I guess. I guess I just say what I speak out. I'm thinking for both of us there. I'm not just throwing you under the bus. Thank you. Well, in the 70s, while he's still in college, Lou starts a helicopter taxi service,

and eventually in 1980, Lou's able to get his very own blimp. Okay. It's saying mommy and daddy have money. Yeah, exactly. Yeah. So, but how does he do it? Well, he goes to a clothing company

and convinces them to give him money to sponsor a blimp, a blimp he does not yet have. And then once he's got the sponsorship, he pays contractors to actually build his blimp. So, Lou is basically making a bunch of promises to people and hoping he'll be able to find a way to keep those promises later. It's a classic con artist mentality and though Lou gets away with it this time, as we'll see, he won't be so lucky forever.

It's so scary because I'm like, that's actually genius. Like, I'm like, we should start doing that more. Conning people? Well, I didn't know before the word con was brought into it. I was like, okay, like, I mean, as long as the blimp shows up, everyone's happy. Yeah, you're right. So, you promise the blimp and see what happens. I tell you, the amount of flops that we've covered on here that were totally because there is some man who had a full cup of audacity in the morning

and was like, I'm worth billions of dollars. And people just listened to him. It's so scary. It's delusion. You could make something work. You just have to be a good person after you get what you want. Right. And that's the tough part.

Because once you get the blimp, it goes to your head. Mm-hmm. You're flying high. It's always the blimp. It's the blimp. He could have went from flop to bop really quick, but, like like not here. Well, from there, Lou goes on to fly even higher, and he found Transcontinental Airlines,

a company that charters luxury private jets for the rich and famous. And that's what gets him into the boy band business, because you know what kinds of celebrities travel on private jets a lot, musicians. Wow. So, Lou says that because of this private jet business, he was able to meet new kids on the block and that led to his boy band light bulb moment. In the immortal words of LFO, new kids on the Block had a bunch of hits. LFO, that was the missing link.

That was it. These days, the new kids are less remembered for their hit songs and more for the fact that they basically invented the boy band formula. Get five cute white boys and put them on stage to sing and dance. But later on, Lou might call himself the boy band visionary, but he's really just following this model

that has already proven to be successful. But here's how it happened. When Lou hears about New Kids on the Block, he can't believe that they have the money to charter an airplane. And he's even more surprised to find out that in 1990 alone, the New Kids earned practically a billion dollars.

Whoa. Whoa. Surprising fact. Okay. Let me clarify one thing. He took on new kids on the block or did he see new kids on the block and that's where he started? Yeah, he was just chartering a jet for them.

Okay. So new kids on the block, they kept their money. Like he, they had nothing to do with Lou Perlman. Okay. No affiliation. Okay. Thank God block, they kept their money. Like, they had nothing to do with Lou Perlman. Okay. No affiliation. Thank God. Thank God for their block. Thank God for that block.

But Lou says to himself, I'm in the wrong business. He's had his head in the clouds while the real money is on the ground in record stores when we still had those. But in 1991, Lou moves to Orlando, which at this time is ground zero for talented teenagers. Because it's where Disney is filming some of their biggest new kids shows, Lou moves to Orlando, which at this time is ground zero for talented teenagers, because it's where Disney is filming some of their biggest new kids shows,

perhaps most notably the Mickey Mouse Club, which features two kids you may have heard of named Britney Spears and Justin Timberlake. Exactly. Yes, yes, yes. So Lou sends out an ad that says he's putting together a band that is looking for talent and that this is the band that will become acapella drum roll, please,

the Backstreet Boys. Wow. Wow, wow, wow, wow, wow. I would see that ad. Oh, we'd both be auditioning for the Backstreet Boys. I mean, I was listening to the ads from Disney being like, are you a kid and do you wanna audition? And I'm like, yeah.

This would be a big shot. Yeah, could have been us, but thank God. Here's a question. Do you know how the Backstreet Boys got their name or do you have any guesses? Oh? Jesus Christ um My whole body just ran cold Seemingly obsessed with like street like this Backstreet. That's it's on the block Right right the Backstreet, New Kids on the Block. You know, and there's a lot of blocks happening. Is it the Backstreet of the New Kids?

Well, Lou named the band after a flea market. Backstreet Flea Market in Orlando. Wow. We gotta get to Orlando more. I know, seriously. So far, that's all I'm gathering. Not enough people are saying that, yeah. Not enough people are saying that.

So, Lou finds the kids he's looking for and starts training them to become the perfect pop stars. He gets the budding Backstreet Boys dance lessons, singing lessons, tutors, and Lou's proteges call him Big Papa. Yeah. Oh, I hate that. I was just thinking, even just the idea, like, how old are these kids at this point?

Because they're, like, kids. Children. We'll see some videos in a moment. Okay. Well, by 1993, the Backstreet Boys are ready to launch. So let's take a look at a clip from a local interview that the Backstreet Boys did when they were still Backstreet Babies. We have five very popular new guys here. Two of you guys are from Orlando, right? It's called the Backstreet Boys, brand new group. And which two of you are from Orlando? What is your name?

I'm AJ McClea. AJ, and who are you? Howie D. Howie. Okay, now where are you from? I'm from Lexington, Kentucky. My name is Brian Littrell. Brian, okay. And over here? I'm from Tampa, Florida, and I'm Nick Carter. Okay, and who are you? I'm Kevin Richardson. I'm from Lexington, okay. And over here? I'm from Tampa, Florida, and I'm Nick Carter. Okay, and who are you?

I'm Kevin Richardson. I'm from Lexington, Kentucky. New heartthrobs, huh? What do the girls have to say about this? Well, they like us. They like us. They like us. Oh. How little was Nick Carter?

Nick Carter was so little. A little baby. And who... What was the giant one on the end? Kevin Richardson. Kevin, he's like six, eight. He's one of my tops, I would say. Well, I'm not even gonna make that joke, but we can't get into tops right now, but yeah, he was a top.

But also how 90s was this? Oh my God, they're full on bobs. It's not even a middle part, it's a bob. Literally bobs. Yeah, it was like middle part of a bob. Literally bobs. Yeah, it was like the stop it crones lady from the commercial. How would you rank their interview skills? I mean, for their age, you know what I mean? For infants.

For to be infants and to be on screen like that, I think that they were doing the best they could. I was like getting personality, not really their nervous. Yes, and that's where you're kind of like, okay, we put a lot of years into dance classes, like I'm always putting media training above it all. I want to see media training at the top of the pyramid for a group like the Backstreet Boys.

And I'm sure they got it, but it wasn't really flexed in that moment. Not in that exact moment, no. But I feel nothing but sympathy and almost grief seeing those children. Like, that's actually just devastating. Yeah. It's like there should be laws put in place. There almost should be. There almost should be, yeah. Well in 1993, Lou sets the boys up with their first public performance.

I don't know if you know the lore of Backstreet Boys. Do you know where their first performance happened to be? I wish. Orlando? Well... Well... They performed for the first time at SeaWorld. Ah!

Yes. It just gets more cursed with each sentence. Well, Lou records the performance and starts sending the tape around to music industry folks to get the boys noticed. They don't blow up in the U.S. right away, sending the tape around to music industry folks to get the boys noticed. They don't blow up in the US right away, but they are a huge hit in Europe almost immediately. So they start touring overseas.

Jesus Christ. No, I can't. This is like literally American Horror Story. It's the worst case scenario to me. These babies touring with Lupal. I'm sure they were so excited. I'm sure Lupal was so thrilled to get on a plane. I'm sure that was the highlight of the program.

I'm sorry. Has the plane chapter closed? Like, was that legit? Oh, no, it's still open. Oh, yeah. We'll be flying that. We'll be on that ride for a while. OK, great.

Amazing. So this whole time throughout all the touring, Lou has been covering all the band's expenses. And while the Backstreet Boys are getting everybody in Europe to rock their bodies, Lou's also still running Transcontinental Airlines. And it's no longer just an airplane rental company, it's become the umbrella company for all of his projects. Even the Backstreet Boys are part of Transcontinental Airlines. I don't like this, man. I'm sorry, what I said earlier about you and Luke Gromit.

Thank you. I'm going to be so serious, Joe. It's been in my mind the entire time. Every you. I'm going to be so serious, Joe. It's been in my mind the entire time. Every time we mention Lou's name, my stomach sinks. That just doesn't sound right. There are two problems with transcontinental airlines. One, Lou's burning through company money, spending big on meals, helicopters, private jets. The Backstreet Boys hair gel bill alone must have been astronomical. Oh, I thought you were going to give us a real stat just now.

I was shaking in my boots. I was so excited. They were spending $9,000 a month on hair gel. I wouldn't be shocked. I wouldn't be shocked. And those custom little outfits, I'm sure that wasn't cheap. Lou's businesses, they're actually not as robust as they seem. By 1995, Lou's blimp business has deflated. He's totally out of blimps. Clock that T.

He's out of blimps. His blimp business is out of blimps. Well, I feel like blimps had their day in the sun. You know, I'm not really seeing many blimps nowadays. I do feel like I saw a significant amount more of blimps when I was a kid. Yeah. So something happened. But the heart of Lou's empire is supposed to be his airline service.

But it basically exists only on paper. Lou's been telling people he's got a whole fleet of jets, but in reality, he only has three. Okay. So he's got a whole fleet of jets, but in reality, he only has three. Okay. So he's just lying. Yeah. And sometimes you have to do that in business. Yeah. Well, he's been lying.

Yeah, he's been lying ever since he was on that school paper. But what does Lou do to keep the lights on and keep the Backstreet Boys on tour? Well, he hypes up his businesses even more, lies, to get investors to pump more money into them, even though he's not sure when he'll be able to get them their money back. Lou also starts selling investment savings accounts. These are supposed to be super safe and reliable, the sort of thing you invest your retirement money in, but the ones being sold by Loo are going to turn out to be anything but safe and reliable. Okay.

Okay. I know investment savings accounts sound super boring, but just remember them because they'll be important later on. I'm sure. It's giving Jen Shaw immediately to me. I just immediately am scared. Yes. But back in boy band land, Lou, he's thinking ahead. The Backstreet Boys may not have broken through in the US just yet, but they are getting bigger and bigger.

And Lou, he is smart. And he's smart enough to know that eventually they'll have competition from a rival group. So what does Lou do? competition from a rival group. So what does Lou do? He makes the rival group. He decides to create the rival group himself. He is a genius.

I mean, it is smart. He's a genius. Stinks to say, but he's very smart in that way. Yeah, that's very smart. This way, it doesn't matter which boy band you prefer. Lou will be making money off of both of them. As Lou puts it, quote, where there's McDonald's, there's Burger King. And where there's Coke, there's Pepsi. And where there's Backstreet Boys, there's going to be someone else.

Someone's going to have it. Why not us? Wow. I have chills. That was a really good quote. We're going to have that framed in our homes soon. Yeah. Where there's Burger, where there's McDonald's, there's a Burger King. Yeah, take that, love, laugh, love.

And so to compete with the Backstreet Boys, Lou puts together a little band you might have heard of called Asterik NSYNC, otherwise known as NSYNC. The new band debuts in 1995. Right. Okay. Lew, however, doesn't tell the Backstreet Boys about his involvement with NSYNC. That's right, Big Papa's got a secret second family.

Not Big Papa. That's nasty work. That's crazy. Yeah, that's criminal. That is criminal alone. Yeah, they're just like, what's this new group? Who's this new group? And he's like, disappear. And they're like, where's Big Papa? Like, where is he? We're touring, like, Germany.

We haven't seen Big Papa in weeks. Where's Lou? I need hair gel. Yeah. Joey Fretona is somewhere else. It's crazy. Yeah, but good news for Lou, because soon Lou's boy band plan starts paying off, because both his bands make it big. In 1997, the Backstreet Boys finally have a hit in the U.S.

They sell two million copies of their single, Quit Playing Games With My Heart. Hit Clips. Hit Clips. Mm-hmm. The song goes to number two on the charts. And just a year later, Lou strikes pop gold once again when NSYNC explodes in popularity. Their first album is paired with a concert movie filmed at Disney World in Orlando. And after that footage airs on Disney Channel, NSYNC becomes a pop culture phenomenon.

Sales of their album explode, and it goes on to sell 10 million copies. Wow. So they, NSYNC blew up bigger than Backstreet Boys at this time. Oh, yeah. I would be biting at the bars of my enclosure if I was in Backstreet Boys and this was happening to me. Like, actually, I would be losing my mind. Poor Nick Carter. Yeah, well, for many reasons, poor Nick Carter.

But that's crazy. Here's my other question. Like, how impressive is it that Lou has been able to put together two bands that are sensations when he was, like, flying blimps? Yeah. It's kind of really, like, he could have... It's, oh, it's the age-old thing where it's like, if only these people used their power for good.

It was so... We could have had a dozen boy bands happening at the same time. And instead... It was Lou. Everyone's a sicko. Well, he knew the girls were gonna... They were gonna love it. And us.

And us. And the Gables. And us. Well, at this point, you might think that Lou would sit back I love it. And us. And us. And the Gables. And us. Well, at this point, you might think that Lou would sit back and enjoy all the money he's making from the Backstreet Boys and all the cash they're pulling in to get people to keep investing in his other, sketchier ventures. It's like he just can't help himself. So when it comes to getting people to give him money, Lou is truly a master of finding ways to wow investors.

He has a business card that folds out to reveal dozens of different companies that he owns, like, more than could possibly fit on one regular business card. That's a resume. That's a huge red flag to me immediately. It's like, be good at one thing, be good at, like, two things maximum, and sink in Backstreet Boys and blimps three things. He wasn't good at blimps, Joe. There are no booms that exist.

Yeah, it's like if you go to a restaurant other than the Cheesecake Factory that has too big of a menu, you're like, I don't know about this. Mm-hmm. Yeah. He also takes investors for rides on private planes and drives them in limos to recording studios. And he also, of course, gets his boy bands to perform for potential investors.

And here's what's really shady. The boys have no idea that they're performing for people in business with Lou. It's his boy band to perform for potential investors. And here's what's really shady. The boys have no idea that they're performing for people in business with Lou. They just think they're his pals. I hate this, man. What? I know. Just tell them.

Yeah, it seems like there's nothing that like a 16 year old boy is really going to say or do with that information. You think it would be a pressure situation? You think that if he told them these are major investors before they went on, they wouldn't be sick to their stomach? You're trying to be, you're trying to find the good. You know what? I'm going to stop talking a little bit too much.

I don't want to relate to Lou any more than I already have. So I'm going to shut up. Okay. Well, let's think about the other side. If you were going to be one of these big investors with Lu, like, how much are you swayed by getting to see, like, Backstreet Boys or NSYNC perform? Like, that's just, like, the really troubling element

of all of this is why do they even care? They're seeing the talent and they're saying, how are they gonna get there? You know what I mean? Because they're doing the little song and dance, they're like, this group is amazing, but we need to give money to lose planes. Lose other random companies?

Yeah. You can just imagine the boys being like, we're playing games with my blimp. I'm like, yes, stop playing games with that blimp. Let's give him money. You're going to South Korea. We're getting you there. We're flying you there right now.

Right now. Well, as we know, Lou's glitz and glam is actually just smoke and mirrors. And soon, some of Lou's shady deals are going to be exposed. So how do you think people first find out about some of Lou's not so honest deals? The investors that have just been like,

what's going on? Like, there's been no returns, what's happening? Like where are your planes? Missing ROI. ROI. Yeah, ROI. ROI is a really good way to put it, Joe. Yeah.

Where are the planes? It's not actually Lou's investment deals that first get him into trouble. No, it's his deals with his boy bands. Oh God. So as the bands are blowing up, the members of Backstreet Boys and NSYNC No, it's his deals with his boy bands. Oh, God. Jesus. So as the bands are blowing up, the members of Backstreet Boys and NSYNC know that they should be raking in the dough, but somehow they're barely seeing any of it.

And so now they're starting to wonder, where is all this money going? So at this point, NSYNC is selling tens of millions of albums and generating $300 million in revenue. But the members of NSYNC, they don't see any of the money. They're getting just $35 a day from Lou, a poultry per deal. That's the craziest number you could have said. $35 a day? $35 a day. you could have said. $35 a day? $35 a day. Oh my god. Poor Jaycee.

Because you would see them at the time too, and you'd be like, oh, these kids are making money. Yeah, they have to be rolling in it. Millionaires. Yes, and in 1998, Lou takes all of the members of NSYNC out for a big celebration dinner, where he says he's going to give them all checks. They think, we're finally going to get a cut of all the money

that we've been raking in, and they're expecting that these checks are going to have a lot of zeros at the end. How much money do you think those checks... I'm like so scared, because you just said $35 a day. So, like, I have to only, like, do we think the checks were like... I would hope, no, $100,000 each? That's like still low. But that sounds like a bare minimum.

Bare minimum. A bare minimum. $100,000. Okay. Don't even with me. The checks are for $10,000. I gotta go. When they've made $300 million.

Okay. So now my question, as it always does when it comes to a child star, is what's going on with the parents? Well, that's the... Yeah, that's a really good question. What's happening here? Well, I don't know about the parents, but his other boy band, the Backstreet Boys, they aren't doing any better.

Collectively, they've only made $300,000 for all of their hard work touring, recording, while Lou himself has pocketed $10 million. I want to say things that would get me on a watch list about this man at this point. Like, I have to just bite my tongue because this is evil work, evil work. I mean, we have to remember that the Backstreet Boys

are on the front lines of screaming teenagers every day. They literally deserve 300 grand Justin Hazard pay. Yeah. Therapy bills. But this is also how the Backstreet Boys find out that Lou was behind their rivals in sync, and they're devastated. This is how they found out. How long was it? How long did this go on? It's been three years.

No, that's unacceptable. Obviously, this is unacceptable. But that's truly unacceptable. It's cause for us to scream. Yeah, that's really... That's crazy. Yeah, can you imagine that moment of finding out that Big Papa... Big Papa lied to us. Big Papa's been lying. They're trapped there. Because it's like, can they really like,

can they even leave these contracts? And if would they even want to, would they have success on their own? That's their life now. Yeah, that's what I'm saying. I mean, $35 a day in 1998 money was pretty good. They're like, we're eating. We're eating. So, N'Sync and the Backstreet Boys,

they start looking into the fine print of their deals with Lou and find some seriously shady stuff. But the worst thing might be the fact that Lou wrote into the contracts that he was the sixth member of the Backstreet Boys and NSYNC. No one was, the lawyers, nobody was reading over this contract saying, what do you mean sixth person? Well, he was taking advantage of kids in Florida. I'm sure their parents didn't have like extensive legal backgrounds

or the funds to even get a lawyer. Geez. He was choosing a vulnerable. That's crazy. Yeah, I mean, if you're from Lexington, Kentucky, and this guy is like, hey, I'm going to make you an international sensation. You're just like signing on that dotted line. He says, look at my blimps. Just look at my blimps.

They look like big coppers blimps. Ew. Well, the Backstreet Boys, they were the first to push back against Lou, and they sue him in 1998. Of course. I mean, that's right. Backstreet is backing out of their contract with Lou. Yeah.

Soon after that, InSync follows Sue and files a suit of their own. I wish I had like more brain cells at this time, you know. Are they saying that we're like... I would love to be paying attention when I was like three years old. I need to know. But Lou's not letting the boys go without a fight. He hires a lawyer named Chaney Mason to defend him in his Backstreet Boys and in-sync cases. Lou also makes the case for himself in the press, saying that the bands basically wouldn't

ever have gotten off the ground without him and he's just trying to get the money back that he invested in them. He said, quote, I pay the bills. I gave them a house. I paid their living expenses for vocal coaches, choreography. I think this is a classic example of like, we need more things in writing here. Because I actually like, I would be on Lou's side if he was like, once we earn our first million, like 500k of that is coming out and it's going to cover what we spent on you.

And then from that point forward, it's yours to figure out. Like, this just seems like it's a cop out for crime. And I want to lock Lou up. I want to lock him up. Lock him up. Well, after a messy bunch of litigation, the Backstreet Boys and NSYNC make a deal to get out of their contracts with Lou.

In order to sever ties with Lou, the bands wind up having to pay him around $64 million to buy out the rest of their contracts. I guess Chaney did a pretty good job as Lou's lawyer. I'm sorry, Chaney got them to have to pay $64 million when they were being paid $35. Yeah, how did they come up with this cash? So, how did they accrue that? Brand deals.

Brand deals at the time. Yeah, brand deals. Disney. But the boy bands are free. And one year later, NSYNC uses their newfound liberty to put out a song that actually sounds like a regular boy band love song, but that some people think is actually about everything they went through with Lou. Oh.

The song is called No Strings Attached. There it is. Puppet dolls. The puppet dolls. It all comes back. Mm-hmm. Very sexy puppet dolls. So, in the wake of losing the Backstreet Boys and N'Sync, Lou is actually doing pretty much completely fine.

Even though everybody knows about Lou's shady contracts now, Lou's still got lucrative deals with bands like LFO, Aaron Carter, and a girl group he created called Innocence. Well, I wish we heard more from them. Yeah, I do. Like, Lewiside, I wish. I would be an Innocence fan, yeah. Now, Innocence is best known because Britney Spears was a member for a hot sec,

but she decided to go solo instead of sticking with them, so maybe she Innocenced something fishy with it. I was gonna say, I feel like Brittany and Lou Pearlman had some situation happening at some point. That's... that girl. That poor girl. That's crazy. So many victims in this story surrounding Lou Pearlman. It's actually crazy. Well, Lou also creates a hit show,

making the band... Oh, my God....loved. And he uses the show to make another boy band sensation also creates a hit show making the band Oh my god loved and he uses the show to make another boy band sensation, O-Town Wow and as all this is going on, Lou's business lies they're getting bigger and bigger he continues to tell investors that his businesses are booming he says he owns real estate, a movie studio, even his own airline,

and investments they keep rolling right in. But Lou's empire is about to crumble. And it all starts because of his former lawyer, Chaney Mason. Chaney is about to go from defending Lou to attacking him. Wow. Thank God for Chaney. This is the arc I was not expecting. No. Can you possibly think what Chaney's beef with Lou might be? Well did Lou ever pay Chaney for the fees? There we go.

Okay. Ding, ding, ding. This man just thinks he can get away with everything. It's crazy. Yes, Chaney wants Lou to quit playing games with his attorney's fees. Chaney's looking to get his cut of that $64 million Lou got in the boy band settlement, but Lou doesn't want to pay up. So Chaney decides he's taking Lou to court.

If you're getting sued by your own lawyer, you've really messed up. Now, as part of this suit, Liu has to provide financial statements. He gives documents to Cheney that show he barely has any cash at all. Sorry, he just won't be able to pay. But there's a problem. In other documents, like the ones he shows his investors, Liu's claiming that his businesses couldn't be doing better. Chaney sees this discrepancy between all these documents. And he thinks something's not on the level here. Spoiler alert, he's right. So he calls up, oh, girl, the FBI.

Oh, my God. It's just... It's like, don't answer. Is there like an American crime story season about this? Ryan, you didn't eat this up. It really, I am like, it would just be a fantastic show. I'm hooked. So, here we go.

Remember all those investments Lou was getting people to make in his businesses? It turns out Lou has been behind one of the biggest Ponzi schemes in the history of the United States. I love a Ponzi scheme. All the money Lew was making from the bans, from loans, from investors, he didn't keep any of it separate.

He used it to pay whatever bills he needed to pay until he could get more money from somewhere else and remember those investments accounts. Those were totally phony. Lou lied about basically everything about them. He lied about the accounts being fully insured and also forged all the documents related to them. He also set up a phony accounting firm called Cohen and Segal. When Lou wanted to get a bank loan, he'd tell the bank to check with his phony accountants, and they'd tell the bank what great financial shape Lou was in.

And it was just Lou? Yeah, yeah. He's like, hello, how you doing? Like a multiple phone calls. And remember that airline he said he owned? Mm-hmm. Lou faked promo photos for the Totally Fake company by taking pictures of toy airplanes. No. I'm obsessed with him again.

I'm back on Lou's side. You're ebbing and flowing. Because now I relate. I'm like, I would do that in a heartbeat. At some point, when you're scamming the rich, it's fine. It's when you're scamming children that I draw the line. But go ahead. But toy planes? That's funny.

That's really creative. Yeah, that's smart. Yeah, that's genius. Well, all in all, Lou is said to have stolen over $300 million from nearly 1,000 people. That is disgusting, to put it frankly. As investigators are closing in, Lou starts shredding documents.

And in February 2007, the IRS and the FBI raid Transcontinental's office and Liu's home. But at this point, Liu has already fled the country. By the time of the raid, Liu hasn't been seen in the US in a month. Liu has straight up vanished. Is it a blip? To put it in 90s terms, it's where in the world is Lou Pearlman. Mm. Love. And he's our car in San Diego. There we go. He really is. If you had to flee the country, where would you go? Croatia. I love it there.

Joe, that's really smart. What did you say? I said I love it there. Oh, yes. Well, yeah. Well, I think the criminals, like, it's famous for, like, if you're trying to, like, avoid getting tried for something in the US, it's famous for if you're trying to avoid getting tried for something in the US, you will go to Croatia. I just know that off the top of my head.

It seems like why would you go to Croatia? There's something about the laws or something. It's not like you hide. It's like they can't get you. That's a known fact. I am not going to Croatia. Where would you go? I don't know.

Iceland? That's very close though. Very close. They could hop, skip, and jump. I feel like the Icelandic people would be like, yeah, it's like so, I'll go when it's like dark 24 hours out of the year. They can't see shit. Wouldn't you get depressed?

I mean, any more than I already am? That's why you need someplace like Croatia. You can go like cliff jumping. At least like... You can go to the Blue Lagoon and I'll be fine. Well, with Lou nowhere to be found, his companies declare bankruptcy and Lou's assets start to get auctioned off to cover his massive debts. At the auction, which takes place in Lou's offices, people are bidding on all kinds of boy band memorabilia like platinum records, posters,

autographs. They also auction off Lou's ceremonial key to the city of Orlando. Any guesses at how much a city key goes for? Especially Orlando. I imagine that that's like 20 bucks. But what does it really get you? Easily. 20 bucks in Orlando? What does the key get you besides like symbolism? Right? It should get you into every single park. That's well, yeah. It should be a fast pass.

Straight into Sea World. Fast pass for the rest of your life. That's true. Well, somebody at auction really loves the city of Orlando because they thought it was worth $1,400. Okay, okay. I'm sorry. I would give it to them.

Who was it, Walt Disney? I would do that. Yeah, exactly. I think I would buy that key for $1,400. After I priced it at 20, I'd be willing to do it. Well, listen, another item that you might have been able to buy at this auction is a portrait of Lou and we do have a photo of that. Oh, Jesus. Oh, my God. Oh, wow.

Oh, my God. I'm sorry. And he had that in his home? Yeah, I'm sure this was hanging right above his office desk. For the people who are listening only, can you describe this portrait of Lou for them? I would... I'm just in disbelief. I would...

It's spectral. It's definitely spectral. It definitely feels like it's not of this realm. It feels like a haunted mansion. Like, it feels like it would move if you walked past it. The eyes would follow you. I'm not under... Is he bald or is that... A halo of sorts? It's almost a halo. It's getting...

It's lighter by the head, which is shocking. And then I'm now noticing the toy plane, front and center, and that kind of says a lot. Unless that's a portrait of a plane, but regardless, it looks very toyish. And obviously we have the Moon Man, the VMA, some other awards, it seems. Gorgeous houses in the back.

Yeah, gorgeous homes. That's Orlando for you. That is very much giving Orlando to me, I have to say. Well, as all of this is going on, stories start to come out about people who lost money to Lou's scheme, including people who lost their entire life savings. One of Lou's victims says, quote, he stole money from innocent people who trusted him and put all their life savings into an investment we thought was secure. Some of the people he scammed were elderly people, some were even friends and relatives of Lou.

Oh, mm-hmm. This is a, I'm really shocked that this man didn't, like, run for office here. Like, I think he really would, he would have done a great job, I have to say. I mean, if he were still around here in 2025, he would be- He'd be in the cabinet. People would say, for sure.

For business man. Oh, he'd be there, he would be in the cabinet. He would say, for sure. Business man. Oh, he'd be there. He'd be there. Yeah. Yeah. In June of 2007, Lou is arrested in Bali, where he's been laying low in a resort under a fake name. Can you guess what his fake name was?

Is it guessable? Is it going gonna upset us? It's... Big Papa. Oh, my gosh, that would've been good. No, he signed into this resort as Incognito Johnson. I love him again. That's such a good drag name.

It's that. Welcome to the stage, Incognito Johnson. It's an excellent drag name, actually. Done. Bollie, at least, was a good choice. I have to say. At least he was catching some sun, some vitamin D. It really helps with the depression, I'm sure, he was, you know, dealing with by having to give up that self-portrait. I'm sure. Yes. He was at the White Lotus.

Yeah, yeah, very White Lotus. Well, after his arrest, Lou is brought back to the United States to face justice. And around this time, Vanity Fair publishes an article alleging that Liu sexually abused members of his band. And though these very serious allegations are never litigated, and Liu publicly denies that any abuse ever took place, they do cast a disturbing shadow over Lou's legacy of cultivating young talent. I mean, was the shadow not already kind of there? You know, like it's almost that almost just only adds to me. And I'm not gonna say it doesn't surprise me.

I was gonna say the same thing. I was gonna say the same thing. Unfortunately. So in May of 2008, Lou is sentenced to 25 years in prison, but the judge does give him a little offer. The judge offers to remove one month from Lou's sentence for every million dollars he gives back to his victims. So just doing some quick math here, that means if Lou returns the entire $300 million, he won't have to go to jail at all. But the cash was gone, so he did go to prison.

That's like some, it's like in the Christmas Carol bargain. That's very like Scrooge, Scroogean. So now Liu's broke behind bars and he's also been revealed as a con man and a total fraud. All that and the continuing swirl of allegations of abuse mean that Lou's been brought to one of the lowest points imaginable. I don't feel bad. So, let's do a little, where are they now? After everything they went through with Lou, N'Sync and the Backstreet Boys persevered

to become the legends of pop music that they are today. In fact, many of the group's biggest successes and biggest albums like Millennium and No Strings Attached, which both broke sales records, came after they parted ways with Lou. Thank God. That's really sweet. Yeah. As for Lou, while in prison, he continued to stay involved in the music industry. And how?

By working with a choir made up of other inmates. He said, I know how to make a group. Let's get it together, girl. Can you imagine the choreo those inmates had to learn? He also always believed that he'd be able to make a comeback. In an interview from jail, he said, I'll be back. But he died in prison in 2016. That sounds about right. That sounds correct.

Yep. Now, listen. Here on The Big Flop, we try to be positive people and end on a high. So are there any silver linings that you can think of that came about from Lou Perlman and his boy band era? I would say that he put very talented people on the map

and while they weren't getting the money that they deserved, I'm happy to hear at least two of the groups were able to part and still find success. Yeah, I would agree with that. I also think that hopefully we have learned from these transgresses and people have, you know, really have, I think maybe parents have gotten more aware of when a contract is in front of them. I mean, clearly that isn't the case because people only seen this happen time and time again in recent years, but I hope that the more the story,

thanks to you for sharing this story, you're gonna single-handedly stop a child from signing an entertainment contract at nine years old. And that's the beauty of it. Hope so. That's what this is all about. Well, now that you both know about Lou Pearlman, the boy band mastermind whose schemes cost him everything,

even his freedom, would you consider this a baby flop, a big flop or a mega flop? I would say dying in prison is a flop. I think that you can't really come back from that in several ways. Yeah, no. And he's been lying from the very beginning. And if you have a blimp involved, mega flop. Even just being a kid obsessed with blimps, that starts you off on a really bad note. Yeah. And it continued throughout his career.

Yeah. Well, thank you so much to our high flying guests, Joe Hedges and Andrew Muscarella, for joining us here on The Big Flop. And of course, thanks to all of you for listening and watching. If you're enjoying the show, please leave us a rating and review. Oh, what's this? Are you excited that we'll be back next week with another flop or did you just take an end-sight? That's right, our next big flop is Steve Warshak's Natural Male Enhancement Pill. Bye!

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Bye! Bye! Bye! Bye! Bye! members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey. The Big Flop is a production of Wondery and At Will Media, hosted by Misha Brown, produced by Sequoia Thomas, Harry Huggins, and Tina Turner, written by Anna Rubinova and Luke Burns, engineered by Zach Rapone, with support from Andrew Holzberger. The video podcast is edited by Olivia Vessel.

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