Under Investigation: The inside story of the Florida Attorney General’s investigation of Wilhelmina Scouting Network, the largest model and talent scam in America.

ISBN-0968713335 Paperback 512 pages $29.95

Easy Background Check

Lou Pearlman aka Louis J. Pearlman aka Svengali

Svengali: "A person who, with evil intent, tries to persuade another to do what is desired": “a crafty Svengali who lures talented people with grand promises yet gives them little lasting operational authority” (Chris Welles)

A Google search for Lou Pearlman Svengali showed 500 results. The term "svengali" has been used not infrequently in news reports about Lou Pearlman—from MTV and Rolling Stone—to TIME, The Village Voice, LA Weekly and Orlando Weekly.

Why do all these people think Lou Pearlman is a Svengali? How did he get this reputation? Is there any truth to it or is it just because Pearlman is a celebrity, and, as a public figure, he has little protection under defamation laws from extreme criticism?

Lou Pearlman is one of the most well-known talent managers in America and arguably also the most controversial talent manager in the world. He is, of course, widely known for his involvement with the Backstreet Boys, 'N Sync, etc., but not every talent manager is called a Svengali. It is largely or originally his involvement with those music groups, however, that led to accusations he is a Svengali. Example:

Backstreet Boys Sue Lou Pearlman

New York Post
December 1999

The Backstreet Boys are again suing the svengali who created the band in 1993 and made them all millionaires. Louis J. Pearlman once reportedly kept more than 50 percent of the group's profits. But the phenomenally successful "boy band" has sued Pearlman five times, resulting in three settlements. And now, Los Angeles Daily Journal columnist Ross Johnson reports, the band has hired top entertainment lawyer Marty Singer to sue them again. Singer -- who has repped the likes of Arnold Schwarzenegger, Bruce Willis and Sylvester Stallone -- filed Dec. 1 with the California Labor Commission accusing Pearlman of repeatedly violating the California Talent Agencies Act by functioning as both the group's manager and its unlicensed talent agent. Singer wants all contracts and agreements between the Boys and Pearlman declared null and void, and he wants all the millions Pearlman has arned off the band returned, going back to when they first signed with his Florida-based Transcontinental Records in 1993.

The New York Times exposed Pearlman in a report on the BS Boys and uncovered something that it seems no reporter has confronted Pearlman about, namely, his contract scheme where he made himself a member of the band without discussing it with the members of the band:

The Lost Boys: How a Pop Sensation Came Undone

By Neil Strauss
The New York Times
August 18, 2002

In response to accusations from Pearlman and others that the group lost its drive, he [one of the band members] said: "We tried to find a balance. We got tired of being taken advantage of. That's the bottom line." So the group took its contracts to outside lawyers, who discovered Pearlman had legally made himself a sixth member of the group, allowing him to keep 17 percent of revenues after taking his 15 percent commission, according to court documents.

History shows that the discontent between Pearlman and the Backstreet Boys was not an isolated case. The situation was the same with 'N Sync and even Aaron Carter, the younger brother of BS Boy Nick Carter. "Where is my money, Lou?" they all asked.

Why is it so many artists managed by Pearlman think he is scamming them out of money? Are they all wrong? Why are so many unable to resolve the issue with their manager they have to sue him? The pattern resulted in racketeering charges: "In furtherance of the scheme, the Racketeering Enterprise transmitted fraudulent accounting. . ." (Aaron Carter v. Lou Pearlman and Transcontinental Records, ¶51)

Lawsuit: Pop star's manager a racketeer

St. Petersburg Times
June 25, 2002

 

The suit, filed in state court in Hillsborough County, accuses manager Lou Pearlman and his company Trans Continental Records of racketeering for a deliberate pattern of criminal activity in dealing with clients like Carter. "This isn't just an honest disagreement over the terms of a contract," said Tampa lawyer William Yanger, who represents Carter. "This is something that has happened time and time again." Pearlman and Trans Continental once represented the Backstreet Boys and 'N Sync, both of which sued to be released from their deals, accusing Pearlman of deception and cheating them out of royalties. Those cases have been settled. A history of deliberately deceiving clients, including Carter, the Backstreet Boys, 'N Sync and Take 5, substantiates the racketeering charge, the suit alleges. Plaintiffs who win civil racketeering claims can be awarded up to triple the monetary damages, according to Florida civil statutes. "They find talented kids, sign them, watch them get successful, don't pay them, wait for them to sue and then settle the cases," Yanger said. "It is not an isolated case."

Pearlman and Trans Continental Records maintained their innocence, yet Pearlman was unwilling to cough up the records which would instantly exonerate him. Consequently, a judge found Lou Pearlman in contempt:

Carter Seeks Judgment Against Lou Pearlman and Trans Continental Records

BusinessWire
March 13, 2003

 

WHO: Attorney Bill Yanger, for Popstar Aaron Carter, and parents Jane & Bob Carter

WHAT: Plaintiff's Motion for Order to Show Cause and Entry of Costs in the above cause before the Honorable William Levens

WHERE: 419 Pierce Street, Room 332-B, Courtroom #4, Tampa, FL

WHEN: Thursday, March 13, 2003, at 11:15 a.m.

WHY: On December 16, 2002, this Court entered its Order Compelling Defendants, Lou Pearlman and Trans Continental Records to respond to discovery accordingly.

 

"Defendants, Lou Pearlman and Trans Continental Records have continued to ignore the order of the court; refused to respond to requests for a complete and full accounting of with regard to Aaron Carter's music on said record label; and have wholly failed to establish that their failure to respond to discovery was substantially justified or that other circumstances make an award of expenses unjust," said Bill Yanger.

 

JUDGE HOLDS PEARLMAN IN CONTEMPT

By John Swenson
United Press International
3/17/2003 3:00 AM

 

Judge William Leven has found Lou Pearlman and Transcontinental Records in contempt of court for ignoring a previous court order to produce documents relating to royalty payments. Leven further fined the parties $2,500 in the Hillsborough County, Fla., case involving pop star Aaron Carter and his parents Robert and Jane Carter. Carter attorney Bill Yanger said, "Lou Pearlman may think he can ignore Aaron Carter, he may think he can ignore me, but Pearlman learned today that he'd better not ignore a Circuit Court judge in Hillsborough County." The Carters repeatedly have tried to obtain a full accounting on behalf on their 15-year-old son Aaron for the records Pearlman's label has sold and continues to sell for him. "Unfortunately, TransContinental has failed to provide any royalty payments or accounting, ever, to Aaron," claimed Jane Carter. "TransContinental's only response is to continue to stonewall in this matter -- an all too familiar pattern for Louis Pearlman and his label." In June of 2002 the Carters filed their original lawsuit demanding accounting statements and royalties due the young Carter. In 1997, Pearlman signed then 10-year-old Aaron, younger brother to Backstreet Boy star Nick Carter, to a recording agreement with his TransContinental Records label. The suit alleged despite having reached platinum sales status and selling more than 1 million copies of his recordings to date, Carter has not received any royalties from the sale of his TransContinental albums. Carter has sold 10 million records worldwide to date.

 

Judge Finds Lou Pearlman in Contempt in Aaron Carter vs. Lou Pearlman

"Defendants, Louis J. Pearlman and Transcontinental Records, Inc., are hereby found to be in contempt." -- Judge William P. Levens, Circuit Court Judge

 

            

Pearlman's past became more suspicious following the ruling against him after he was accused of scamming his lawyers, yet more people who thought Pearlman was not giving them money he owed them.

Lou Pearlman ordered to pay $15 million to lawyers

"An Orange County Circuit Court judge has ordered boy band guru Lou Pearlman of Trans Continental Records Inc. to pay $15 million to the lawyers who successfully represented him in litigation against music groups 'N Sync and The Backstreet Boys. Judge Frederick Pfeiffer ordered that Orlando attorneys Cheney Mason and William B. Pringle be paid for their work in representing Pearlman against the two bands he founded."

As if it was not bad enough from his involvement with the BS Boys, 'N Sync, and Aaron Carter, Lou Pearlman's reputation as a Svengali blossomed after he teamed up with advance-fee scam artist and white-collar criminal Alec Defrawy and convicted telemarketing scam artist David Elliott for the Trans Continental Talent scouting network, which then became known as Wilhelmina Scouting Network.

Trans Continental Talent was exposed by Dateline NBC for the scam it was. The media did multiple critical reports on the scam, confronting Pearlman for his association with criminals.

The scam eventually went bankrupt, after Monster.com banned the company following a blistering report by Newsweek, and after Pearlman rescinded the merger, but Lou Pearlman, owner of Wilhelmina Scouting Network, was sued for $25,000,000.

Under suspicious circumstances, outlined by the State of Florida, Lou Pearlman was accused of conspiracy and bankruptcy fraud in a civil case: "Plaintiff is informed and believes that defendant Fashion Rock was created . . . for the avoidance of certain liabilities, including liability to plaintiff." (AMN v. Fashion Rock LLC, Lou Pearlman, Mark Tolner, Trans Continental Talent, ¶12)

"Debtor engaged in extensive insider transactions prior to filing for bankruptcy. These transactions . . . can be more fully investigated in Florida. . . . If discovery reveals that the pre-petition transactions were fraudulent . . ." (Motion for Change of Venue by John Macgregor, March 31, 2004, ¶7)

Quoted

Plenty of enemies It’s not hard to find people who hate Lou Pearlman
"I don't have any respect for this man whatsoever when it comes to business," Donna Wright told The Orlando Sentinel.
Erich Burnett, "Runway to Nowhere," Cleveland Scene, Aug. 20, 2003.
http://www.clevescene.com/issues/2003-08-20/feature.html

"After working under Pearlman, McGurk realized he enjoyed the music industry, but not the business ethics he was expected to operate under. McGurk took an even bigger chance and left the company with the experience he gained working under Pearlman to partner up with Kenny Boulton, a connection he made while in New Orleans, to establish LNL Records." -- Crystal Anderson, "Alumnus sponsors Holiday Bash," The Keystone. http://www.keystoneonline.com/story.asp?Art_id=1149