Ongoing Pearlman Saga Gets Uglier
February 16, 2007 at 5:51 AM (PT)
THE NY POST reports that LOU PEARLMAN, the promoter behind the 1990s boy-band explosion, is facing a different kind of music for a series of business deals that one FLORIDA state regulator described as a "Ponzi scheme."
PEARLMAN had his ORLANDO offices and home raided yesterday by a task force of FBI agents, bank regulators and FLORIDA investigators.
As first reported on ALL ACCESS (NET NEWS 1/31), at the center of the probe is PEARLMAN's TRANS CONTINENTAL CO., as well as four other companies owned by the NEW YORK native, who happens to be a first cousin of pop icon ART GARFUNKEL.
According to investigators, the alleged scheme was simple: PEARLMAN purportedly offered employees and "select" investors a high rate of return for their investments in "employee investment savings accounts" that were supposedly guaranteed by the FDIC, AIG and LLOYD'S OF LONDON.
However, the guarantees did not exist because there appeared to have been no investments, according to investigators.
"Bank records indicate the investors' deposits of approximately $118 million have been utilized to pay earlier investors both dividends and cash withdrawals, as is the case in Ponzi schemes," the FLORIDA Office of Financial Regulation wrote in a complaint against PEARLMAN.
Sheriff's deputies have seized his Gulfstream jet, citing a $19.6 million loan balance to a NORTH DAKOTA bank.