The sound of scammers. Welcome to MsMojo, and today we’re looking at the most appalling and reprehensible revelations unearthed in Netflix's documentary, “Dirty Pop: The Boy Band Scam.”
Category
🗞
NewsTranscript
00:00If you make a deal with the devil, he's not going to show up as the devil."
00:04Welcome to Ms. Mojo, and today we're looking at the most appalling and reprehensible revelations
00:10unearthed in Netflix's documentary, Dirty Pop, The Boy Band Scam.
00:14He was so busy seeing the shiny objects that he didn't see who he hurt.
00:21Transcontinental Records
00:23Inspired by the vast success of the popular boy band New Kids on the Block,
00:28Lou Pearlman looked to replicate some of that success and wealth for himself.
00:32I learned that they sold 200 million dollars in record sales
00:36and 800 million dollars in touring and merchandising. I said, I'm in the wrong business.
00:41So he launched his company, Transcontinental Records. The first group who signed up with
00:47him was the Backstreet Boys. Although the U.S. was more lukewarm to the group,
00:51they became huge in Germany, which later helped put them on the map across the globe too.
00:56Lou's recipe was throw them in Germany, let them develop. It was a great science
01:02experiment for building pop groups. While Transcontinental Records existed
01:07and launched successful acts, details about its financial health and inner workings remained
01:12opaque. This secrecy fueled suspicion about its legitimacy as a record label.
01:18Lou definitely used his bands to catapult investment in all of his transcontinental
01:24companies. Boy Band Sue
01:26As the documentary reveals, Pearlman one day presented the band with their first paycheck,
01:32which immediately raised a red flag. If they were making millions, why was the check missing
01:37some zeros? It took my bandmate, Brian, saying,
01:41enough is enough for us to all truly open our eyes to what's really being done behind our backs.
01:49Initially, they tried to give Pearlman the benefit of the doubt. After all, this was Big Papa.
01:54But when nothing changed, they hired legal representation.
01:57I literally begged him physically in his office to make it right, and he didn't do it.
02:04You know, I gave him every opportunity. JC went and got the lawyer.
02:10Meanwhile, NSYNC, his other big band, realized they also needed to part ways with the label.
02:15Hey, but does that make you ungrateful? No.
02:19Because Transcon was there when you guys were nobody.
02:22Transcon has definitely been compensated.
02:26As stated in the doc, Pearlman saw himself as the sixth member of the bands,
02:30and compensated himself as such, if not more. Ultimately, both groups bought out their
02:36contracts, knowing it was the best move despite the huge financial cost.
02:41The ten of us, us and NSYNC, we did buy Lou out. A settlement was the easiest way to get out.
02:48Did you hear what we bought out there? It was a decent amount.
02:53Creating a Pepsi band behind the Backstreet Boys backs.
02:57The battle of the boy bands was huge in the 90s and 2000s,
03:01with fans fiercely divided between the Backstreet Boys and NSYNC.
03:05The documentary reveals the true origin of this so-called feud.
03:09NSYNC, it was a very hush-hush project.
03:12Nobody was supposed to talk about this band that was being put together.
03:17While Backstreet Boys was in Germany.
03:19While the Backstreet Boys were winning hearts in Germany, Pearlman decided to create a second band,
03:24becoming his own competition before someone else could,
03:27or creating the Pepsi to his Coke as he phrased it.
03:31If Backstreet turns out to be a dominant brand like Coke,
03:35someone is going to come along and create a Pepsi. We might as well beat them to it.
03:41The formation and launch of NSYNC were kept super secretive,
03:45and code names were even used in official documents.
03:49Needless to say, the Backstreet Boys felt
03:51deeply betrayed when they discovered what Pearlman had been up to behind their backs.
03:56We were definitely like the first child to a family that you thought you were gonna be the
04:00only child. We thought Lou Pearlman was our big papa, as we called him, and now he's papa of many
04:06kids. Allegations of inappropriate conduct. Among all his questionable business endeavors,
04:12the documentary briefly touches on some of the more troubling relationships with those around him.
04:17Wasn't a part of my life, wasn't a part of my experience. However, there was some suspect
04:27behavior.
04:28In one instance, we meet Tammy Hilton, a nurse assigned to care for him after a medical emergency.
04:35Hilton recounts that after her work ended, Pearlman insisted on keeping her in his life.
04:40And he goes, we're gonna fly down to Fort Lauderdale to go to a friend of mine's birthday party.
04:45I was introduced as, this is Tammy, my girlfriend. Completely blindsided me.
04:51He introduced her as his girlfriend, although she claims there was nothing more than good
04:55companionship between them. Some people suspected him of sexual misconduct with the young people
05:00around him, and Hilton hints that perhaps he may have used her as a cover-up. The documentary only
05:06brushes across the subject, but it's not the first time these allegations have arisen.
05:11If those things actually did happen, I feel bad for any victims and anyone who was taken
05:16advantage of. The FBI raid. One day, Pearlman's colleague caught him coming out of an elevator.
05:22He's like, hey, I gotta run. I just wanna say, I love you. I'm going out. I'm gonna be on vacation
05:26for a little while. Thank you for everything. Okay? Okay. Within a few weeks of that encounter,
05:32the FBI had a warrant to raid the place and others linked to Pearlman.
05:37I could see local news trucks, unmarked cars, people in the FBI jackets that you see on TV.
05:44Every drawer, every cabinet, everything is open.
05:47It's believed that he had been on the lam for at least six weeks by this point. For many who
05:52knew him, this was the first time they had heard of these alleged crimes. Soon enough, news spread,
05:58and people who had invested their life savings in Pearlman's companies started asking for their
06:03money back. The FBI got their hands on all sorts of incriminating documents.
06:08He had a warrant for the church street office. We seized a ton of documents.
06:13I was able to go in with the FBI that day and bring out boxes of evidence.
06:18They also had a warrant for his arrest, but as we know, he was long gone.
06:23Lou left the country and his story to everybody that was asking questions about it,
06:28was he was going to get the money out of the locked boxes that he was going to make this
06:31all right and he'll be back and he'll figure it out.
06:33Frankie Vasquez Jr.
06:35From the start of the documentary, we learned that Pearlman's crooked dealings had devastating
06:40consequences, costing some people their lives.
06:43I think Frankie knew a lot of stuff that he didn't want me to know.
06:48And I think he wanted Lou to return my money that I had invested.
06:52One such person was Frankie Vasquez Jr., who worked closely with Pearlman and trusted him
06:58enough to get his mother to invest in Pearlman's company. Those who knew Vasquez noticed that he
07:03began to act differently.
07:05And I remember I remember looking at Frankie and be like, yo, what is the deal? And he's like,
07:10you don't get it. You're gonna get it.
07:12Your buddy's done it now. Your buddy's done it. He was rattling off.
07:16It seems he'd uncovered Pearlman's secrets and the burden was too much to bear,
07:21leading him to take his own life. Pearlman's initial reaction seemed nonchalant,
07:26though he later claimed someone else may have been responsible.
07:29And I told him, one minute you don't care, and the next minute he was murdered,
07:34and now you care? That doesn't make any sense.
07:37The series hints at a big blowout between Vasquez and Pearlman after the truth came out,
07:43and that some initial investors had shady connections.
07:46Unbeknownst to me, all these firms were- the mob was behind them.
07:53The mafia, they're all connected somehow.
07:55The beginning of the end. Pearlman had his hands in many pies and was running one of
08:00the longest Ponzi schemes in US history. So where did it all unravel? Well, remember how
08:05he got sued by the boy bands earlier? Although those lawsuits were settled, he didn't settle
08:10his account with his lawyer, who then sued him.
08:13He got Lew a favorable settlement, but he also ran out of legal fees.
08:18Lew could have paid Cheney. He chose not to, which was a huge mistake.
08:23This forced Pearlman to disclose his financial statements, and they revealed a fiscal disaster.
08:29What followed wasn't just a can of worms. It was Pandora's box unleashed.
08:33Lew Pearlman had totally false bank statements, tax returns.
08:39State documents also accused Pearlman of using a mysterious accounting firm
08:43to hide the scheme from investors and Wall Street.
08:46Soon the truth was out. Fraudulent savings plans,
08:50illegitimate checks, and countless forgeries. Investors learned about the investigation
08:55through media and word of mouth, and they quickly showed up demanding their shares back.
09:00Investors started coming into all of the different entities looking to get money,
09:06to where there would be like scenes being made. Where's my money? How can I get my money?
09:11People were stealing things from the studio and from the mansion trying to get whatever they could.
09:15On the Run
09:16As we mentioned earlier, Pearlman went on the run before the FBI could catch him.
09:21He took his business partner Michael Johnson along,
09:24but kept him in the dark about the true nature of their travels.
09:27With Pearlman's assets frozen, he relied on his partner to cover their expenses.
09:32He was relying on me solely for his freedom. I didn't know that at the time.
09:38His assets had been frozen, which forced all of the travel to be on my credit card.
09:44Eventually, Johnson got internet access and discovered the allegations against Pearlman.
09:50As he was uncovering the truth, Pearlman sat next to him, scheming yet another fraudulent plan.
09:56And he had hand-drawn this bank seal for like a loan document,
10:01and he faxed it off from the business center to Bank of America.
10:05I think it was for a million dollars. And he got the damn loan.
10:10Realizing something was seriously wrong, he decided to leave.
10:14Later on, Johnson learned his so-called business partner had been using his name on records.
10:19We've arrested Lou Pearlman in Bali, and he was under the name Incognito Johnson.
10:25I'm Michael Johnson. He registered as Incognito Johnson because we were on my credit card.
10:29Through that, the investigation was tied back to me.
10:33Pearlman was eventually arrested in Bali after being recognized by vacationers.
10:38The Ponzi scheme. At the center of it all were Transcontinental Airlines,
10:43Transcon Records, and their parent company, essentially fictitious entities.
10:48Ultimately, we discovered that none of that was true. He didn't have any planes.
10:52There were no operations at all other than this investment scam.
10:55Pearlman lured banks and individuals into investing in these companies,
11:00promising high returns. Estimates vary, but the scheme defrauded investors of
11:05hundreds of millions, with some reports citing over $1 billion.
11:10He even set up a fake accounting firm named after two past criminals.
11:14He did create this fake accounting firm called Cohen & Siegel,
11:18which was named after two gangsters, Mickey Cohen and Bugsy Siegel.
11:23When the house of cards finally fell, over $300 million was unaccounted for.
11:29For many victims, this meant losing their life savings.
11:32These broken promises left the Caesars devastated.
11:36We don't know where the next dollar is going to come from. We don't have any other money.
11:44Given how long he perpetrated this fraud, the number of people affected is staggering.
11:49He ultimately pleaded guilty, but we imagine this offered little comfort to his victims.
11:54There were investors who came to the sentencing and talked about how he had ruined their lives.
12:00There was no remorse, nothing. I don't understand people like that.
12:03You don't expect to see a penny of this money back?
12:06No, not at all.
12:07Before we continue, be sure to subscribe to our channel and ring the bell to get
12:11notified about our latest videos. You'll have the option to be notified for occasional videos
12:15or all of them. If you're on your phone, make sure you go into your settings and switch on notifications.
12:22The State Attorney General's investigation.
12:24A few years before all this blew up, Jackie Dowd, who was then Florida's Assistant State
12:30Attorney General, was looking into another one of Perlman's ventures, a model scouting agency.
12:36I very strongly felt I had a case.
12:38According to Dowd, the state had 2,000 complaints from consumers who felt
12:42misled by Perlman's model scouting company, Transcontinental Talent.
12:46Just as she was about to move forward with the investigation,
12:50she was suddenly pushed out of her role, and the Attorney General dropped the case.
12:55Some speculated that personal factors might have influenced this decision.
12:59You know, there were rumors that he had
13:01relationships with the Attorney General of the state of Florida at the time.
13:06Had the investigation gone forward, the whole truth might have come out sooner,
13:10potentially preventing at least some of the ensuing trouble.
13:14Federal lawsuit filed this week accused Crist of not doing his job then,
13:18and claims that investigation could have uncovered the Perlman savings program in 2004.
13:23While we'll never know for sure, it's possible that many could have been spared.
13:27Perlman was sentenced to 25 years in prison, where he ultimately died.
13:32Did you watch the documentary? Tell us what you thought of it in the comments.
13:37We'd all be much better off today if Lou didn't do any of this.
13:42Check out this other recent clip from Ms. Mojo, and be sure to subscribe and ring the
13:46bell to be notified about our latest videos.