Early life and career
Pearlman was born June 19, 1954 and raised in Flushing, Queens, the only child of Jewish parents Hy, who ran a dry cleaning business and Reenie Pearlman, a school lunchroom aide. (Pearlman is the first cousin of Art Garfunkel, their mothers being sisters.) His home at Mitchell Gardens Apartments was located across from Flushing Airport, where he and childhood friend Alan Gross would watch blimps take off and land. According to Pearlman's autobiography, Bands, Brands and Billions, it was during this period that he used his position on his school newspaper to earn credentials and get his first ride in a blimp. (This version of events is disputed by Gross, who claims he was the school reporter, and allowed Pearlman to tag along.)His cousin Garfunkel's fame and wealth helped fire Pearlman's own interest in the music business. As a teenager he managed a band, but when success in music proved elusive, he turned his attention to aviation. During his first year as a student at Queens College, Pearlman wrote a business plan for a class project based on the idea of a helicopter taxi service in New York City. By the late 1970s, he had launched the business based on his business plan, starting with one helicopter. He convinced German businessman Theodor Wüllenkemper to train him on blimps, and subsequently spent some time at Wüllenkemper's facilities in Germany learning about the airships.
Suspicions of insurance fraud and pump & dump
Returning to the United States, Pearlman formed Airship Enterprises Ltd, which leased a blimp to Jordache before actually owning one. He used the funds from Jordache to construct a blimp, which promptly crashed. The two parties sued each other, and 7 years later Pearlman was awarded $2.5 million in damages. On the advice of a friend, Pearlman started a new company, Airship International, taking it public to raise the $3 million he needed to purchase a blimp, claiming (falsely) that he had a partnership with Wüllenkemper. He leased the blimp to McDonald's, for advertising.
After he took his air charter company, Airship International, public in 1985, Pearlman became personally and professionally close to Jerome Rosen, a partner at small-cap trading outfit Norbay Securities. Based in Bayside, Queens, and frequently in trouble with regulators, Norbay actively traded Airship stock. This sent Airship's stock price consistently higher, enabling Pearlman to sell hundreds of thousands of shares and warrants at ever-higher prices. However, Airship was reporting little revenue, cash flow or net income. In return for keeping his penny stock liquid, Pearlman allegedly paid Rosen handsome commissions, according to a mutual friend, that reached into 'the tens of thousands of dollars' per trade.—Roddy Boyd, New York Post
Entertainment industry career
Pearlman became fascinated with the success of the New Kids on the Block, who had made hundreds of
millions of dollars in record, tour and merchandise sales. Thus he started Trans Continental Records with the intent of mimicking their boy-band business model. The label's first band, the Backstreet Boys, consisted of five unknown performers selected by Lou in a $3 million talent search. Management duties were assigned 
to a former New Kids on the Block manager, Johnny Wright, and his wife Donna. The Boys went on to sell 100 million albums worldwide, hitting gold and platinum in 45 different countries. Pearlman and the Wrights then repeated this formula almost exactly with the band *NSync, which sold over 56 million records globally.With these two major successes under his belt, Pearlman had become a music mogul. Other boy bands managed by Pearlman were O-Town (created during the ABC–MTV reality TV series Making the Band), LFO, Take 5, Natural, and US5. Other artists on the Trans Continental label included Aaron Carter, Jordan Knight, Smilez & Southstar and C-Note. Pearlman also owned a large entertainment complex in Orlando, including a recording studio he called Trans Continental Studios, and a dance studio by Disney World named "O-Town".
Band lawsuits
The members of Backstreet Boys were the first to file a lawsuit against Pearlman, feeling that their contract — under which Pearlman collected as both manager and producer — was unfair, since Pearlman was also paid as a sixth member of the Backstreet Boys (i.e., one-sixth of the band's own income). The band's
dissatisfaction began when member Brian Littrell hired a lawyer to determine why the group had received only $300,000 for all of their work, while Pearlman and his record company had made millions. Fellow boy band *NSYNC was having similar issues with Pearlman, and its members soon followed suit.
Talent scouting scandal
After Hotjobs and Monster.com pulled over a thousand of the company's job ads from their boards, they were further advertised on the Difrawi-founded "Industry Magazine" website. The Better Business Bureau's opinion about Options / TCT / WSN was negative (a "pattern of complaints concerning misrepresentation in selling practices"). The New York State Consumer Protection Board issued an alert, naming it the largest example they had found of a photo mill scam (in which agencies force models to shoot portfolios with photographers on their own payrolls), and a State Senator called it trying "to make a quick, dishonest dollar"
The San Francisco labor Commissioner declared it in violation of California law, and several state agencies were reported to be investigating. In Florida, around 2,000 complaints were filed with the then-Attorney General Charlie Crist and the Better Business Bureau, and an investigation was started by Assistant AG Dowd. However, no charges were filed, as the newly appointed Assistant AG MacGregor was unable to find "any substantial violations" and the company had declared bankruptcy, "leaving no deep pockets to collect damages from."
By June 2004, Fashion Rock, LLC had filed a civil suit for defamation against some who had criticized Pearlman's talent businesses and outed suspicions of bankruptcy fraud. The case was dismissed and closed in 2006. One of the accused, Canadian consumer-fraud expert Les Henderson, successfully pursued a libel lawsuit against Pearlman, Tolner, El-Difrawi and several others.
Fashion Rock, LLC lived on until February 2, 2007, when its assets were sold in Pearlman's bankruptcy proceeding.
Allegations of inappropriate sexual conduct
The November 2007 issue of Vanity Fair magazine reported claims of inappropriate sexual conduct made i
n interviews with several former and current boy band members, and male employees of Pearlman's. Many of the boys had lived in Lou's Florida mansion, where the inappropriate conduct was alleged to have taken place, but none was willing to come forward publicly, and no charges were ever filed. Backstreet Boy Nick Carter's mother, Jane Carter, told the magazine: “Certain things happened and it almost destroyed our family. I tried to warn everyone. I tried to warn all the mothers." She said, "I tried to expose him for what he was years ago".The Ponzi scheme
In 2006 investigators discovered Pearlman had perpetrated a long running Ponzi scheme that defrauded investors out of $300 million. For more than 20 years Pearlman enticed individuals and banks to invest in Trans Continental Airlines Travel Services Inc. and Trans Continental Airlines Inc., both of which existed only on paper. Pearlman used falsified FDIC, AIG and Lloyd's of London documents to win investors' confidence in his "Employee Investment Savings Account" (E.I.S.A.) program and he used fake financial statements created by a fictitious accounting firm Cohen and Siegel to secure bank loans.Investigation
In February 2007, Florida regulators announced that Pearlman's Trans Continental Savings Program was indeed a massive fraud and the state took possession of the company. Most of the at least $95 million which was collected from investors was gone. Orange County Circuit Judge Renee Roche ordered Pearlman and two of his associates, Robert Fischetti and Michael Crudelle, to bring back to the United States "any assets taken abroad which were derived from illegal transactions."Arrest
Conviction and sentencing
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