Faces up to 25 year jail sentenceThe Pearlman Plea Agreement
The Story:http://www.orlandosentinel.com/news/local/crime/orl-bk-pearlman030608,0,2754957.storyOrlandoSentinel.comFormer boy-band mogul Lou Pearlman pleads guilty to conspiracy, fraud Scott Powers and Sara K. Clarke
Sentinel Staff Writers
11:03 AM EST, March 6, 2008
Louis J. Pearlman pleaded guilty to conspiracy, money-laundering and bank fraud in federal court in Orlando this morning and acknowledged he is ready to cooperate with federal authorities trying to build cases against unnamed others involved in his schemes to defraud investors and banks.
In a deal he struck earlier this week with Assistant U.S. Attorney Roger B. Handberg, Pearlman, 53, pleaded guilty this morning before Senior U.S. District Judge G. Kendall Sharp on two counts of conspiracy, one count of money laundering and one count of making a false claim in a bankruptcy.
"I'm accepting full responsibility," Pearlman told the judge.
Pearlman faces up to 25 years in prison and more than $1 million in fines. His sentencing is set for May 21. Pearlman is seeking leniency and prosecutors are prepared to seek some sort of sentence reduction from the judge, depending on how much Pearlman cooperates.
Standing before the judge while wearing shackles on his feet and a blue 5X Orange County Corrections uniform, Pearlman spent 45 minutes answering a long list of Sharp's questions. With his answers, Pearlman acknowledged details of how he ran two major schemes to defraud investors and banks, using false promises backed by fictictious financial statements.
Pearlman spoke clearly and audibly, mostly answering "Yes, sir" to Sharp's questions in a federal courtroom filled with lawyers, media, investors and at least one of his former business partners. The pleas wrap up the latest phase in a long-running saga that federal prosecutors say involved a string of frauds against hundreds of individuals and dozens of banks.
The next phase might be harder than actually getting Pearlman behind bars – finding money for all the investors and banks who claim they lost money to Pearlman and his schemes. In the plea deal, Pearlman also promised prosecutors he would help them track down assets to pay back hundreds of millions of dollars that authorities say is missing.
However, Pearlman has maintained since his arrest that he's broke; that's one reason why his attorneys in this case are court-appointed public defenders, notably R. Fletcher Peacock, the former federal public defender for the Middle District of Florida.
In the meantime, and possibly beyond that sentencing date, Pearlman is likely to continue the life he has lived since he was plucked from a posh Indonesian resort hotel and turned over to U.S. authorities for arrest in June. Since returning to Orlando on July 10, has been held in the Orange County Jail.
Pearlman lives in isolation in an 8-foot by 16-foot cell with a toilet, a sink and bunkbeds mounted to the wall. He's allowed out of his cell for only one hour a day for hygiene and to make phone calls, and can come out for visitors or recreation. He's rarely out of his cell for more than three hours a day, according to a jail spokesman.
Pearlman's prior life was of a world-famous pop music mogul and businessman who owned airplanes and blimps, lived in a Lake Butler mansion and threw lavish, celebrity-attended parties that were the talk of Orlando. He founded the superstar boy bands Backstreet Boys and 'N Sync along with several other pop music acts.
That mansion, like much of what Pearlman previously owned, is set to be sold at auction this weekend, as his creditors try to recover some of what they claim they are owed.
Pearlman fled the country in January 2007 as tens of millions of dollars worth of lawsuits began stacking up against him in civil courts and state and federal law enforcement authorities began looking into his activities. In February, the FBI and other law enforcement agencies raided his offices and home. In March, he and his business empire were dragged into bankruptcy. By April claims against him reached $317 million. But court officials and attorneys stated they were unable to find him. He was not charged with any crimes until after his June 14 arrest.
In court this morning, Pearlman acknowledged three frauds, some for 20 years: a Ponzi scheme involving the sale of "employee investment savings accounts," a bank-fraud scam involving phony financial statements, and a plot to siphon frozen assets from a bankruptcy case.
Pearlman's answers made it clear he was not running the programs alone. However, he did not elaborate and Sharp did not ask him to identify others. Federal authorities have not disclosed whom else they suspect might be involved in the conspiracies.
Jim Leusner of the Sentinel staff contributed to this report. Scott Powers can be reached at email@example.com or 407-420-5441. Sara K. Clarke can be reached at firstname.lastname@example.org or 407-420-5664.__________________________________________________