State: Trans Continental Savings Program a Fraud
The savings program that boy band promoter Lou Pearlman sold to more than 1,000 investors was a massive fraud, Florida regulators said Friday. At least $95-million was collected from investors, most of which is gone.
Orange County Circuit Judge Renee Roche appointed a receiver to take over Pearlman’s Trans Continental Airlines Inc., which sponsored the savings program, and two affiliated companies, Trans Continental Airlines Travel Service Inc. and Trans Continental Enterprises LLC.
The receiver took control of Trans Continental’s offices at Orlando’s Church Street Station Friday night and will attempt to recover assets belonging to the companies and ultimately to investors.
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.
They also were ordered not to alter or destroy records related to the savings program. However, their assets have not been frozen. Pearlman is reported to be traveling in Europe.
Pearlman was known for launching the boy bands *NSync and the Backstreet Boys, as well as a record company, recording studio and reality TV shows. He presented himself as a multi-millionaire and even wrote an advice book, “Bands, Brands & Billions: My Top Ten Rules for Making Any Business Go Platinum.”
However, his empire was built on borrowed money, including the life savings of hundreds of elderly investors. His savings program was presented as an opportunity to earn high yields at no risk by participating in Trans Continental Airlines’ “Employee Investment Savings Account.”
Investors were told their accounts were insured by the FDIC with additional insurance from Lloyds of London and AIG. In fact, there was no insurance, the state says.
Pearlman transferred investors money to his other businesses, used it to make payments on various bank loans and to pay commissions to the agents who sold it.
Investors may contact the receiver, Jerry McHale, at (407) 345-0004. (Note: The receiver is occupying Trans Continental offices. Hopefully you will be able to get information sometime next week.)