Pod Insights American Scandal Lou Pearlman: The Con Man of Pop | I Want It That Way | 1 About this episode Lou Pearlman rises from humble beginnings in Queens, New York to launch a successful blimp and charter plane company called Trans Continental. In the ‘90s, he cements his reputation as a risk-taking entrepreneur when he creates a pop music “boy band,” the Backstreet Boys. But Pearlman’s “fake it till you make it” approach is built on a foundation of deception, setting the stage for his ultimate downfall.
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0:00 Lindsay Graham? Audible subscribers can binge new seasons of American Scandal early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.
0:25 Lindsay Graham? It's June 2007 at the Westin Resort in Bali, Indonesia. Twenty-four-year-old Michael Johnson pushes through the doors of the hotel business center, looking for his mentor, Lou Pearlman. Pearlman is 30 years older than Johnson and a world-famous music mogul, best known for creating two of the most successful boy bands in history, The Backstreet Boys and NSYNC. For the last several months, Johnson has been traveling around the world with Pearlman, scouting bands and meeting with potential investors for a music and media business they're planning on starting together. And at first, Johnson felt immensely lucky to have this opportunity to work with someone as savvy as Pearlman. When they first met, Johnson was just a teenager with dreams of becoming a famous musician himself.
1:10 Lindsay Graham? Pearlman managed Johnson's band for three years, but when the band fell apart, Pearlman took Johnson under his wing and offered to teach him the business side of music. And even though Pearlman is old enough to be his father, Johnson has come to think of him as one of his best friends. But lately, things have felt different. Johnson spots Pearlman hunched over a table and makes his way over to say hello. He pulls up a chair, but Pearlman barely acknowledges his presence. It's yet another sign that Pearlman isn't telling him something. With every passing week, Pearlman has seemed more and more distracted. Plus, he keeps delaying their trip back home to Florida, and he started asking Johnson to charge all of their expenses to Johnson's credit card, even though Pearlman's a multimillionaire.
1:55 Lindsay Graham? Something must be going on. Johnson needs to know what it is. So when he plunks himself down at the other end of Pearlman's table and logs on to one of the business center's computers, the first thing he Googles is the name Lou Pearlman. And immediately, an article pops up from a newspaper in Florida. Johnson clicks the link, and as he begins to read, his mouth goes dry. The article says that Pearlman is accused of defrauding hundreds, if not thousands, of people, and that he's currently evading law enforcement. Johnson's instinct is not to believe the article, but as he scrolls through the comment section, he sees the names of several people he knows, claiming that they were ripped off by Pearlman.
2:40 Lindsay Graham? Johnson turns to look at Pearlman. The older man is drawing something on a piece of paper, and he looks deeply focused on what he's doing. Johnson tries to get his attention. Uh, Lou? Yeah? I'm reading an article here in the St. Petersburg Times. Oh, that useless rag? Well, they're saying you're on the run, that no one knows where you are. Reporters will say anything to sell papers. But Lou, there are hundreds of comments from people saying you owe them money. I know some of these people. They've been around the office. They used to come to my shows. Pearlman ignores Johnson and keeps drawing. Lou, why do all these people say you owe them money? Pearlman holds up his drawing. Hey, does this look real to you? What? It's a seal for a German bank. You think it looks real? What do you mean?
3:26 Lindsay Graham? Does it look like a real bank seal to you? Would you buy that this was a seal from a bank? I guess. Why? Don't worry about it. Johnson looks over at a stack of papers next to Pearlman. It's a loan application from Bank of America. No, for real, Lou. Why'd you draw that seal? I told you, don't worry about it. Pearlman gets up, grabs the application, and walks over to a fax machine. Are you sending a forged document to Bank of America? Pearlman ignores him again. Lou, seriously, tell me what's going on. Look, don't overreact. This is just how you do business on a global scale. You'll see for yourself one day. Johnson stares at Pearlman in disbelief. He may not be a hot-shot businessman, but he knows forgery and fraud are not standard practice.
4:11 Lindsay Graham? This is criminal behavior. As the fax finishes going through, Pearlman turns back to Johnson. Come on, let's go to the beach. Sure. I just need to grab something from my room. I'll meet you out there. All right, but don't be long.
4:26 Lindsay Graham? Johnson dashes out of the business center and up to his room, but he has no intention of meeting Pearlman on the beach. He's booking himself on the first flight back to the United States. But as he starts packing his bags, Johnson struggles to understand how he got things so wrong, how he could have missed the signs that must have been there, telling him who Lou Pearlman really was.
4:50 Speaker 01 Hi, I'm Sachi Cole, co-host of Scamfluencers from Audible Originals. Disgraced Theranos founder Elizabeth Holmes let a film crew see everything before she went to prison, or at least that's what she wanted them to think. In our latest episode, we dig into the documentary that has everyone asking, who's really running the con? Listen to Scamfluencers on Audible or wherever you get your podcasts.
5:12 Speaker 02 Hi, I'm Candace DeLong, former FBI profiler and host of the podcast Killer Psyche. In our latest episode, we go inside the case of Krista Pike, the woman Tennessee tried to execute and failed. Listen to Killer Psyche on Audible or wherever you get your podcasts.
5:40 Lindsay Graham? From Wondery, I'm Lindsay Graham, and this is American Scam.
6:05 Lindsay Graham? In the mid 1990s, a middle-aged entrepreneur named Lou Pearlman became one of the most important figures in the music industry. He didn't sing or play music especially well, but he had an uncanny ability to develop and launch musical acts. Pearlman was the brains behind both the Backstreet Boys and NSYNC, two of the most successful and lucrative groups in popular music. He also managed other acts like LFO and O-Town and helped launch the hit TV show Making the Band. Between album sales, concert tickets, and merchandise, Pearlman's groups generated hundreds of millions of dollars. And thanks to his golden touch, Pearlman had musicians lined up to audition for him and investors begging for a piece of his multifaceted business empire
6:49 Lindsay Graham? in which managing bands was just one piece. Pearlman's portfolio also included an aviation business, fast food franchises, a steakhouse, and even the male stripping act Chippendales. But then, in 2007, 10 years after Backstreet Boys first topped the charts in the United States, news broke that Pearlman was arrested for an array of financial crimes. And finally, it was revealed that his vast empire was built on lies. This is episode 1: I Want It That Way.
7:23 Lindsay Graham? It's 1967 in Queens, New York. David Liebenstein stands in a gravel lot with his leather baseball glove positioned at the ready. At 17 years old, Liebenstein loves playing baseball with his friends, and he keeps up a steady prattle of "Hey batter, batter", trying to throw off the hitter at the plate. But something's distracting him. Somewhere over his shoulder, someone is calling Liebenstein's name. He tries to ignore it and squints and watches the batter swing and miss. Liebenstein pounce his fist into his glove. "Two strikes, one more to go." And as the pitcher winds up, Liebenstein leans in, ready to pounce on any ball hit near him. But again, someone calls his name, this time more urgently. The hitter knocks the pitch foul,
8:07 Lindsay Graham? and Liebenstein turns to see who's trying so desperately to get his attention. When he sees it's his neighbor Lou Pearlman, Liebenstein is even more annoyed. Pearlman is a couple of years younger than Liebenstein. They live in the same complex, and sometimes Liebenstein asks Pearlman to sub in on his paper route. But for the most part, Liebenstein tries to keep his distance from Pearlman. There's something awkward and off-putting about the boy. He's pudgy with thick glasses, wears a pocket protector, and as far as Liebenstein can tell, only has a few friends. He's also obsessed with airplanes and blimps, which Liebenstein finds weird. But perhaps the biggest reason Liebenstein doesn't like talking to Pearlman is because he lies all the time,
8:48 Lindsay Graham? usually about stupid stuff, like how he gets giant tips on the paper route, when Liebenstein knows it's not true.
8:59 Lindsay Graham? So Liebenstein turns back to the game, showing just how disinterested he is in what Pearlman has to say. But clearly, Pearlman won't be dissuaded. Hey David, I have something for you. Shut up, Lou. Come and see. I'm in the middle of a game. Trust me, you're gonna wanna see this. Sure, it's fascinating. Pitcher winds up, releases, and puts the pitch in the dirt. It's ball one. It's an invitation to my bar mitzvah. Ha, I'm not gonna be able to make it. You don't even know when it is. Whenever it is, I'm busy. Yeah, well, it's not just a bar mitzvah, it's also a private concert. What are you talking about? Art Garfunkel is gonna perform.
9:41 Lindsay Graham? Art Garfunkel is one half of the duo Simon and Garfunkel, who are one of the biggest music acts in the country. Liebenstein turns to face Pearlman. Art Garfunkel is going to perform at your bar mitzvah? He is, he's my cousin. Liebenstein snaps his attention back to the game, and raises his glove as the hitter knocks a pop fly over the infield. It drifts foul, so he turns back to Pearlman and sneers. Art Garfunkel is your cousin? Is he your cousin in the same way you got a hundred dollar tip last week on a paper route? I did get a hundred dollars, and Artie is my cousin. Whatever you say, Lou. I'm serious, you're gonna be sorry to miss it. I'll take my chances.
10:23 Lindsay Graham? At the plate, the batter swings and misses for the third strike of the third out. Liebenstein trots toward home plate, his team now up to bat. But Pearlman continues waving the envelope, yelling that Liebenstein forgot his invitation. But Liebenstein doesn't turn around. He has no interest in going to Pearlman's bar mitzvah. And if there's one thing he knows for certain, is that there's no chance in hell that Art Garfunkel is related to geeky Lou Pearlman.
10:52 Lindsay Graham? At Lou Pearlman's bar mitzvah, the surprise guest of honor is Art Garfunkel, who is Lou Pearlman's cousin. And though he does not provide a private concert, when kids in the neighborhood hear that Garfunkel was really there, they're impressed. And Pearlman's association with a famous musician earns him a tiny bit of cachet, and Pearlman likes the way this feels. Alone in his room, Pearlman begins to imagine himself as a popular rock star himself, adored and respected, like his cousin Art Garfunkel. It's the kind of life he wants for himself. So while still in high school, Pearlman decides to pursue music. He joins a band as a rhythm guitarist and even plays some local shows. But Pearlman's only a moderately talented musician, and he doesn't really look the part.
11:37 Lindsay Graham? So he transitions to managing the band, and at one point, he even claims that he's close to securing them a record deal. But his dreams of rock and roll success never materialize. So in the early 70s, at the age of 18, Pearlman enrolls at Queens College. He majors in accounting with the goal of pursuing his other great love: aviation. Growing up, Pearlman's apartment building faced the Flushing Airport, where he would watch Goodyear blimps take off and land. Pearlman became obsessed with flying, even through his high school music phase. So when one of his college professors gives the class the assignment to pitch a business, Pearlman sees it the opportunity to develop an idea for a helicopter commuter company.
12:19 Lindsay Graham? And he does such a thorough job planning it, that Pearlman's professor encourages him to try to make his idea a reality. To raise the startup funds he'll need, Pearlman goes to his uncle, Jack Garfunkel, Art's father and business manager. Uncle Jack tells Pearlman that he likes the sound of the business and he'd be happy to give him some money, but he doesn't want to be Pearlman's first investor. He says he'll buy Pearlman's second helicopter, but he wants Pearlman to find the money to purchase the first chopper on his own. So Pearlman begins pitching the idea around. And after a string of rejections, he finally convinces a group of investors to purchase two helicopters and lease them to Pearlman's new company, Commuter Helicopter Service Incorporated.
13:01 Lindsay Graham? It's his first big break as a businessman, and Pearlman is eager to make the most of the opportunity. He hires an old friend from the neighborhood called Ray Sidon to help him run things, and together they start building up a customer base. But soon Pearlman discovers that the cost of maintaining helicopters is significantly more than he anticipated. Before long, the company finds itself with cash flow issues. And about two years after launching, Pearlman merges his struggling business with a tourism company called Island Helicopters. The merger is a lifeline for the now only 23-year-old Pearlman, and it allows him to pursue yet another business idea. In the days before electronic money transfers, banks needed to physically send paper checks
13:45 Lindsay Graham? to clearinghouses to be processed, often via airplanes. So Pearlman begins leasing planes to transport checks around the country. The business gets off to a strong start, and by 1979, he's ready to expand. Pearlman and Sidon start another new company called Transcontinental Airlines Travel Services. The idea is to lease planes, including major jets like Boeing 747s, to discount travel companies. To market the company, Pearlman turns to his old friend and neighbor Alan Gross. They grew up together in the same Queens apartment building where they both still live and bonded through their mutual love for aviation. Gross now works for Goodyear Blimps, but more importantly to Pearlman, he still has
14:29 Lindsay Graham? the model plane collection he built as a kid. So one day, Gross opens his apartment door to find Pearlman standing there with a camera hanging around his neck. He holds up his car keys and tells Gross to grab his model Boeing 747 because they're going on a field trip. Gross nods and goes to collect the model. He doesn't bother protesting or even asking where they're going, because he knows there's no point. Pearlman is relentless when he wants something. About a half an hour later, the two men arrive at JFK Airport. Pearlman leads Gross through the terminal until they reach a large window with a clear view of a runway. Pearlman peers at the view through his camera lens and says, "This is perfect."
15:10 Lindsay Graham? Then he pulls out a small sticker that says "Transcontinental Airlines," tells Gross to put it on the model plane. Now Gross starts to get curious and asks Pearlman what exactly they're doing. Pearlman explains he needs marketing material for his new company, specifically photos of a 747 taking off so he can use them in brochures and ads. Gross wonders out loud if this isn't misleading advertising. Pearlman doesn't actually own any planes, but Pearlman is quick to correct him. He doesn't own any planes yet, and he needs a way to pitch the company in the meantime. Gross isn't sure this is entirely ethical, but Pearlman tells him it's fine. Companies do this kind of thing all the time.
15:52 Lindsay Graham? There's a reason why fake it till you make it is such a well-known phrase. So Gross agrees to play along. Pearlman is the more experienced businessman between them, and if he says this is how it's done, then it must be true. So he takes the sticker and carefully applies it to the model plane, making sure it's straight. Then he shows it to Pearlman, who loves it. Pearlman then hands the camera to Gross as he positions the plane in front of the window, holding it by the tail and angling it up about 45 degrees. Then he asks Gross to make sure it looks like the plane is taking off. Gross looks through the viewfinder and tells Pearlman to move the plane a little to the right, angle it down slightly, and after a few adjustments, they get it right.
16:34 Lindsay Graham? Gross snaps some photos until Pearlman feels sure they've gotten one that'll work, then they head back home.
16:43 Lindsay Graham? A few days later, the photos are developed, and they've come out great. They really make it look like a transcontinental plane is taking off from JFK. And Pearlman uses the photos to place ads in newspapers and make brochures for his new company. Soon, he's offering flights from New York to Paris on the planes he leases. And by the next year, Pearlman is ready to start yet another business. In 1980, he partners again with his old friend Ray Sidon to form a blimp company called Airship Enterprises. He lures Alan Gross from Goodyear to run the company's PR. But unlike Pearlman's other aviation businesses, Airship is not a travel or delivery company. It will lease blimps out exclusively for marketing purposes as giant flying billboards.
17:27 Lindsay Graham? Gross puts together a video featuring the highest-quality German-made blimps, and soon, Airship lands a major customer, the blue jean company Jordache.
17:38 Lindsay Graham? The plan is to fly a blimp emblazoned with a Jordache logo over a party the company will host in Manhattan's Battery Park. The only problem is that Airship doesn't own a blimp and doesn't have the money to buy one, but Pearlman figures out a workaround. He finds an old industrial logging balloon, once used to lift lumber out of forests at a fraction of the cost of an actual blimp. He then hires metal fabricators to create a frame so it resembles the oblong shape of a traditional blimp, and then he covers the entire thing in gold leaf to give it extra pizzazz. On October 8, 1980, Alan Gross arrives at the airport in Lakehurst, New Jersey, excited for the Jordache party and the debut of Airship Enterprises' first blimp, but when he sees
18:21 Lindsay Graham? the dirigible in person, Gross feels his stomach sink. It doesn't look anything like the sleek, German-made blimps in the video he made. It's small and misshapen, and the gold leaf has turned brown in the sun. Gross asks Pearlman if he's worried that Jordache will be upset when they see that their expensive promotional blimp looks like, in Gross's words, "a duty in the sky." But Pearlman waves him off and says Jordache execs came out to inspect the blimp yesterday and said it looked fine. Gross isn't sure he believes that, but Pearlman seems unconcerned, so the flight will go ahead as planned. And while Gross has watched hundreds of blimps launched since he was a child and always gets a thrill from it, today he feels dread.
19:05 Lindsay Graham? The pilot fires up the engines and the blimp floats into the air. It rises higher and higher, and for a second Gross thinks maybe he underestimated Pearlman and his makeshift blimp. But then suddenly, the blimp starts spinning, slowly to the right like a deflating balloon. It spins and spins until it hits a pine tree and crashes to the ground. Everyone on the airfield stands there stunned. Fortunately, no one is hurt, but Gross feels ill. He believed his old friend Lou Pearlman when he said they could build something amazing together. Gross trusted Pearlman's business savvy and resourcefulness. He even gave up a job a good year to come work with Pearlman. But now it seems that Airship Enterprises, just like its first blimp, may be destined to come crashing back to Earth.
19:55 Speaker 03 You stepped out for your morning jog, except it's not your usual morning jog. You started listening to an epic sci-fi book on Audible. Thirty chapters later, you've accidentally run a half marathon. You've lost track of how far you've run, somewhere just past the city limits. You can't stop, you have to find out what happens next. Then it's over. The universe seems bigger. You feel different. You feel like you have no idea where you are. Audible, stories that speak to you.
20:25 Speaker 04 Alice, have you ever wondered why the Mini is so small?
20:29 Speaker 05 The Skir or the Magnum?
20:31 Speaker 04 Well, I meant the iconic British car, because in 1956, Britain's oil supply was suddenly cut off. Petrol rationing was brought in, and the car industry was scrambling around for a vehicle that hardly used any fuel. Enter the Mini.
20:45 Speaker 05 Interesting, but actually not technically British Scandal series material.
20:50 Speaker 04 Well, the reason they had to save petrol is because the Prime Minister started a war and lied about why.
20:56 Speaker 05 Okay, scandal siren going off.
20:58 Speaker 04 I'm Matt Ford.
20:59 Speaker 05 And I'm Alice Levine.
21:00 Speaker 04 And our latest British Scandal series involves a secret meeting in a French villa, a Prime Minister running on amphetamines.
21:06 Speaker 05 An Egyptian president that everyone fancied, the end of the British Empire, and at the heart of it, a canal.
21:13 Speaker 04 This is the story of the Suez Plot.
21:16 Speaker 05 Follow British Scandal wherever you get your podcasts, or listen early and ad-free on Audible.
21:37 Lindsay Graham? After witnessing the crash of Airship Enterprise's first blimp in October 1980, Alan Gross is crushed. He'd banked his career on his friend Lou Pearlman's company, and now their dream seems to be over before it got off the ground. But moments after the crash, Pearlman does not seem all that upset. He tells Gross to head back to Queens and start tape-recording all the news footage of the crash. Pearlman plans to placate the executives at Jordache Jeans by pointing out that the accident is generating media attention, and Jordache's name is all over the coverage. Pearlman is a strong believer that there's no such thing as bad publicity. Gross nods, because it's actually not a bad idea.
22:18 Lindsay Graham? And it's not the only way that Pearlman is planning to capitalize on this apparent setback. Not long after the crash, Pearlman files a claim with his insurance company. He had insured the blimp for several million dollars, with the kind of policy you'd expect for a traditional, high-quality blimp. But when the insurance company sees the specs of the blimp that Pearlman actually bought, they balk at the idea of paying out. But Pearlman is determined to use the insurance to fund his next venture. So he takes the company to court. And as Gross watches Pearlman's maneuvering, part of him wonders if this wasn't the goal all along. As a child, Gross could look past Pearlman's endless series of lies and exaggerations.
23:00 Lindsay Graham? But Gross does not like the idea that his old friend and now-business partner may be deliberately committing insurance fraud. So when he gets an inkling that Pearlman is trying to push him out of Airship, Gross decides to leave before he can get fired. He quits with a bad taste in his mouth. So with Gross gone, and the insurance dispute working its way through the court system, Pearlman plows forward. He continues to pitch his blimp business, and his other company, Transcontinental Airlines, continues to offer discount travel packages. And improbably, his businesses appear to be successful. In 1982, Pearlman moves out of his parents' apartment and into the penthouse of a luxury apartment building in Queens, New York.
23:41 Lindsay Graham? Then he trades in his Dodge for a Lincoln Continental Stretch Limousine and a Rolls-Royce. All around Pearlman's old neighborhood, people take notice. Some hear that his net worth is $400 million. Others hear $72 million. However much it is, Lou Pearlman has clearly hit it big, and he's only in his late twenties. His friends and neighbors are proud that a local kid has done good. But to raise Sidon, Pearlman's business partner in both Transcontinental Airlines and Airship Enterprises, the success doesn't add up. Sidon has worked with Pearlman for over eight years, and the whole time, he's had to work a second job as a shoe salesman just to make ends meet. So Sidon doesn't understand how Pearlman is able to afford this lavish new lifestyle.
24:25 Lindsay Graham? And then one night, as Sidon sprawls out in the back of his friend's Lincoln Continental limo, buzzed on expensive wine, his curiosity gets the best of him. They're on their way back to Queens after another multi-course meal at Peter Luger, a high-end steakhouse on Long Island. Like always, Pearlman charged the meal to his business. Sidon leans over and pats Pearlman on the shoulder, thanking him again for dinner and acknowledging that he knows this was not a cheap meal. A single steak at Peter Luger cost forty dollars in 1982, so Sidon would never be able to afford it himself, never mind wash it down with a pricey bottle of Bordeaux. But Pearlman just grins and tells Sidon not to worry about it.
25:06 Lindsay Graham? Sidon smiles back and then asks as nonchalantly as possible, "How Pearlman is able to live like this?" Pearlman shrugs and explains that you have to spend money to make money. Sidon looks at him confused, says of course he knows the phrase, but he doesn't see how moving into a penthouse, being driven everywhere in a limousine, is helping Pearlman make money. Pearlman sighs and explains that after the Jordache blimp crash, his reputation was ruined. He needs investors to keep Airship Enterprise and Transcontinental going, but no one wants to invest in a loser, so he needs to be seen as a success. Sidon nods, because he can understand that, but it still doesn't explain how Pearlman is paying for this lifestyle.
25:49 Lindsay Graham? His businesses are definitely not bringing in enough. Pearlman is quiet for a moment and then leans forward to make Sidon swear not to tell anyone what he's about to say. Sidon nods, promising. So Pearlman whispers that he has fifty thousand dollars worth of charges on his credit card. Sidon's eyes go wide. Fifty thousand dollars is almost enough to buy a house, and Pearlman spent that on fancy cars and steak dinners. He can't believe that his friend is willing to go into that much debt to attract investors. He wonders if Pearlman's plan will actually work. But slowly, Lou Pearlman is able to get some friends and family members to invest in Transcontinental Airlines. And in his new luxury apartment building, Pearlman meets a neighbor who helps him hatch
26:34 Lindsay Graham? a plan for reviving his other business, the struggling Airship Enterprises. Pearlman's neighbor is a broker who specializes in so-called penny stocks, shares of small companies that typically trade for under five dollars, making them attractive to less wealthy investors. The broker tells Pearlman that a blimp business is perfect for the penny stock market, and the fact that all Pearlman has is an idea and one failed blimp, isn't important. The market is red hot, and penny stocks are big business. So Pearlman ditches Airship Enterprises and launches a new company, Airship International. In 1985, the company goes public, and with the help of his stockbroker neighbor, Pearlman
27:13 Lindsay Graham? raises $3 million in the initial public offering, using the money to buy a real blimp. Pearlman then secures a deal with McDonald's to use this blimp for advertising. McDonald's keeps the blimp up in the air for most of the year, bringing in a steady income that allows Pearlman to rent an office on Fifth Avenue. And in 1987, Pearlman gets another windfall, when a jury awards him $2.5 million in his dispute with the insurance company over the crash of the Jordache blimp. Ultimately, Pearlman purchases two more blimps and leases them out to major companies like MetLife, Anheuser-Busch, and Gulf Oil. Pearlman gains a reputation as an innovator in the world of blimp marketing. Meanwhile, Pearlman keeps building his other business, Transcontinental Airlines.
27:58 Lindsay Graham? He leverages connections through his cousin Art Garfunkel to charter private jets for musical acts like Paul McCartney and Michael Jackson. He also continues to encourage his friends and family to invest in Transcontinental, telling them he plans to take the company public and offering them the chance to get in on the ground floor. Pearlman tells his investors they'll earn 20% interest with an investment of just $5,000 and promises them they can withdraw their money at any time. People seem to be eager to get in on the action, and the man once seen by his friends and neighbors as an awkward outsider is now viewed as a business genius. By the late 1980s, Pearlman is flying in a private Learjet and owns a 6,000-square-foot vacation home in Orlando, Florida.
28:42 Lindsay Graham? But he's also getting restless and looking for his next business opportunity. He finds it in 1989, when a Boston-based pop group called New Kids on the Block charters one of his planes to fly to several of their concerts. Pearlman has never heard of New Kids on the Block, and he's surprised that this boy band, most of them still in their teens, can afford a Transcontinental private jet. So when the group's manager pays for the plane, Pearlman asks about their finances. He's shocked when the manager tells him that between sold-out arena shows and merchandise sales, New Kids on the Block are raking in upwards of $100 million a year. When he hears this, Pearlman's old musical aspirations come flooding back.
29:26 Lindsay Graham? So he goes to a New Kids concert to see for himself what the fuss is about. Later, when he gets invited to a party at Art Garfunkel's apartment in Manhattan, he decides to do some further reconnaissance. Pearlman meanders around the crowd, and when he sees Garfunkel step out onto the balcony, Pearlman seizes the opportunity to talk to him alone.
29:48 Lindsay Graham? Pearlman follows his famous cousin onto the balcony, holding a plate loaded up with hors d'oeuvres. "Hey, Art, you want any of this?" "Yeah, thanks." "You bet. Help yourself. How's the aviation business, Lou?" "Oh, it's good. Lots of big-name clients, you know, including this band New Kids on the Block. You know them?" "Sure I do. We're on the same label." "No kidding. I checked out one of their shows, and you wouldn't believe how loud the screaming got. And not just from teen girls, but also their moms." "Yeah, I bet. They have a following." "And they were put together in a really smart way, I noticed. Each guy's, I don't know, a different personality type. You've got the bad boy, the jock, the boy next door. So they each appeal to different sorts of girls." "Yeah, that tracks with what I've heard about them." "Well, what have you heard?"
30:32 Lindsay Graham? "Well, it makes sense that they were put in a band based more on their looks than their vocal abilities. Word around town is not all the guys can sing." "Oh, that's interesting." "Yeah, the rumor is their producer sings on a lot of their records, and they don't sing live during their performances. I mean, it's just a rumor, but, you know, it's what I've heard." "Wow. I mean, if that's true, and this is how people react to a boy band that can't really sing, think how well a boy band who could sing would do." "Well, that would be something." "I'm gonna go check on my other guests, but it's been nice catching up, Lou. Glad to hear the plane business is going so well." "Yeah, yeah. Thanks, Art, and great talking to you, too. Always interesting to hear about the music biz from a real insider."
31:13 Lindsay Graham? As Garfunkel steps back inside, Pearlman gobbles down some hors d'oeuvres, his mind racing. He can't think of any reason why he couldn't put together a group like the New Kids on the Block. He knows music. He has a home base in Orlando, which is a city filled with young, aspiring entertainers, and he has the money to invest. So Pearlman decides what his next business venture is going to be. And this time, it won't be in aviation. He's gonna start a boy band, and he's gonna make it the biggest pop group in the world.
31:47 Speaker 06 There are books that change how you see the world, and there are books that change how you see yourself. In a new podcast series, A Great Book with Barack Obama, President Obama sits down with a series of surprising and sharp guests to explore six books that have shaped his life and perspective on the world. From Song of Solomon and The Fire Next Time, to All the Pretty Horses and Gilead. The president is joined by guests like Tom Hanks and Ta-Nehisi Coates to reflect on how these timeless stories shaped his thinking on everything from fatherhood to leadership, and discover together what they tell us about the world we live in and the world we want to create.
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32:46 Speaker 07 Ghosts aren't real. At least, that's what journalist Tristan Redmond always believed. Sure, odd things happen in his childhood bedroom, but ultimately, he shrugged them off. Until he discovered that he wasn't alone, that everyone who lived thereafter him also had bizarre experiences they couldn't explain. And it gets even weirder. It just so happens that his wife's great-grandmother was murdered in the house next door. Is this ghost somehow connected to her murder? He decides to go where no son-in-law should, digging up a cold case and asking questions that Nobody wants answered. Like, could his wife's great-grandfather have gotten away with the perfect crime? This is a podcast about family secrets, overwhelming coincidence, and the things that come back to haunt us.
33:31 Speaker 07 For the best bingeable series like Ghost Story, listen to the Audible True Crime Podcast wherever you get your podcasts. Audible subscribers can get all episodes early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.
33:58 Lindsay Graham? By the early 1990s, Lou Pearlman is all in on his boy band idea. In 1991, he officially moves his base of operations to Orlando, Florida, and brings several of his employees with him from Queens. He tells them that they're all in the music business now. In 1992, he officially launches Transcontinental Records as a division of Transcontinental Airlines. Then he places an ad in the Orlando Sentinel, looking for teenage boys who can sing and dance to form a New Kids on the Block-style group. In April 1992, 14-year-old A.J. McLean becomes the first member of Pearlman's still unnamed boy band. A.J. has been working as an entertainer in Orlando for several years, so Pearlman convinces
34:41 Lindsay Graham? A.J.'s mother Denise to use her contacts to recruit more boys to audition. The next two members are cast in quick succession: 19-year-old Howie Duro and 13-year-old Nick Carter. Filling the final two spots, though, proves more difficult, but Pearlman is adamant that five-part harmonies are key to a boy band's success. He also thinks having five different personality types in the group will broaden their appeal, similar to the New Kids formula. And then finally, by the spring of 1993, the group has found its fourth and fifth members, a pair of cousins named Kevin Richardson and Brian Littrell. They also have settled on a name: Backstreet Boys, after the backstreet flea market in Orlando.
35:23 Lindsay Graham? Pearlman puts his group through a boy band boot camp, and every day they spend hours rehearsing. Pearlman hires choreographers, singing coaches, and tutors for the members who are still in high school. The training is full-time, so Pearlman rents a house where the older boys can live and the band can rehearse. Through it all, Pearlman tells them they're like a family. He asks the boys to call him Big Papa, and he takes them out for meals at steak houses around Orlando, buying them clothes and jewelry, and throwing them birthday parties. But with Pearlman's attention on the Backstreet Boys, Airship International begins to suffer. By early 1994, the company posts a $4 million loss, which causes the stock price to tank.
36:05 Lindsay Graham? Fortunately, Transcontinental Airlines is still bringing in millions of dollars, and Pearlman still has the trust of his investors, who are excited that Transcontinental is now getting into the music business. And by the mid-1990s, Pearlman pitches a new opportunity to investors, including even his barber, Mark Morelli in Queens. Morelli has been cutting Pearlman's hair for years, and it means a lot to Morelli that even though Pearlman is a big shot, he still comes to Morelli's shop and flushing for all his haircuts. That loyalty is part of why Morelli started investing with Pearlman in the late 1980s. He put his entire retirement savings into Transcontinental shares, because he believes in Pearlman. Transcontinental is Morelli's ticket to an early retirement.
36:49 Lindsay Graham? So in the mid-1990s, when Pearlman comes by for his usual haircut, Morelli is delighted to see him.
36:58 Lindsay Graham? Morelli spins his chair toward Pearlman and pats the back. Hey Lou, good to see you. Take a seat. Pearlman hangs up his suit jacket and sits down. How's life, Mark? I can't complain. What about you? How's the band? Oh, they're terrific. Touring the country right now, singing at different high schools. And you should see the way the girls go crazy. It's like, uh, Beatlemania. I can't wait to see them. When they come to New York, I'll bring them by. You can cut their hair. You'll be able to say you knew them before they got huge. Well, that'd be incredible. And there's something else I want to let you in on, another ground-floor opportunity. Oh yeah? What's that? So this is only available for current Transcontinental employees and investors, but we're offering, uh, something new. It's called Employee Investment Savings Account, an ESA.
37:41 Lindsay Graham? 8% returns, and that's better than what you'll get at the bank. Sounds interesting. Check my inside jacket pocket. There's a brochure in there. Morelli stops snipping and reaches into Pearlman's suit jacket. He pulls out a trifold brochure, the front featuring a photo of a 747 taking off from JFK Airport. Now, mostly that's about Transcontinental and our planes, which you, you already know all about. But flip to the back. Uh, it's a, an insurance certificate. Yep, Lloyds of London. They're one of the most prestigious insurance companies in the world. They insure Bruce Springsteen's voice, you know. And of course, we're also covered by the FDIC, so this is a safe investment. Morelli puts down the brochure and resumes cutting Pearlman's hair. Well, it does sound pretty great, Lou. Uh, but you have a doubt. I can hear it in your voice.
38:26 Lindsay Graham? Now, I've already invested all my savings into Transcontinental. I mean, I guess I could cash in some of those shares? Buy into the, what, the, what's it called? ISA. Yeah. Look, well, Mark, between you and me, Transcontinental is going to go public soon. So you're gonna wanna hang on to those shares. But the ISA is a great opportunity. And if there's any way to find some funds to invest, I promise you won't regret it. Well, I mean, maybe my brother would wanna go in. I'd talk to him. I wanna help out as many people from the old neighborhood as possible. Well, you know, we, we appreciate it. In a few years, half of Flushing will be a living the good life in early retirement, all thanks to you. Well, from your lips to God's ears. All right, I think I'm done. Tell me what you think.
39:07 Lindsay Graham? Morelli holds up a mirror so Pearlman can check the back of his head. Pearlman nods approvingly, so Morelli brushes him off and unclips the barber's cloth. But Morelli's mind is elsewhere, thinking about this new investment. He's never heard of an ISA before, but if Pearlman says it's a good opportunity and it's fully insured, Morelli is gonna find a way in.
39:31 Lindsay Graham? Mark Morelli and his brother end up investing in the employee investment savings account, as do many of Pearlman's other Transcontinental investors and staff. Pearlman assures them that a strong rate of return is virtually guaranteed because the plan is insured by Lloyds of London and protected by the US government. But behind the scenes, Pearlman is burning through cash, because it's taking much longer for the Backstreet Boys to take off than he expected. The group's tour of high schools is proof that they have what it takes to attract a fanbase, but even so, a record deal remains elusive. But Pearlman doesn't give up. He reportedly spends $3 million developing the band. And finally, in 1994, two years after A.J. McClain first got cast in the group,
40:17 Lindsay Graham? Jive Records indicates they're interested in signing the Backstreet Boys. Jive has had big success with artists like R. Kelly and a tribe called Quest. And when the Backstreet Boys show up in Jive's offices in Manhattan, they're awed by the gold and platinum records on the wall. So is Denise McClain, A.J.'s mother. Because A.J. is still a minor, she's accompanying him to this meeting with the Jive executives. The past two years have been exhausting, and there were times when Denise wondered if it would ever pay off. But now they're here, and if all goes well, there's a record contract in the future. An assistant leads the group into a conference room, where Denise finds Lou Pearlman waiting with a man she's never seen before. Pearlman introduces the man as Kendall Mitter, the band's lawyer, and Denise is surprised.
41:02 Lindsay Graham? She had no idea the band had a lawyer. Pearlman says that Mitter has reviewed the contract from Jive, and in his expert opinion, this is the best deal the group is gonna get. Mitter passes out the contracts to the band, and Denise takes one, her mind spinning. She isn't prepared to read and evaluate a contract right now. She thought they were just going to meet with the Jive executives and hear a pitch. She looks over at Nick Carter's parents, who also seem caught off-guard, but Pearlman plows forward, leading the group through the contract, highlighting a few paragraphs he thinks are important. Some clauses seem odd to Denise, like how Pearlman is listed as the "sixth member of the group",
41:43 Lindsay Graham? but she doesn't know what's standard in a music contract, so she doesn't feel comfortable calling it out. And when they've gone through the agreement, Pearlman looks up at everyone with a smile, and Denise realizes he's expecting everyone to sign right now. But Denise doesn't feel comfortable with that, and neither do the other parents. Nick Carter's father, Bob, says he'd like to have his own lawyer look over the contract. And a flood of relief comes over Denise. She quickly says she does too. Pearlman calmly explains that he hired Kendall Mitten to get the best deal for all of the boys, and he looks Bob and Denise in the eye and asks if they trust him. He thought they were all one family. Denise can't deny that Pearlman has been exceedingly generous over the past two years.
42:27 Lindsay Graham? He's paid every expense to get the boys to this moment, and the truth is, she doesn't even know a lawyer to ask. But Bob Carter reiterates that he won't sign anything until his own lawyer has reviewed it. Pearlman's calm demeanor suddenly disappearing, he barks angrily that this is the only deal they have, it's either take it or leave it. Denise sees her son's shoulders tense up. A.J. turns back and looks at her, asking her, "Please, just sign the contract," reminding her that this is exactly what they've always wanted, a recording deal with a major label. Denise looks at A.J.'s pleading face, the same one he had when he was six years old, begging her to let him audition for a community theater production. He's been working so hard for so long, and she can't be the reason he doesn't achieve
43:12 Lindsay Graham? his dreams. So she nods and agrees to sign. Next to her, Bob Carter gives in and agrees to sign as well. The boys break out into cheers. They have a record contract, but as Denise signs her name to the paper, she still feels uneasy. In the past, she's always felt like she could trust Lou Pearlman. He's discussed with them every move and business decision, lived up to every promise, but today it doesn't feel like they're on the same team, feels like they're being railroaded. Denise McLean wonders if maybe Big Papa isn't as trustworthy as she'd originally thought. From Wondering, this is episode one of Lou Pearlman, the con man of pop for American skin.
43:56 Lindsay Graham? In our next episode, Pearlman's investment in the Backstreet Boys pays off, and he decides to launch a second boy band. But when the group grows suspicious of their manager's lavish spending, Pearlman's empire starts to crumble.
44:14 Lindsay Graham? American Scandal is only possible because of listeners like you, so thank you. And don't miss an episode. Be sure to follow American Scandal on Audible or wherever you get your podcasts. And Audible subscribers can binge new seasons of American Scandal early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts. And to find out more about me, including my other podcasts, my live show, the history tours I'm arranging, and all sorts of other things, go to historyishuman.com. That's historyishuman.com.
44:47 Lindsay Graham? If you'd like to learn more about Lou Pearlman, we recommend the book The Hit Charade by Tyler Gray and Mad About the Boys by Brian Burrows, published by Vanity Fair. This episode contains reenactments and dramatized details. And while in most cases we can't know exactly what was said, all our dramatizations are based on historical research. American Scandal is hosted, edited, and executive produced by me, Lindsay Graham, for Airship. Audio editing by Krishan Paraga. Sound design by Gabriel Gould. Music by Lindsay Graham. This episode is written by Austin Rackliss, edited by Emma Courtland, fact checking by Alyssa Jung Perry, produced by John Reed, managing producer Olivia Fonte, senior producer Andy
45:29 Lindsay Graham? Herman, development by Stephanie Jens. Executive producers are Jenny Lauer Beckman, Marshall Louis, and Aaron O'Flaherty for Wondery.
45:45 Speaker 02 In January 1995, 18-year-old Krista Pike and two friends lured a classmate, 19-year-old Colleen Schlemmer, to an abandoned steam plant and killed her. At just 20 years old, Pike was sentenced to death. 30 years later, on September 30, 2026, the state of Tennessee tried to execute her and failed. I'm Candace DeLong, former FBI profiler and host of the podcast Killer Psyche, where we go inside the minds behind the most shocking crimes. In our latest episode, we take you in- The case of Krista Pike. The brutal crime, the childhood of abuse, three decades of appeals,
46:28 Speaker 02 and the night an execution went terribly wrong. Follow Killer Psyche wherever you get your podcasts. Audible subscribers can listen to all episodes of Killer Psyche one week early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.
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