In Lou Pearlman Ponzi scheme case, little restitution yet for many victims
Wake up and good morning. Remember Lou Pearlman, the Orlando-based swami (above in better days) who created popular boy banks like *NSYNC and the Backstreet Boys and also proved to be one of Florida's biggest-ever scammers and Ponzi schemers? Pearlman ripped off hundreds of folks including plenty in the Tampa Bay area. Well, Lou was finally caught, after fleeing the country, in Bali and sits in prison serving a 25-year sentence. But that does not mean his victims are seeing any return of the money they gave the persuasive Pearlman, purportedly pitching high returns to invest in his ventures but really to buy goodies like you see in the photo above.
St. Petersburg Times business reporter Helen Huntley, now retired from the newspaper, did masterful work covering the Pearlman scam. Her reporting even contributed to law enforcement officials recognizing and apprehending Pearlman while he was eating breakfast at a swank resort in Bali. Here is a complete and special report from the Times archive on Pearlman's escapades. (Photo: Pearlman in police custody by Phelan M. Ebenhack.)
Now comes an Orlando Sentinel story that says the court-appointed trustee in Pearlman's bankruptcy case has spent millions of dollars on lawyers to find money that vanished during the convicted swindler's fraud. Yet 3 1/2 years after the collapse of Pearlman's Orlando-based business empire, records show victims of the $300 million Ponzi scheme have yet to see any restitution.
Of the $10 million that trustee Soneet Kapila (photo, left) has secured so far, the Sentinel reports more than $2.5 million has been paid to lawyers and others hired to help recover the funds, according to documents in U.S. Bankruptcy Court in Orlando. An additional $1 million has been spent on other expenses related to the case. The remainder is either sitting in the trustee's operating accounts or pending further litigation, according to Kapila's reports.
Kapila sued former Pearlman insiders, brokers, money-management firms and some major banks, including SunTrust, Wells Fargo and Fifth Third Bank, to try and recover funds that Pearlman supposedly socked away in financial accounts and elsewhere. the Sentinel reports. Kapila's even sued more than 700 individual investors because they supposedly profited, at least partially, from Pearlman's scheme.
-- Robert Trigaux, Times Business Columnist