Orlando music producer Lou Pearlman was juggling two Ponzi schemes at the same time, according to the latest court filings in his case.
In addition to a scheme the state says took more than $300-million from individual investors, federal prosecutors say the more than $100-million he borrowed from banks was a Ponzi scheme of its own, dating at least to 2001.
Assistant U.S. Attorney Roger Handberg says Pearlman went from bank to bank borrowing money from one to pay off another to keep the scheme going. Ultimately at least 10 banks were victims, including a group of small Midwestern institutions.
The techniques Pearlman used included presenting banks with false financial statements and tax returns purportedly prepared by a non-existent accounting firm. Some of the loan documents were supposedly signed by a former business associate after his death.
According to the federal criminal complaint against him, Pearlman even took Bank of America representatives to Germany last September, telling them Trans Continental Airlines owned the Continental Airlines plane they flew.
The criminal charges against Pearlman specifically accuse him of defrauding Integra Bank of Evansville, Ind. However, Handberg says that because the fraud was a coordinated scheme, he should be able to introduce evidence regarding the other banks in Pearlman's trial.
Pearlman is in the Orange County Jail awaiting trial. The state also has filed a civil complaint accusing Pearlman of defrauding individual investors. A bankruptcy court trustee is searching for assets to repay his creditors. The deadline for filing a claim in the bankruptcy case has been extended to Jan. 30.
Helen Huntley can be reached at firstname.lastname@example.org or (727) 893-8230.
Federal prosecutors say these banks were victims of Pearlman's Ponzi scheme:
- Integra Bank, Evansville, Ind.
- Washington Mutual Bank, Chatsworth, Calif.
- HSBC Bank, New York
- Bank of America, Charlotte, N.C.
- First National Bank and Trust Co. of Williston, Williston, N.D.
- American Bank of St. Paul, St. Paul, Minn.
- MB Financial Bank, Chicago
- First International Bank and Trust, Waterford City, N.D.
- Northside Bank, Gurnee, Ill.
- Tatonka Capital Corp., Denver, Co.