The Chilling True Story Of How The Backstreet Boys And NSYNC Were Scammed By Their Manager

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While BTS, One Direction and the Jonas Brothers have taken the world by storm in recent years, little can compare to the fame and influence held by the boy bands of the mid-1990s. Of these, two groups far outshone the rest – the Backstreet Boys and NSYNC. With their slick looks and choreographed dance routines, these young men seemed to have it all. Only later did they  – and we – realize that the musical megastars were enmeshed in a terrible scam.

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Nick Carter, AJ McLean, Howie Dorough, Brian Littrell and Kevin Richardson are better known to their many fans as the Backstreet Boys. The group was formed in 1993 following an audition process in Kissimmee, Florida. And just three years later, following the release of their debut album in 1996, the band were enjoying international success.

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The Backstreet Boys’ self-titled first album brought them success in Europe, though it wasn’t released in the United States. Some singles did enjoy releases in the U.S., however. And the band’s song “Quit Playing Games (with My Heart)” was a hit with American audiences. Consequently, it reached number two in the Billboard Hot 100 Chart, and eventually sold over a million copies.

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Doubtless spurred on by the success of their first album, the Backstreet Boys were quick to follow up with a second internationally-released album in 1997. Almost simultaneously, they launched their first American album, which contained songs from the two records that had so far been released worldwide. And after its release in the U.S. it eventually sold 14 million copies.

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It was this early period that brought us hits like “As Long As You Love Me” and “Everybody (Backstreet’s Back).” But the Backstreet Boys were yet to peak. That’s because the band’s third studio album, Millennium, was yet to drop. But when it did, it would launch the Backstreet Boys’ fame into the stratosphere.

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When Millennium landed in 1999 it contained tunes like “I Want It That Way” and “Larger Than Life.” What’s more, it debuted at number one on the Billboard 200 and would go on to become the best-selling album in the U.S. in 1999. In fact, Millennium proved so successful that as of January 2013 it was still the fourth best-selling album of the SoundScan era.

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By mid-1999 the Backstreet Boys were looking at a sell-out tour and seemed to have the world at their feet. However, by 2000, they would be joined at the top of the boyband scene by a rival group. It consisted of Justin Timberlake, Chris Kirkpatrick, Joey Fatone, Lance Bass and JC Chasez – collectively known as NSYNC.

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Like the Backstreet Boys, NSYNC had enjoyed success in Europe before making it big in their native United States. However, the band broke onto the U.S. market in 1998, with the release of their first American single, “I Want You Back.” Though it would be two years later, in 2000, that NSYNC would experience real, standout success.

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That would come following the release of “Bye Bye Bye,” which is still generally considered to be NSYNC’s most famous song. However, it wasn’t until the release of “It’s Gonna Be Me” that the band would earn their first U.S. number one single. Both songs appeared on NSYNC’s No Strings Attached album, which sold more than one million copies in 24 hours, and 2.42 million copies in seven days.

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So, just like the Backstreet Boys, by the new millennium NSYNC were one of the biggest boy bands on the planet. But that wasn’t the only thing that the two groups had in common. That’s because they shared manager Lou Pearlman, who’d set up the bands to rival one another, and ultimately make him more money.

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Pearlman was raised in New York, and as a first cousin of Art Garfunkel, a passion for music ran in the family. As a result, Pearlman managed bands from his teenage years onwards, although he took time out from the industry to pursue a career in aviation. During that time, he ran a successful helicopter taxi service in New York City.

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However, Pearlman returned to the music business after witnessing the financial success of New Kids on the Block in the late 1980s and early 1990s. The boy band had made millions through their records, shows and merchandise sales. As a result, Pearlman was keen to replicate the phenomenon with his very own group.

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With that in mind, Pearlman established his own label, Trans Continental Records. But he was still in need of his first big signing. So in 1992 he went on the search for singers, placing a notice in Florida newspaper the Orlando Sentinel and holding auditions. This was how he came to form the Backstreet Boys.

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Chris Kirkpatrick – who would later find fame with NSYNC – had tried but failed to get into the Backstreet Boys. But he later met with Pearlman to discuss the possibility of forming another band. The music manager agreed to fund another group, but Kirkpatrick would have to find the other singers. He did, and that’s how NSYNC came to be.

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With two of the era’s biggest boy bands under his management, Pearlman was by now quite the musical impresario. As a result, his record label signed a number of acts, who no doubt hoped they could replicate the success of the Backstreet Boys and NSYNC before them. However, in 1998, Pearlman’s music empire had been rocked by scandal.

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At that time the Backstreet Boys were Pearlman’s most successful band. However, the relationship between the band and their management had become frayed. And in 1998 the Backstreet Boys filed a lawsuit against Pearlman and his record label, claiming the mogul had lied to them regarding the group’s earnings.

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Under the Backstreet Boys’ contract with Pearlman, he received three sets of payments as producer, manager and sixth member of the band. Consequently, Pearlman’s company made about $10 million in revenue from the group between the years of 1993 and 1997. However, in contrast, the Backstreet Boys received just $300,000.

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NSYNC had a similar experience with Pearlman. After forming in 1995 the band worked their socks off for three long years and sold millions of records. During that time, the band’s members had been given a daily allowance of $35 a day. But in December 1998, Pearlman invited them to a fancy restaurant with the promise of finally sharing the wealth NSYNC had created with the group itself.

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NSYNC were convinced they had generated enough money to make each member millionaires. So we can imagine their reaction when they were instead given a cheque for a $10,000 each. “That is when I knew we were being taken advantage of,” NSYNC singer Lance Bass told The Guardian newspaper in April 2019.

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With that in mind, NSYNC sued Pearlman and Trans Continental Records. The band claimed their manager had fraudulently taken over half of their earnings, rather than taking one-sixth of NSYNC’s profits as they believed was the deal. However, Pearlman claimed that his contract entitled him 90 percent of the group’s earnings, suggesting that – as the owner of the band’s name – he was NSYNC.

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But the judge presiding over the case didn’t buy Pearlman’s claims. As a result, she ruled in NSYNC’s favor. However, when the band threatened to leave Trans Continental, Pearlman countersued them for $150 million and use of the NSYNC name. The case was eventually settled out of court, and NSYNC left Pearlman’s label to sign with Jive.

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So, while Backstreet Boys and NSYNC had been established as rivals, they found common ground in their pursuit of justice against Pearlman. Revealing the extent of the two bands’ conflict in The Boy Band Con: The Lou Pearlman Story, Bass revealed, “[Lou] pitted us against each other. And we stayed against each other for our whole entire careers… If I saw them in a room, I wouldn’t even want to talk to them.”

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But this was not the end of Pearlman’s woes. Eventually, all but one of the acts associated with the music maestro sued him for fraud and misrepresentation. What’s more, all these cases have either been settled out of court, or have been won by the acts. So by 2002 Pearlman’s career as a music manager was practically over.

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It has since been claimed – namely in the YouTube Premium documentary The Boy Band Con: The Lou Pearlman Story – that the music manager hid his scams behind the veneer of his wealth. But Pearlman was also eager to be liked. He nicknamed himself Big Poppa and tried to portray himself as just another member of the bands he looked after, albeit taking on a more fatherly role.

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However, according to The Boy Band Con: The Lou Pearlman Story, the manager had a darker side. Appearing in the documentary – which he also helped to make – Bass recalls Pearlman as being “very touchy-feely.” Meanwhile, there are also allegations of the mogul asking a band to fondle him, and another implying he secretly filmed another of his groups undressed on a sunbed in his house.

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And it seems that Pearlman had perfected his cons for many years. Even the helicopter taxi business he had run was reportedly funded by an insurance policy he had taken out on a shoddy blimp he was sure would crash. Furthemore, even after the lawsuits with his various bands, Pearlman still couldn’t manage to stay on the right side of the law.

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In 2002 Pearlman acquired scouting agency Options Talent from Mark Tolner, but it was fraught with problems. Vanity Fair magazine reported in 2007 that a number of Options Talent’s senior staff held criminal records. Furthermore, it had received hundred of complaints from clients, who claimed they’d got little in exchange for their fees.

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With Pearlman and the company’s help, Options Talent underwent many name changes and an investigation by the state of Florida. Though it never faced any charges of wrongdoing, the company filed for bankruptcy in 2003. Pearlman then launched a new company known as Talent Rock, but by all accounts this venture seldom returned much in the way of profits.

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As a result, Pearlman launched other money-making schemes. Using his influence in Orlando – where he’d been made an honorary sheriff’s deputy – he regenerated a section of historic buildings in the city’s downtown. Aside from moving his own business there, Pearlman was able to breathe some life into the area, opening a series of stores and restaurants.

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But still Pearlman wasn’t earning anywhere near as much money as he had when he was managing the Backstreet Boys and NSYNC. At the same time, he had simultaneously brought in a wage by running his aviation company, Airship International. And Pearlman’s lack of funds was a major problem for him as he had hundreds of investors to whom he owed money.

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Since the 1980s, Pearlman had convinced investors to put money into two business – Trans Continental Airlines Inc. and Trans Continental Airlines Travel Services Inc.. However, neither of the companies actually existed. Instead, Pearlman was running a so-called Ponzi scheme, in which he took money from a series of investors, paying the older ones with money from the newer ones.

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By 2003 Pearlman’s business empire was beginning to fall apart at the seams. So in order to pay his investors, Pearlman leveraged all of his possessions to raise capital. In return for all of his homes, planes, royalties, and the buildings he owned in downtown Orlando, he received a sum of around $156 million. And, perhaps more importantly, it kept his investors appeased for the time being.

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Pearlman’s downfall started with the death of one of his biggest investors, Joseph Chow. It was then that Chow’s family came to cash in on their relative’s loans. However, Pearlman informed them that his investment was practically worthless. He offered to pay Chow’s family the $14 million they were owed back in installments, but they declined.

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Instead the Chow family hired a lawyer and began investigating Pearlman’s finances. By mid-2005 they had evidence that the former music mogul had committed fraud, and – what’s more – that he was still accepting money from investors. However, Pearlman’s scam was about to burn out, and by the summer of 2006 he was practically broke.

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Suddenly, Pearlman’s investors stopped receiving their payouts, and some of them grew suspicious. As a result, they took their complaints to Florida’s Office of Financial Regulation, who began to investigate. In January 2007 the state filed a suit accusing Pearlman of running a Ponzi scheme, and the next month the FBI staged a forced search of the conman’s mansion.

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Subsequent investigations found that Pearlman had taken more than $300 million from his investors and banks, but most of it was gone. So too was Pearlman, who had seemingly fled the country after realizing that officials were on to him. There were reported sightings of him in Germany and Israel, but police eventually caught up with Pearlman in Bali, Indonesia, in June 2007.

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Later that month Pearlman was indicted on one count of wire fraud, one count of mail fraud and three counts of bank fraud. Then, in May 2008, he was sentenced to 25 years in jail on account of money laundering, conspiracy and making false statements during bankruptcy proceedings. Pearlman was told he could knock one month off his sentence for every $1 million paid back to his victims. But he would never be a free man again.

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Two years into his prison sentence, in 2010, Pearlman suffered a stroke. His health seemingly declined further, and in August 2016 he died at the Federal Correctional Institution in Miami, FL. Pearlman had suffered a heart attack and was just 62 years of age at the time of his passing.

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In many ways, the age in which Pearlman was able to build boybands into million-dollar machines in a matter of years is behind us. With the advent of the digital age, and the streaming services it’s brought us, selling records isn’t as profitable as it was once. However, for some who were swindled by Pearlman, there are still lessons to be learned from his scams.

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Speaking to The Guardian, Bass explained, “It is a cautionary tale that we have to keep reminding ourselves of. Yes, people can get called out a lot easier and quicker these days [because of social media] and the temperature is definitely cooling down. But there will always be people out there trying to take advantage of young entertainers.”

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