Lou Pearlman is going to quit playing games with the Feds.
The former music mogul responsible for assembling hitmakers the Backstreet Boys and 'N Sync has agreed to plead guilty to conspiracy, money laundering and bank fraud charges and aid investigators in exchange for a possible sentence reduction, per court documents released Tuesday.
"Mr. Pearlman is going to enter a plea," court-appointed Pearlman attorney Fletcher Peacock said Monday. "It's the first step in taking responsibility for what has happened."
Pearlman is accused of bilking investors out of close to $200 million by selling worthless stock in sham companies that "existed only on paper" and acquiring another $140 million in bank loans with the help of bogus financial statements and tax returns supplied by a nonexistent accounting firm staffed with fictitious colleagues. He's still facing up to 25 years in prison and $1 million in fines.
But, per the 47-page plea agreement he signed Feb. 26, Pearlman could get a break come sentencing time if he cooperates fully with prosecutors, bankruptcy trustees, FBI, IRS and other federal and state regulators looking to put the squeeze on a number of unnamed coconspirators, helps them track down millions in assets and makes $200 million in restitution to individual investors and banks.
Also as part of the deal, Pearlman has agreed to forfeit the goodies seized last year by the government after he fled the country, including a 2004 Cadillac Escalade, a 2004 Rolls Royce Phantom, a 2006 Cadillac limousine and a $72,000 check from Bank of America.
Authorities finally caught up with the boy band impresario on the Indonesian island of Bali, last summer and he was arrested in Guam. He has been behind bars in Orange County, Florida, since July 10.
"For over 20 years, Louis J. Pearlman was successful in raising millions of dollars based on false representations about two companies affiliated with him," the plea deal states. "One of those companies was Transcontinental Airlines Travel Services Inc. The other was Transcontinental Airlines Inc.
"Pearlman represented to thousands of investors and several federally insured financial institutions that those two companies were successful companies in the airline business and that Pearlman's ownership interest in those companies was worth millions of dollars.
"That was not true."