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- [00:00]
Lindsey Graham
Hi, this is Lindsey Graham, host of American Scandal. Our back catalog has moved behind a paywall. Recent episodes remain free, but older ones will require a Wondery plus subscription. With Wondery, you get access to the full American Scandal Archive ad free, plus early access to new seasons and more. Join Wondery plus in the Wondery app or on Apple Podcasts. It's mid-2005 in Chicago, Illinois Attorney Edwin Brooks paces the floor of his office, waiting for the phone to ring. He's expecting a call from a process server he's hired to serve a subpoena this afternoon, but so far he's heard nothing and is growing impatient with each lap around the room. Brooks glances up at the clock on the wall, then at the stack of financial documents that have littered his office and his mind for the last several months. Late last year, Brooks was hired to represent the estate of Dr. Joseph Chow. Chow had sunk around $14 million into music mogul Lou Perlman through various loans and investments. But after Chow died and his family tried to collect the money, Perilman refused to pay. He even sued the Chao family to prevent them from demanding repayment, citing a forbearance letter that granted Perlman permission to pay back the money at his own convenience. Initially, Brooks was stunned to see Chao's name signed to such an ill advised agreement. But upon closer examination, the lawyer came to believe that Chau may not have signed the document at all. After weeks of combing through Chao's agreements with Perelman, he noticed that the signature on the forbearance letter was an exact match for one he'd seen on another letter signed by Chau. Which probably meant the signature on the forbearance letter had been forged, likely by Perlman. Unfortunately, the letter is a legal dead end. Brooks only has a copy of the comparison signature, not the original. And without originals of both documents, he wouldn't be able to prove in court which one was real and which one was fake. But Brooks still has forgery on his mind, and he's been studying every Perelman related document he's been able to get his hands on with suspicion. That's why he sent a process server to the Florida offices of Cohen and Siegel, the accounting firm listed on Perelman's personal financial statements. Brooks wants to know if their account records match the ones that Perelman turned over to Brooks, and to do that, he needs to serve the firm with a subpoena. But as Brooks completes another lap around his office floor, he looks up at the clock and sees that it's after 5pm in Florida? The subpoena should have been served at least half an hour ago. And he doesn't understand what the holdup is. Finally, the phone rings. Brooks lunges over a pile of reports to grab the receiver. Edwin Brooks speaking. Hey, it's the process server. Yeah, yeah, how'd it go? You served the subpoena? Well, about that. The place doesn't exist. What do you mean? Well, I went to the address you gave me, and there's no business called Conan and Siegel there. Yeah. You sure you're at the right address? Yep, I'm sure, but I'm telling you, the only business here is some kind of secretarial services company. Oh, well, they have a German address, too. Maybe they just employ secretarial services for their US Customers. That's possible, but serving papers internationally, that's a whole other can of worms. Yeah, and, you know, I'm not sure it's worth it, honestly. Why do you say that? Well, it's. I mean, have you thought about the name of the accounting firm? Cohen and Siegel. What about it? Those names don't ring any bells for you? I mean, should they? Mickey Cohen, Bugsy Siegel. The gangsters who founded Las Vegas. Yeah, I don't think this is a real business at all. Oh, my God. You think Perlman faked an entire accounting firm? Looks like to me. All right, I gotta go. And thank you for your help. Good luck getting this guy. Brooks hangs up the phone, his mind reeling. He Googles the number for the FBI and begins to dial, but then stops himself. He has an ethical duty to get the best possible outcome for his clients, the Chow family. And from that perspective, the better move is to keep gathering proof that Perelman is a con artist and use that evidence to push Perelman to pay. The child's the biggest settlement possible. So Brooks hangs up the phone. For the sake of his clients, he'll leave the criminal case to the professionals. But he now feels certain that Perelman's con runs far deeper than he could have imagined. And that many others have been caught up in his web of lies, too. American scandal is sponsored by Uncommon Goods. Spark something uncommon this holiday. With just the right gift from Uncommon Goods. Incredible handpicked gifts for everyone on your list. Gifts that spark joy, wonder, delight. And that it's exactly what I wanted feeling all in one spot. Like what my wife found recently. 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- [05:45]
Ryan Reynolds
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- [06:41]
Lindsey Graham
From Wonder I'm Lindsey Graham and this is American Scandal. By the late 1990s, Lou Pearlman rocketed to fame as the impresario behind the Backstreet Boys and NSync, two of the biggest pop acts in the world. He built a reputation as a risk taking entrepreneur who oversaw a vast empire that included not just musical acts, but a private airline company, restaurants and real estate. But at the height of their popularity, both the Backstreet Boys and NSYNC sued to be released from their contracts with Perelman, citing him for fraud and dereliction of fiduciary duty. In the wake of these lawsuits, Perelman tried to create another hit band but had little success and was bleeding money. And soon Perelman's other businesses would come under increasing scrutiny, raising the question of whether Perelman was really a brilliant businessman or just a cunning con man. This is episode three Bye Bye Bye. It's August 2006 in Orlando, Florida. Lou Perlman sits hunched over his desk, dialing the number for a bank in Georgia. The phone rings once, twice, and then the call gets redirected to a Series of pre recorded greetings interspersed with on hold music. Perlman slumps back in his chair. He needs to speak to a loan officer as soon as possible. But he's made enough of these calls to know it probably will be a while before a human answers the phone. So as he listens to the voice on the recording explain for the third time that someone will be with him shortly, Perelman gazes around his office. Four years ago, this former train depot was just a rundown tourist trap. Then Perelman bought it and transformed it into a thriving business center, complete with ornate fountains and a glass elevator. He opened a steakhouse and set up his headquarters in the building. The office used to be a source of pride for Perelman, but lately it's felt more and more like a symbol of everything that's gone wrong in his life. Perelman took on massive debt to buy this building, and now he's struggling under the weight of it. Since losing his boy band cash cows, he's had to take out loans from nearly a dozen banks to keep his various businesses afloat. But they weren't enough. And now he needs to borrow more. The on hold recording stops abruptly and finally a loan officer answers. Perelman doesn't want to sound desperate, so he clears his throat and leans forward in his chair, placing his elbows on his desk to steady himself. Yeah, hi, this is Louis J. Perlman with Transcontinental, and I'm calling to follow up on a loan application I submitted. A colleague of mine sent over all the paperwork last week. Mr. Perlman? Yes. Yeah, I have your application right here. You're seeking a loan of $2.5 million? That's correct. Okay, well, we just need to confirm a few details. Absolutely. All right, well, we have a letter here from the accounting firm of Cohen and Siegel that says Transcontinental has a 50 million doll reserve fund held in a bank in Germany. Is that correct? That's correct. Okay, well, we're going to need a statement directly from the bank confirming these holdings. Well, Cohen and Siegel is a third party accounting firm. I don't understand why that won't suffice. I'm sorry, but it's company policy. We need to receive verification from the institution that's actually holding the money. Okay, but that's not the only collateral I'm offering. I'm also, there's also my personal home and my Rolls Royce, as well as the 49 airplanes owned by Transcontinental. Yes, I see that. All very helpful. But this reserve account is a key asset and we would still need the statement from the bank itself. Is that a problem? No, not at all. It's just another step I didn't realize was necessary. I'm trying to move this along as quickly as possible. I understand that. And I can assure you that as soon as we receive the paperwork, we will move forward without delay. Okay. All right. Well, then I'll get it to you as soon as I can. Thanks for your help. It's been my pleasure. Perlman hangs up the phone and sighs. He starts to feel his chest tighten in panic. He needs that money now. But he's never let a little paperwork get in his way. Perlman wakes up his computer and opens the file where he keeps the letterhead for the fictitious German bank he made up years ago. And as he prepares to write his own financial statement, Perlman reminds himself that he's been in plenty of financial holes before and he's always found a way out. This time will be no different. By the summer of 2006, Lou Perlman has borrowed close to $160 million from various banks, using almost all the same assets as collateral. But what none of the banks realize is that for the most part, those assets don't exist. Transcontinental Airlines doesn't own a single plane and never has. The private planes Perelman chartered to bands in the 80s and 90s were all leases. His company's brochure still features the same photo of a model 747 that he and a childhood friend faked decades ago. Transcontinental Airlines technically doesn't even exist as a company. Their Registration expired in 1999 and Perelman never bothered to renew it. And it's not just the banks that he's been misleading over the years. Many of Perelman's friends and family members bought into Transcontinental's Employee Investment Savings account account, or ESAs, which Perelman assured them were both insured by the FDIC and Lloyds of London. This wasn't the case, and ESA isn't even a real type of investment vehicle. Perlman made it up. But to make the account seem legitimate, Perlman's been generating fake investment statements using fake letterhead from the fake accounting firm Cohen and Siegel. But there's no money in the accounts of any of Perlman's investors. All of their money has been directed straight into Perlman's pocket. And he spent it freely for decades. But now Perelman is starting to face reality. He's already been sued by multiple banks for non repayment, and the authorities have started to ask questions about ESA. In late 2006, Perelman is called to sit for a series of interviews with agents from the Florida Office of Financial Regulation, and they want to know why investors have been unable to withdraw their money from their ESA accounts. Perlman claims that he is trying to pay back his investors, but the money is in a German bank, and the Department of Homeland Security is holding up the transfer. He agrees not to sell any more ESA investments until the matter is cleared up, and Perelman's latest lie buys him some time with the Florida regulators. But among his investors, word of the Chao family's lawsuit has begun to spread. More and more people are starting to have concerns about the integrity of their investments, and soon they start taking those concerns straight to Transcontinental. In late 2006, Mandy Newland, one of Perlman's longtime assistants, is sitting at the front desk of the Transcontinental office, struggling to manage the phones. They've been ringing nonstop, and every call is someone asking about money. Perelman has assured Nuland and the rest of the Transcontinental staff that he's taking care of the situation, but he's rarely in the office these days, and his promises aren't relieving anyone's concerns. Suddenly, the door swings open and an elderly couple marches in, demanding to see Lou Perlman immediately. The man explains that they've been calling for weeks to no avail, so they drove all the way down here from New York to confront Liu in person. Nuland is apologetic as she explains that Perlman is not in the office and she doesn't know when he'll be in, but she promises to let him know that they came all this way to see him. The couple looks deflated and exhausted, but they still refuse to budge. The old woman's voice shakes as she explains they invested their entire life savings with Perlman, and if they don't get the money back, they could lose their home. Newland doesn't know what to say. She wants to help them, but she doesn't know how, so she gently reiterates that she'll make sure to tell Perlman that they are here the next time she speaks to him, but does little to comfort the couple. She watches the old woman's lip begin to quiver before she bursts into tears, sobbing that they're going to end up in the street. The old man wraps a steadying arm around her shoulder, and as he guides her out of the office, he promises they'll try again tomorrow. But before the door is even shut, another elderly man marches in, demanding to know where his money's gone. Newman's heart sinks. She tries to maintain her composure, but she isn't cut out for this. When she started working at Transcontinental, she felt like she was in the business of making people's dreams come true. But now every person who calls the office seems like they're living a nightmare. In January 2007, Lou Perelman hires an accountant named Paul Glover to comb through his books, looking for assets that can be sold to pay back his bank loans and investors. It's a last ditch effort to save Transcontinental, or at least delay its inevitable implosion. But when Glover arrives at Perelman's offices on January 5, the music mogul isn't there. Instead, the accountant is greeted by Transcontinental vice president Bob Fischetti and led into Perelman's corner office, where a fake tiger fur rug covers most of the floor and a row of filing cabinets lines one of the walls. Fischetti motions toward the filing cabinets and tells Glover that he can review every document he needs. Glover thanks Fischetti and then gets to work. He takes a seat and begins reviewing stacks of financial documents. Since Transcontinental was founded in the 1980s, there are thousands of pages to shift through, and Glover works through the day, flipping through page after page until the numbers start to blur. But just when he thinks he can't look at another document, his eye catches on some small print at the bottom of one of the more recent reports. It's a standard accounting disclaimer, but the language is out of date. Glover's a bit confused. The document was generated by Cohen and Siegel, the same accounting firm that has signed off on almost every one of Transcontinental's financial documents for the last two decades. So Glover checks another report, and the disclaimer is wrong on that one, too. This is not the kind of error that a reputable accounting firm would make. It's a legal liability not to have the most up to date disclaimer language on these forms. So Glover decides to give Cohen and Siegel a call. He pulls out his cell phone and dials the number on the company's letterhead. But when Glover hits send, the phone on Perlman's desk starts ringing. It could be a weird coincidence, but when Glover hangs up his cell phone, Perlman's phone stops ringing. Glover's heart thumps in his chest. He calls Cohen and Siegel's number again. And again, Perlman's phone starts ringing. Glover's mind races. He rushes over to where he put the ESA statements and starts paging through them. They've all been generated by Cohen and Siegel, the company that Glover now knows to be a front for Lou Perlman himself. Suddenly, a thought strikes Glover like lightning. The reason none of Perlman's investors have been able to withdraw their money is that there is no money. Perlman has been running a Ponzi scheme. He's been luring investors with a promise of better than average returns and then placing most of that money straight into his own bank account. And judging by the dates of these ESA statements, he's been doing it for over 20 years. Usually Ponzi schemes work by using new investor money to pay the returns of the old investors. So maybe a few investors had gotten their money back with interest in the beginning. But now too many people are trying to get their money out, and Perlman isn't bringing in enough new investments to cover the gap. Glover was hired to help Perlman, but now knows he can't. This man is a criminal. And Glover decides he's going to do the right thing and use his access to Perelman's financial records to bring him to justice.
- [18:52]
Ryan Reynolds
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- [20:05]
Lindsey Graham
American scandal is sponsored by Aura Frames. Now here's something that I know is true. The people we love most are the most hard to shop for. Luckily, there's one gift that probably everyone on your list is sure to enjoy. An Aura Digital Picture frame named number one by Wirecutter because Aura Frames makes it incredibly easy to share unlimited photos and videos directly from your phone to the frame, no matter where it is. So when you give an Aura Frame as a gift, you can personalize and preload it with a thoughtful message and photos using the Aura app, making it an ideal present for long distance loved ones like Grandma or that aunt whose birthday you forget but who always remembers yours. It's a gift so special that they'll use it every day. And Aura Frames come in a variety of styles and colors, so you can be sure to match the taste of anyone in your life. And trust me, it's the easiest way to share back to school photos Cute Halloween costume photos that video you took over the holiday. Anything that you think your friends and family might smile at can be sent to their Aura Frames almost instantly. And for a limited time, visit aura frames.com and get $45 off Aura's bestselling Carver Matte Frames by using promo code as at checkout that's auraframes.com promo code as this exclusive black Friday Cyber Monday deal is their best of the year. So don't miss out. Terms and Conditions app When accountant Paul Glover was hired to sort through Lou Perlman's financial documents in January 2007, he thought he was dealing with a standard bankruptcy case. But as he stands in Perlman's office, surrounded by thousands of pages of what he has discovered are false financial statements, Glover realizes that he's come face to face with evidence of one of the biggest Ponzi schemes in American history. He flips through the ESA statements again, his eyes focused on the totals listed at the bottom. He isn't certain of the exact numbers yet, but it looks like Perlman has taken hundreds of millions of dollars from vulnerable investors. Glover shakes his head. He can't let Perlman get away with this. He has to get this evidence to the authorities. But outside Perlman's office, Transcontinental employees are milling about, waiting for Glover to finish his work. And he has no idea how much they know or don't know about Perelman's scheme. It's entirely possible that they're in on it. So Glover wants to try and sneak out without attracting attention. While carrying as much evidence as he can. Glover grabs a file box and starts loading it up with financial documents. He grabs ESA statements and revenue reports from Transcontinental and anything else he can turn over to the authorities to prove what Perelman's been up to. And then, just after 9pm Glover peeks out the door of Perelman's office with a box of evidence in his hands. There are still a few people working, but most of the staff have gone home. This might be his best chance. But as Glover exits Perelman's corner office and walks past rows of cubicles, Transcontinental vice president Bob Pachetti suddenly appears out of another office and blocks Glover's path. Glover puts on his best poker face and reminds himself he just needs to throw Fchetti off the scent for long enough to get to his car. Vachetti flashes a grin that to Glover, looks a little forced. Hey, Paul. You taking off for the night? Yeah, it's been a long day. And I'm white. Totally understand. You've been at it a while. What's in the box? More documents. You know, I gotta review them all. You need to take them with you. It's easy. If I just go through them at my office, it won't be in your hair. Well, it's not a problem for you to come here. You're not in the way at all. I appreciate that, but it adds commute time. It's more efficient if I take the files with me. Okay, but what exactly are you taking with you? Oh, various tax returns, revenue reports. I need to find assets anywhere I can. Lou and you guys at Transcontinental, you're in a bit of a jam. And how long will you need these for? About a week, give or take a week? Well, the company's been around a long time, and there are all these subsidiaries. It's taking me a while to sort it all out. Hmm. Really? Look, I just want to make sure I don't miss anything. I know creditors are breathing down Lou's neck. I'm sure you're feeling the stress. So the more thorough I am at this stage, the more likely I'm going to be able to find something to help you out. Fischetti stares at Glover. Glover swallows, fighting hard to keep his face neutral. Finally, Fischetti claps Glover on the shoulder. Well, we appreciate all your help, Paul. It is a big mess. Well, no problem. Tell Lou I'll be in touch as soon as I'm finished going through everything. All right? Will do. Fchetti steps aside, and Glover heads for the exit, resisting the urge to run as fast as he can. And when he finally reaches his car, Glover. Glover puts the box full of evidence in the trunk and collapses into the driver's seat, breathing hard. After Glover leaves Perlman's office, he calls the state fraud hotline to tell them what he's discovered. Then he meets with some investigators who take a statement from Glover as well as the box of documents. Then, on February 1, 2007, Florida's Office of Financial Regulation files a civil suit against Perelman. They allege that Perelman has been committing fraud for at least 15 years through the sale of EAS. And they detail some of the lies Perlman told to make the accounts seem legitimate. Around the same time, the banks that loan money to Perelman decide they're done, letting him dodge them. He's defaulted on every one of his loans and owes the banks nearly $200 million combined. So a group of banks in Orlando go to federal court and ask the judge to put Transcontinental into bankruptcy, freezing the company's assets. But that's when they discovered that Transcontinental barely has any assets left. What little money remained in the company's accounts had already been transferred to the personal accounts of Perelman and other company executives. And when FBI agents raid Transcontinental's offices two weeks later, on February 15, 2007, they find the place ransacked. Panicked employees shredded as many documents as they could and carted off anything of value to sell. The place has been stripped of TVs, audio equipment, even furniture. So agents load up their truck with whatever documents are left and head to Perelman's home, where they seize more evidence. But Perlman himself is nowhere to be found. When FBI agents questioned Transcontinental employees, they discovered that Perlman hadn't been in the office for six weeks. The last person to see him was his executive assistant, Mandy Newland, who had gone with Perelman to Ireland, where he was scouting another boy band. After that, Perelman had flown to somewhere in continental Europe with a former member of one of his bands named Michael Johnson. Right now, his exact whereabouts are unknown. So with Perelman on the lam, the case turns into a media circus, generating news not just in the United States, but all over the world. Word that the man behind the Backstreet Boys and NSYNC was running a Ponzi scheme hits especially hard in Germany, where both bands got their start. So when a 32 year old German computer programmer named Thorsten Eborg sees the coverage, Perelman's image lodges somewhere in the back of his mind. But E. Borg forgets the story and moves on with his life. But then, in June, 2007. Nearly six months after Perlman left the United States, Eborg and his wife were on vacation in Bali, Indonesia. And that image of Perlman comes rushing back. Yborg is walking down a white sand beach, enjoying the sunshine outside the Westin resort Nusa Dua, when he spots a heavyset middle aged man with large glasses, dressed in a Hawaiian shirt. Yborg squints, thinking that man looks a lot like Lou Perlman. Iborg tries to tell himself it's just a random tourist, but he can't shake the sense that it really is Perlman. So he heads to the resort's business center and searches the Internet for pictures of Perelman. And as he scrolls through the photos online, all of his doubts disappear. The man he saw was definitely Lou Perlman. And from everything Eborg has read, he's a wanted fugitive. Maybe there might be even some kind of reward for a tip leading to his arrest. So Eborg continues Googling, and he comes across a blog written by a financial report reporter with the St. Petersburg Times named Helen Huntley. Huntley's been covering the Perelman case closely, outlining how his scams worked and peeling back the layers of deception. So Iborg sends her an email letting her know that he believes Perlman is staying at the Westin resort Noosa Dua, in Bali. Huntley writes back, thanking him for the note. She confirms that the FBI has been looking for Perlman and asks Iborg if she can forward his email to them. Iborg agrees, and soon he's excited to find an email in his inbox from FBI Special Agent Scott Skinner. But to Iborg's surprise, Skinner doesn't seem especially interested in the information Iborg has to share. The agent says that at this moment there is no arrest warrant for Perelman and that because the United States doesn't have an extradition treaty with Indonesia, Perelman is allowed to travel through the country as he pleases. Yborg is disappointed, disappointed by the somewhat dismissive tenor of Skinner's email. But he reminds himself that Skinner must be getting tips like this from all over the world and that it has to be difficult to sort the true sightings from the false ones. So Iborg tries to turn his attention back to simply enjoying his vacation. But the very next morning, while standing in line at the resort's breakfast buffet, Eborg again spots Perlman, this time at a table by himself, sipping coffee. That's when Yborg gets an idea. He walks back to his table and asks his wife for their camera. She wants to know why, and he explains he wants to take a picture of Perelman and send it to the FBI. Maybe photographic proof would encourage them to take him seriously. So after his wife hands over the camera, Eborg pivots in his seat and lines up the shot, centering Perlman in the frame. Holding his breath, he pushes the shutter button and Iborg has the photo. Indisputable proof that Perlman is in Bali, and he hopes it's enough for the FBI to take action.
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- [32:01]
Lindsey Graham
In June 2007, FBI agent Scott Skinner is sitting at his desk when an email comes in from a German citizen named Thorsten Eborg. Only yesterday, Skinner had received a tip from Eborg saying he'd spotted Lou Perlman at a resort in Indonesia. Skinner replied saying the FBI has no arrest warrant for Perlman and that because Indonesia has no extradition treaty with the US the music mogul is free to travel the country as he pleases. But that's not entirely true. The FBI does have an arrest warrant for Perlman, and even though the US And Indonesia have no extradition treaty, the bureau can circumvent this legal restraint by working with the Indonesian National Police. But Skinner doesn't want to explain any of that over email. For all he knows, this Eborg person could be an associate of Perelman's or even Perelman himself. And this supposed tip could be an attempt to glean information about the FBI's investigation or an attempt to lead them on a wild goose chase. So while Skinner feigned disinterest, he ordered two agents from an FBI field office in Indonesia to fly to Bali. They're at the West End resort Nusa Dua right now, scoping the place out. And when Skinner opens this latest email from Eborg and sees the photo he sent, he can't help but laugh. In the corner of the photo, sitting at a table just across from Perlman, or his two agents, dressed undercover as tourists, waiting to make their move. But the agents can't approach Perlman just yet. While Eborg was in the business center, emailing Skinner the photo of Perelman, the agents went to meet with Indonesian National Police and convince them to expel Perlman from the country as an unwanted visitor. With that leverage in hand, the agents return to the resort and make their move. They tell Perlman that he is no longer welcome in Indonesia and he'll have to leave the country. Perelman agrees to fly with them to Guam, which is a US Territory. And once a plane lands, Perlman is officially arrested and placed in jail. He is indicted for bank fraud, mail fraud, and wire fraud, crimes for which he faces a combined maximum sentence of 130 years in prison. In response, Perlman petitions the court for a public defender, claiming he has no money to pay for his own attorney. To Perelman's victims and the authorities, it seems impossible that he could have burned through more than the $500 million he's accused of stealing. But many believe that Perelman has squirreled much of it away in hidden assets. But there's no way to prove it. In July 2007, roughly a month after being captured in Indonesia, Perelman is transferred back to Orlando, where he's denied bail and separated from the general population. The judge is worried that the other inmates will recognize Perlman and try to extort him. And when confronted with the indictments, at first, Perlman insists he's innocent. He spins a story of an elaborate conspiracy, hinting that powerful Florida figures, including the state's governor and the mayor of Orlando, were the real puppet masters behind the schemes he stands accused of. But in March 2008, Perelman finally pleads guilty. He admits that transcontinental airlines and the ESA program were fraudulent from the beginning. His sentencing hearing is scheduled for two months later, in May, and dozens of Perelman's victims travel to attend. Jennifer Chow and her mother arrive from Chicago. They've already settled their suit against Perelman for $9 million on an arranged payment schedule, but they still haven't received most of that money. So they want to attend Perelman's sentencing and hopefully see justice served. So on the morning of May 21, 2008, Jennifer and her mother enter the courtroom and find that it's packed with Perlman's victims. Many of them are elderly and shuffle into the courtroom using canes and walkers. Jennifer shakes her head. These people all look so vulnerable. After a few moments, Perlman is escorted into the courtroom. He's shackled in handcuffs and leg irons, sporting a navy jumpsuit with Orange County Corrections stenciled across the back. Jennifer holds her mother's hand. It's been years since they've seen Perlman in person. There were reports that he had lost significant weight in jail, but he looks the same as she remembers him. The clerk then announces that Judge G. Kendall Sharp is entering the courtroom, and everyone gets to their feet. Judge Sharp enters and wraps his gavel, starting the proceedings. Perlman's lawyer stands up and argues that Perelman should receive a lenient sentence. Under his plea agreement, Perlman is facing a maximum of 25 years in prison. But he's 53 years old, so his lawyer argues that this is effectively a life sentence. He maintains that Perelman was never on the run, simply on a business trip overseas, and uses the fact that Perelman willingly went to Guam as proof that he was cooperative. He also argues Perelman genuinely believed that he would be able to pay everyone back. After his lawyer wraps up, Perlman reads a short statement. He apologizes for his actions and says he wants to do everything he can to make it right. Jennifer Chow just shakes her head. She doesn't buy Perilman's apology. She remembers how hard he fought to avoid paying what he owed her father, including suing her family for trying to get the money they were owed. She doesn't see any reason to believe he's changed since then, and others in the courtroom agree. The judge allows the prosecutor to call some of Perlman's victims to testify about the ways they were hurt by Perlman's con. One by one, they take the witness stand, recounting how Perlman promised them everything and left them with nothing. One woman breaks down as she talks about how, even though she should be retired now, she has to work two jobs to make ends meet. Another victim talks about how her husband died just seven months after learning that all their money was gone. Believing he'd failed his family, Jennifer finds herself fighting back tears. The scale of Perilman's wrongdoing is mind boggling. And like Jennifer's father, these people tried to do the right thing. They all talk about how they looked over his insurance certificates, requested financial statements. Everything seemed above board. But Perelman fooled them all. After the testimonies are finished, the judge reviews every count, then orders Perelman to serve the maximum, 25 years. Around the courtroom, Perelman's victims erupt in applause, cheers, and sobs of relief. Jennifer closes her eyes and exhales. No one is getting their money back. But at least Perlman is paying for his crimes. Even though Lou Perlman's empire crumbled and he likely won't get out of prison until 2029, the former music mogul doesn't give up hope. He spends much of his time behind bars on the phone, calling old friends and business acquaintances, including a former member of one of his boy bands, Michael Johnson. Johnson had been traveling with Perlman in early 2007 when Perlman was apprehended by the FBI. At the time, Johnson thought they were scouting bands for a company he and Perelman were planning on starting together. But as the trip wore on and Perlman started acting stranger and stranger, Johnson decided to Google Perelman from the hotel business center in Bali. That's when Johnson first learned that Perlman was accused of financial crimes. And when he realized that they weren't on a business trip at all, they were on the run. So Johnson left Bali before the FBI arrived, and he has since learned a lot more about the scope of Perlman's crimes. He's sickened by them, and he's certain that Perlman deserves to be in prison. But Johnson can't bring himself to cast Perelman aside entirely. Johnson can't forget the ways that Perelman was good to him, believing in him as a musician and then an entrepreneur. And he knows Perelman's having a hard time in prison. He keeps getting beaten up by other inmates who accuse Perelman of ratting them out in an attempt to broker deals for himself. So when Perelman starts calling Johnson from prison, Johnson reluctantly answers every time, trying to keep Perlman at arm's length, but without cutting him off completely. When Johnson sees that he's getting a call from an unknown number he knows who's probably on the other line. So he picks up, and an automated voice informs him that he's receiving a call from an inmate at a federal penitentiary. Johnson accepts the call. Hey, Lou. Mikey, Hi. How's it going? I'm doing great, buddy. Walking the track, doing my thing. That's good. Good. And I'm close to a deal. I'm gonna get out of here soon. Well, you know, just be careful with that. You remember what happened last time. I don't want you getting into another dangerous situation. Don't worry about that. My lawyers are working on a whole new angle. I just got an email from them today. It's looking. It's looking really good. Johnson closes his eyes. He knows this is a lie. Perlman doesn't have any lawyers right now. Well, good, good. I'm glad to hear that. But in the meantime, you know, I've got all these guys in here singing for me, and I think I could put together a band in here. Some record executives have already reached out to me. Johnson shakes his head. He knows this is another lie. But it's so pathetic, Johnson can't bring himself to call Perlman out. Well, I'm glad you're keeping busy. You could help me manage them. We can get our business off the ground. Maybe even sell this story to a TV network. That would be great. Big things are coming, Mikey. Big things. This is just a hurdle, you know, and we have to get past it. Yep, we sure will. But, hey, I got. I gotta run some things I need to take care of. Sure, sure. Talk to you later. Take care, buddy. You too, Lou. Stay safe. Johnson hangs up the phone. He doesn't have anywhere he needs to be. He just couldn't talk to Perlman anymore or listen to any more lies. Perlman's living in a fantasy world where he's still a big shot on the verge of another triumph. And as Johnson stares out the window, it occurs to him, maybe Lou Perlman's been living in a fantasy world his entire life. On August 19, 2000, in 2016, Lou Perlman died in federal custody from cardiac arrest. He had served eight years of his 25 year sentence and was 62 years old. @ the time of Perelman's sentencing, there was at least $300 million of investors, money unaccounted for. At the sentencing hearing. The judge had offered to reduce Perelman's sentence by one month for every million dollars he returned. But Perelman didn't facilitate the return of any money. Money. Some believe that he had it stashed away somewhere. But most experts believe Perlman simply spent it. Shortly after his arrest, Vanity Fair published a long article about Perelman and his crimes, including accusations that Perelman had sexually abused members of his bands. Sources said that Perelman showed underage boys pornography, massaged them, and would jump on their beds naked to wake them up. But most of the allegations were never proven, and in a 2014 interview, Krilman denied any sexual wrongdoing. But the legacy of the bands he created lives on. NSYNC held the record for most albums sold in a week for 15 years, and several of its members went on to successful solo careers. Most notably Justin Timberlake and the Backstreet Boys continue to tour today. They've sold over 100 million records, which makes them the best selling boy band of all time. Just like Lou Perlman always believed they would be From Wondering this is Episode three of Lou Perlman, the Con man of Pop for American Scandal. In our next episode, we speak with Tyler Gray, author of the hit Charade, Lou Pearlman, Boy Bands and the Biggest Ponzi Scheme in US History. If you're enjoying American Scandal, you can unlock exclusive seasons on Wondery Binge new season first and listen completely ad free when you join Wondery plus in the Wondery app, Apple Podcasts, or Spotify. And before you go, tell us about yourself by filling out a survey@wondry.com survey if you'd like to learn more about Lou Perlman, we recommend Tyler Gray's the Hitch Raid, the Netflix series Dirty the Boy Band Scam, and Mad about the Boys by Brian Burroughs. 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, Lindsey Graham for Airship Audio editing by Christian Paraca Sound design by Gabriel Gould Music by Lindsey Graham this episode is written by Austin Rackless, edited by Emma Cortland Fact checking by Alyssa Jung Perry Produced by John Reed Managing Producer Olivia Fonte senior Producer Andy Herman Development by Stephanie Jenz Executive producers are Jenny Lauer, Beckman, Marshall, Louie and Erin O'Flaherty. For wondering.
- [45:07]
Suzanne Rico
This is a story that begins with a dying wish. One thing I would like my mother's last request that my sister and I finish writing the memoir she'd started about her German childhood when her father designed a secret super weapon for Adolf Hitler. My grandfather, Robert Lesser headed the Nazi project to build the world's first cruise missile, which terrorized millions and left a legacy that dogged my mother like a curse.
- [45:39]
Lindsey Graham
She had some secrets. Mom had some secrets.
- [45:42]
Suzanne Rico
I'm Suzanne Rico. Join my sister and me as we search for the truth behind our grandfather's work and for the first time, face the ghosts of our past.
- [45:52]
Lindsey Graham
Jeez, who is he?
- [45:54]
Suzanne Rico
Listen to the man who Calculated Death exclusively with Wondery Plus. Join Wondery plus in the Wondery app, Apple Podcasts, or Spotify.