On second thought, honey, let’s go to Morton’s.

Pearlman company files for bankruptcy protection

FF Station LLC, Lou Pearlman’s company that owns the Church Street Station complex in downtown Orlando, filed for Chapter 11 bankruptcy protection late Tuesday night to prevent foreclosure and prepare for buyers for the stately downtown shopping and entertainment properties. The filing, in U.S. Bankruptcy Court in the Middle District of Florida, offered an early sketch of the company’s’ liabilities, which were estimated to be between $1 million and $100 million.

FF Station is the corporation that owns and controls the buildings and real estate that make up most of what was once the cornerstone of downtown Orlando’s once-thriving entertainment and shopping district, Church Street Station. After business began diverting to Downtown Disney, Universal Orlando’s CityWalk and other districts, the complex nearly died earlier in this decade. Pearlman’s FF Station company bought the properties with financial assistance from the city of Orlando and promises to resurrect the glory days there. The complex also houses Pearlman’s corporate headquarters and his flagship company, Trans Continental Airlines, at 127 W. Church St.

However, Pearlman’s multi-interest business empire has crumbled in recent months, under state and federal fraud investigations and numerous foreclosure lawsuits. One of those suits, by the Bank of America, specifically seeks foreclosure of FF Station. Bank of America is claiming $26. 5 million from a defaulted mortgage on Church Street Station. Another bank, Copper Star Bank of Phoenix, Ariz., is seeking $4.7 million from a defaulted mortgage on Church Street Station.

Pearlman has not been available for comment for several weeks, and was last reported on business in Germany. The FBI and other agencies served search warrants at Church Street Station and Pearlman’s Lake Butler home last week, clearing out scores of boxes and file cabinets.

Pearlman bails out as empire crumbles

Three other companies, including his flagship Trans Continental Airlines, already were in the hands of a court-appointed administrator, Jerry McHale. He arrived earlier this month to find no one in control of many of Pearlman’s other businesses — ranging from music recording to blimp leasing — run out of the same offices. By now, almost all employees have vanished.

Even some of the many lawyers who have been representing Pearlman in two dozen lawsuits have complained to judges that they have a hard time getting direction from their client. In some cases, Pearlman’s legal representation has yet to be entered into the record. And in others, some of his lawyers are trying to leave, or have left. No one represented Pearlman at one court hearing Wednesday morning in Orange Circuit Court. “Frankly it’s a bunch of rudderless ships,” said Michael Markham, an attorney who represents McHale.

The collapse of the business empire began in December. That’s when state regulators closed in on Pearlman’s investment program and banks and investors began filing claims against his money and assets. At Church Street Station, only Pearlman’s modeling and entertainment talent-placement service, known as Fashion Rock or Talent Rock, was reported to still be running independently of court control. But McHale said no one was there Wednesday afternoon.

Also Tuesday, Pearlman lost some of his stake in his two big boy bands, ‘N Sync and Backstreet Boys. Washington Mutual Bank was awarded a $9.8 million interest in Pearlman’s ownership of ‘N Sync Productions Inc. and Backstreet Productions Inc. in a judgment entered in Seminole County.

In addition, more than a dozen other suits, including a new one filed Tuesday, have been filed in the past 10 weeks by banks and investors, seeking more than $130 million. And the state Office of Financial Regulation alleges he defrauded more than 1,000 private investors.

Pearlman, staff knew ‘end was near’ in 2006

In the final days of Lou Pearlman’s empire, he and his associates transferred millions of dollars into personal bank accounts, stripped the company of big-screen TVs and crystal vases, and shredded and carted away boxes of papers, according to a new court document obtained by the Sentinel on Thursday night. In the document filed in Orange County Circuit Court, court-appointed receiver Jerry McHale paints a picture of desperation at Pearlman’s Trans Continental companies in the weeks and months before lawsuits and state and federal investigations piled up in late 2006 and early this year.

McHale, whose job is to protect the assets of three Pearlman companies, reports that bank records show that in December, Pearlman moved $5 million through his personal bank account. Two months earlier, Michael Crudele, a top executive at Trans Continental, transferred more than $1.5 million into and out of his personal bank account, McHale reported. In the court-ordered status report, McHale maintains that other top employees carried off $20,000 in crystal vases, several plasma televisions, a surround-sound system and a conference-room table and chairs, though those have all since been returned.

McHale’s bigger concern is trying to find out what happened to $317 million that Pearlman’s Trans Continental Airlines took in, during 18 years, from investors and depositors. Hundreds of investors told McHale they gave Pearlman their life savings, and now they are hoping that McHale can find their money. In an interview, he said he thinks Pearlman’s companies were broke by early fall, and that they weren’t even paying phone and trash-collection bills. By the time McHale took over, trash collection was halted and trash was piling up. He said it appeared that Pearlman and his inner circle were preparing as early as August for the business empire’s collapse. In the report, McHale wrote that Pearlman allegedly sold his interest in various companies such as the Rocks Fine Jewelry store and the Pearl Steakhouse, and ownership of the NYPD Pizza parlors is in question.

Hey, relax, guy! Church Street Station is ready for a big comeback!

“I think what it suggests is everybody knew that this thing was falling apart before October,” McHale said. “My feeling is this place was totally illiquid, probably back in August or September.” McHale was given control of three businesses: Trans Continental Airlines, Trans Continental Airlines Travel Services and Trans Continental Enterprises. Shortly after he moved in, all of the employees left. “There did not appear to be any legitimate operations associated with the receivership entities — only liabilities,” he stated in the report. McHale also reported that the businesses were presenting false financial statements from a “non-existent accounting firm.” Previous lawsuits have alleged that Pearlman’s accountants, Cohen & Siegel, do not exist.

Pearlman’s business empire covered numerous interests, ranging from charter airlines to boy bands, TV production to blimps and downtown development. McHale reported that Pearlman created more than 100 companies, but almost all were run with the same offices, staff, computers, bank accounts, even the same file cabinets. He reported that practically speaking, almost all were run as one company. McHale said that when one company was short of cash, Pearlman would simply transfer some money in from another company. Often, the money appeared to originate in individuals’ investment accounts, he reported to the court. “They would say, ‘Lou, the budget this month, we need $30,000 or $40,000 or $50,000 or $100,000,’ and the money would just show up,” McHale said. “Nobody ever questioned where the money came from. I think everybody inside the inner circle just thought that Lou had a lot of money, so, what the hell, another 40 or 50 grand didn’t make any difference.”

Exchange Lounge

About Lou Pearlman

First cousin of singer art Garfunkel, he is from Flushing, Queens, like myself. However, I accept no responsibility for him. Flushing and Art Garfunkel probably don’t either.

A List of Pearlman’s Companies include:

• Trans Continental Companies (umbrella corporation)
• Trans Continental Airlines. During a charter trip, he meets boy band New Kids on the Block and is intrigued with their success. He signs Backstreet Boys and ‘N Sync.
• Trans Continental Records. Best known for: Managing boy bands ‘N Sync and the Backstreet Boys.
• Trans Continental Studios
• Trans Continental Publishing
• Trans Continental Management
• Trans Continental Productions
• Trans Continental Travel
• Talent Rock
• Pearl Steakhouse. A Restaurant I have never been to and it looks like that status will not change.
• Exchange Lounge, which during football season had great Monday night wings and sports a nice upstairs cigar lounge. It looks like they’re still operating, even though the web site hasn’t been updated since last year.
• Cigar Club
• N.Y.P.D. Pizza. Pretty good when I can find one and it happens to be open. Used to be run by Paul Russo, also from Queens, who is married to Beki Onslow, former girl band member who used to cut my hair! So you see, there are 3 degrees of separation between me and Lou Pearlman!
• Orlando Predators. Hey, they made it to the Arena Bowl. No strikes against them just because Pearlman owns ‘em.

Wikipedia has more details about the fraud investigation, including some interesting statements like “A lot of it is New York money,” says receiver Gerard McHale, “especially the significant investments.” (My coworker commented on the destructive raid on Pearlman’s offices, stating “He must have pissed off the wrong guy”)

“I was being monetarily raped by a Svengali” - Justin Timberlake

Harry Robinson owns a heating-and-air-conditioning outfit in New Jersey. Robinson invested $400,000 with Pearlman’s companies. Now he has to sell his car, and maybe his house too. All he has left from Pearlman is an autographed copy of his book, Bands, Brands and Billions: My Top Ten Rules for Success in Any Business. “I’m finished,” he says.

There’s a web site called Scammed By Pearlman.

Orlando Weekly:

At the risk of sounding petulant, we told you so. We told you so, we told you so, we told you so. Nah nah nah nah nah, nah. All this breathless coverage of Lou Pearlman’s crumbling empire you’ve been reading in the Orlando Sentinel of late? Old news, amigos. We told you three years ago that Pearlman was a corpulent pusbag who would rip off anybody and anything within reach of his scaly appendages. But did you listen? No, you did not. And now a court-appointed receiver has taken control of a chunk of Pearlman’s “empire” and a lot of people are out millions of dollars; including taxpayers, who, through the city, gave him $1.5 million in incentives. Suckers.

Pearlman claims to be on tour in Germany with his latest teen-pop group, US5. He’ll probably be there for awhile.

~ Bill G

Hey, don’t worry, guy! I have a brand new investment opportunity in Europe! You can’t lose!