Boy-Band Loot Sold at Bankruptcy Auction
Tuesday, June 12, 2007; 6:25 PM
ORLANDO, Fla. -- Platinum and gold records, autographed posters and even a key to the city all went "Bye Bye Bye" at an auction Tuesday as creditors liquidated the assets of boy-band impresario Lou Pearlman.
Hundreds of bidders packed a downtown building for the Chapter 11 bankruptcy sale. The auction was populated mostly by middle-aged men, not the screaming young girls who drove Pearlman's bands to multi-platinum success.
Pearlman's assets included memorabilia from the Backstreet Boys and 'N Sync, the two boy bands he created in the '90s that made him famous, and several of his lesser-known acts.
Pearlman allegedly defrauded about 1,000 investors of more than $315 million by selling for years a bogus savings account plan, then using their money to cover his losses in other businesses. Banks are hounding him and his companies for more than $120 million, according to court documents.
He also is being investigated by the FBI, IRS and state authorities.
Pearlman's whereabouts are unknown. He hasn't been seen or heard from in months, nor has he responded to multiple subpoenas.
Pearlman doesn't have an attorney in either bankruptcy case against him or his companies.
Everything he left behind was on the block Tuesday, from the ordinary (first aid kits for $12.50 apiece) to the opulent ($18,000 for a five-piece Chihuly glass art series).
Stacey Karatzas, an Orlando jewelry designer, attended for the glass pieces but did not buy them. She was disappointed there was not more big-ticket art.
"It's less than I would have expected," she said.
Dozens of bidders stood elbow-to-elbow in the office where Pearlman used to court aspiring stars. They sweated while an auctioneer shilled.
"Eighty dollars, eighty dollars, gold record," the man said.
A man wearing a Pittsburgh Steelers shirt paid $2,200 for a wall hanging commemorating the Backstreet Boys selling 7 million copies. He declined to be interviewed, but said he was still deciding whether to sell it.
The key to Orlando sold for $1,400 _ a big raise from the $300 bidding start.
Proceeds from the sale were to pay off Pearlman's considerable debt, though authorities are still trying to put the whole picture together.
Pearlman's home in a posh Orlando suburb was also to be sold, and listed for $8.5 million.
Pearlman already lost control of several companies in February, when a judge appointed receiver Jerry McHale to take over the books.
Four banks filed the involuntary federal bankruptcy cases against Pearlman and his Trans Continental companies at the beginning of March.
McHale has discovered few assets and considerable debt, but still doesn't know how deep it goes. McHale told the court Pearlman's former employees trashed and shredded mounds of documents in late 2006 or early 2007, when they believed investigators were closing in.